You probably arrive with a number in mind: the price of the property you want. The lender arrives with a different question. Not what the property is worth, but whether you could keep up the repayments if things got harder. So how much can you borrow for an investment property? It depends on how the lender tests you.
The first thing to do is establish your borrowing capacity, so you can see what is possible before you choose anything.
How lenders work out your borrowing capacity
A lender looks at your income, your living costs and every debt you carry, including credit card limits you never use. Then it tests whether you could still make the repayments if the interest rate rose. APRA, Australia’s banking regulator, expects lenders to add a buffer of at least three percentage points to the rate for that test.
Since February 2026, APRA has also capped how much each bank lends to people whose total debt is six times their income or more. Those loans can be no more than a fifth of a bank’s new lending to investors, and a fifth of its new lending to people buying a home to live in. Higher-debt loans still happen, with less room for them. With the cash rate at 4.60 per cent after September’s rise, the test bites harder than it did a year ago.
Rent counts, but not all of it
For an investment property, the lender counts the rent towards your income, but usually not all of it, to allow for vacancies and costs. Rent from the properties you already hold is treated the same way. That is why a portfolio that pays for itself on paper can still limit what you borrow next.
When the bank says no
Early on, a bank manager told me I did not have enough equity and needed to slow down. My brother let me use the equity in his home, and I got the loan. I tell that story not as a recipe, but because a no from one lender is often the start of the conversation, not the end of it. There is usually a way through; finding it is the work.
What you can do before you apply
- Know your living costs, because the lender will want them.
- Lenders count unused card limits, so lower limits lift your capacity.
- Know what each property you hold earns and what it costs.
- A broker’s view is most useful before you choose a property, not after. Home Buyers Club is run by my son, James.
Borrowing less than you can
The figure a lender gives is the most it will lend, not the amount that suits you. Debt is like a scalpel: a precise tool in skilled hands. The better question is what you could comfortably hold through a rate rise or a vacancy, not only what the bank will approve. What you can borrow is the lender’s answer. How much to borrow is yours to work out first.
Which property, how the loans are set up and how the next one follows are not questions a lender answers. If a lender has said no, or you want to know what comes after yes, book a first conversation. It costs nothing.
Nicholas Lockhart
Lending rules as at 10 October 2026. A broker can assess your own borrowing capacity.
Sources: APRA, Activating debt-to-income limits, 27 November 2025; RBA, Monetary Policy Decision, 29 September 2026.