Your borrowing power comes down to three things: your income (including the expected rent), your expenses and existing debts.
Knowing your borrowing power before you start looking is one of the most useful things a first-time investor can do. It turns “I wonder if I can afford this” into a clear budget, so you shop knowing exactly what you can offer instead of guessing. Here's how lenders work it out.
Income, including the rent
For an investment loan, lenders add the property's expected rent to your own income. They usually shade a portion of the rent by 10–20% to allow for vacancy, management fees and maintenance. That rental boost is why investors can often borrow more than they'd expect.
Expenses and existing debts
Next, lenders subtract your commitments. These chip away at your borrowing power more than most people realise:
- Living expenses: lenders apply a realistic minimum, even if you spend less
- Credit cards: usually assessed on the limit, not the balance, even if you clear it each month
- Car and personal loans: the full repayment counts
- HECS/HELP: your compulsory repayment reduces serviceable income
The serviceability buffer
Lenders don't assess you at the interest rate. They add a buffer, commonly around 3%, and check you could still afford repayments at that higher “assessment rate”. It's a safeguard against rate rises, and it's the main reason your borrowing power is lower than a simple repayment calculation would suggest.
How to borrow a little more
A few practical moves can lift your borrowing power:
- Lower or close unused credit card limits before applying
- Pay down small personal or car loans where you can
- Choose a property with a realistic, evidenced rental estimate
- Compare lenders: serviceability calculators differ a lot between them
Get a realistic estimate
Our borrowing capacity calculator gives you a quick, indicative number using exactly the logic above. From there, a free discovery call with us confirms it against live lender policy. Because we compare 50+ lenders, we'll often find the one whose assessment is most generous for your situation. Not sure about the deposit side? Start with how much deposit you need.
Frequently asked questions
How do lenders work out how much I can borrow for an investment property?
They add the property's expected rent to your income, subtract your living expenses and existing debts, and apply a buffer (commonly around 3%) to check you could still afford repayments if rates rose. Whatever surplus is left determines your borrowing power.
What reduces my borrowing power?
Credit card limits (even unused), car and personal loans, HECS/HELP debt, high living expenses, and dependents all reduce how much you can borrow. Clearing or lowering small debts before you apply can make a real difference.
Last updated: July 2026
This article is general information only. It doesn't take into account your objectives, financial situation or needs, and it isn't credit, financial or tax advice. Figures are indicative estimates that vary by lender, state and property and can change, so we confirm your real numbers before you act. For tax questions, speak to a registered tax agent or accountant. Scott Lung, credit representative 567904 of Purple Circle Financial Services Pty Ltd (Australian Credit Licence 486112).
5 finance decisions to get right before buying your first investment property
- Build your first investment with a long-term property strategy.
- Understand the finance decisions that shape your borrowing power and future options.
- Make smarter decisions around your deposit, cash flow and loan structure before you sign a contract.
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