An investment property loan in Australia is assessed differently from an owner-occupied loan: the rate is typically 0.2% to 0.6% higher, the maximum loan-to-value ratio is usually 90% rather than 95%, and lenders count only 80% to 90% of the gross rent as income. Debt-to-income caps, generally 6 to 8 times gross income, are what stop most portfolio investors rather than the deposit. Interest is tax deductible where the property is genuinely income-producing.
Two policies decide how much an investor can borrow: how much of the rent counts as income, and the cap on total debt relative to income. Both are published below from the lender policy data behind the Kreddi Score engine.
Rental shading, debt-to-income caps and maximum LVR across the 10 lenders NIK Finance models in full policy detail. Investment P&I and interest-only LVRs shown separately.
| Lender | Rental income counted | DTI cap | Max LVR (Inv P&I) | Max LVR (Inv IO) |
|---|---|---|---|---|
| ANZ | 90% | 7.5-8x hard cap | 95% | 90% |
| CBA | 90% | Alert >6x, no hard cap stated | 95% | 90% |
| NAB | 90% | <7x | 90% | 90% |
| HSBC | 75% | ≥6x triggers scrutiny | 90% | NISB 5% required |
| Macquarie | 75% | 8x hard cap (>6x = max 80% LVR) | 90% | 80% |
| ME Bank | 90% | 6-7x tiered by LVR | 90% | 90% |
| Qudos Bank | 80% | OO <7x, Inv <6x (tiered) | 90% | 90% |
| Great Southern Bank | 90% | OO 7x, Inv 8x (≤80% LVR only) | 90% | 90% |
| Firstmac | 80% | No hard cap (IRF ≥8 triggers review) | 90% | 70-80% |
| Bluestone | 80% | Not stated (no hard cap) | 90% | Not stated |
Rental shading is why a property that looks cash-flow neutral to you can look negative to a lender. On $30,000 of gross rent, a lender counting 80% assesses $24,000 — the missing $6,000 has to be covered by your personal income before the loan services.
Most portfolio investors do not run out of deposit. They run out of debt-to-income headroom, usually somewhere between the third and fifth property.
When mainstream lenders close, the routes that remain are non-bank lenders with higher loan-to-income tolerance, debt service coverage lending assessed on the property rather than your income, or a commercial facility for larger portfolios. Sequencing matters: the order you approach lenders in determines how far the portfolio gets.
Interest-only lending preserves cash flow in the early years and keeps the full repayment tax deductible, which is why investors use it. It is not free.
| Factor | Interest-only | Principal and interest |
|---|---|---|
| Monthly repayment on $600,000 at 6.5% | About $3,250 | About $3,796 |
| Debt reduced over the period | None | Principal reduces from day one |
| Rate | Typically 0.1% to 0.4% higher | Standard |
| Maximum LVR | Usually capped lower — see the table above | Higher |
| Serviceability test | Assessed at the P&I revert rate regardless | Assessed at P&I |
Lenders must stress-test an interest-only application at the principal and interest repayment that will apply after the interest-only period ends. Choosing interest-only does not increase what you can borrow — in most cases it slightly reduces it, because the remaining term is shorter when principal repayments begin.
Cross-collateralisation means using one property as security for another. Lenders often encourage it because it gives them stronger security. The costs land on you.
The alternative is standalone security for each property, funding deposits through separate equity release facilities. It takes more structuring work upfront and preserves your ability to sell or refinance individual properties later.
Between 80% and 90% of gross rent across the lenders we model in full policy detail. The shading covers vacancy periods, management fees, rates and maintenance. On $30,000 of gross rent, a lender counting 80% assesses $24,000 as income.
Typically 10% to 20%. Most of our modelled lenders cap investment lending at 90% LVR, with two at 95% for principal and interest. Below 20% deposit, Lenders Mortgage Insurance applies and is assessed more strictly than for owner-occupied lending.
Two reasons. Lenders count only 80% to 90% of the rent, and they assess repayments at a buffer rate roughly 3% above the actual rate. A property that is cash-flow neutral in reality can show a substantial shortfall under that assessment.
There is no regulatory limit. The practical ceiling is your debt-to-income cap, generally 6 to 8 times gross income depending on the lender. Most investors reach that wall between the third and fifth property, at which point non-bank or debt service coverage lending becomes the route forward.
Yes, typically 0.2% to 0.6% per annum above the equivalent owner-occupied rate. Interest-only adds a further 0.1% to 0.4%. The premium reflects the higher statistical default and prepayment risk lenders attach to investment lending.
It preserves cash flow and keeps the whole repayment deductible, which suits a negatively geared holding. It does not increase your borrowing capacity, because lenders stress-test at the principal and interest revert rate, and repayments step up sharply when the period ends.
Your Kreddi Score models your position against real DTI caps and rental shading policy, so you know how many more properties your income actually supports and which lenders will get you there.
NIK Finance Pty Ltd (ACN 685 393 917) is a Credit Representative (567387) of Finsure Finance & Insurance Pty Ltd (Australian Credit Licence 384704). This page is general information only and does not constitute financial advice. Consider your personal circumstances and speak with a licensed broker before applying for credit.