Key takeaways
- Your investment borrowing power depends on your income, expenses, existing debts, deposit and the rent the property will earn.
- Lenders usually count only 70 to 80% of expected rent when working out serviceability.
- Your usable equity in other property can serve as the deposit, so you may not need cash.
- Different lenders calculate borrowing power differently, so the right lender can change your number significantly.
How much can I borrow is the first question almost every investor asks, and the honest answer is: it depends, and it depends on more than just your salary. Andy has been broking in WA since 2000, and he can give you a realistic figure quickly rather than a rough online guess that falls apart at application.
What Drives Your Borrowing Power
For an investment property, lenders look at your income, your living expenses, your existing debts, your deposit or equity, and the rent the property is expected to earn. It is the gap between what comes in and what goes out, plus the security you bring, that sets your limit. An investment adds rent to the income side, but lenders treat that rent cautiously.
How Rent Is Counted
This catches a lot of first-time investors out: lenders typically count only 70 to 80% of the expected rent towards serviceability. The discount, often called a shading, allows for vacancy, management fees and maintenance. So a property advertised at $500 a week is assessed as more like $350 to $400 in the lender’s calculation.
| Lifts your borrowing power | Reduces it |
|---|---|
| Strong, stable income | High living expenses |
| Solid expected rent | Existing loans and credit cards |
| Usable equity for the deposit | Small or no deposit |
| A lender that suits your profile | A lender with conservative policy |
Using Equity Instead of Cash
Many investors are surprised they do not need a cash deposit at all. Your usable equity in your home or another property can act as the deposit, letting you buy without saving from scratch. Keeping the loan-to-value ratio at or below 80% avoids lenders mortgage insurance.
Why the Lender You Pick Matters
Here is the part an online calculator cannot tell you: different lenders assess income, rent and existing debts differently, so your borrowing power can vary by tens of thousands depending on who you apply to. This is exactly where a broker earns their keep, matching you to the lender whose rules give you the most room. See how a broker helps investors access more lenders.
How Andy Helps
Andy works out a realistic borrowing figure based on your full position, then finds the lender that lets you do the most with it. No guesswork, no surprises at application. See the investment home loans page and get in touch.
Investment Borrowing Questions
Does rent count towards how much I can borrow?
Yes, but lenders usually count only 70 to 80% of it to allow for vacancy and costs. Andy can show you how each lender treats your expected rent.
Do I need a cash deposit to invest?
Not necessarily. Usable equity in your home or another property can serve as the deposit, so you may be able to buy without saving fresh cash.
Why do borrowing estimates vary so much?
Because lenders assess income, rent and debts differently. The right lender can change your number significantly, which is why a broker is worth it.
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Investment Home Loans
Investment property loans in Perth and regional WA, explained by a broker who's been working with property investors since 2000.
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