Most people come to their first conversation with a number in mind: the price of the property they want. The lender comes with a different question. Not what the property is worth, but whether you could keep up the repayments if things became harder.
How lenders test you
A lender looks at your income, your living costs and every debt you carry, including credit card limits you may never use. It then tests whether you could still make the repayments if the interest rate rose. Australia's banking regulator, APRA, expects lenders to add a buffer of at least three percentage points to the rate when they run that test.
Since February 2026, APRA has also limited how much each bank can lend 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 lending to people buying a home to live in. Higher-debt loans are still possible, but there is less room for them.
Rent counts, but not all of it
For an investment property, the lender counts the rent toward 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.
The deposit and the value
The lender lends against the value of the property. The less you put in, the more it may charge you for insuring the loan, and the closer it will look at you. The equity in property you already hold can serve as all or part of the deposit for the next one, if the lender agrees.
What you can do before you ask
- Know your living costs, because the lender will want them.
- Close or lower credit card limits you do not use.
- Know what each property you hold earns and what it costs.
- Speak to a broker before you fall in love with a property, not after.
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. I have always encouraged people to ask what they 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. What you should borrow is yours, and it is worth working out first.
Nicholas Lockhart
General information only. No advice is given. Lending rules as at 10 October 2026. A broker can assess your own borrowing capacity.
Source: APRA, Activating debt-to-income limits, 27 November 2025.