What Are the Rental Numbers Behind an Investment Loan?

Lenders count only part of your expected rent when they assess an investment loan. Knowing that before you fall in love with a property helps you set a realistic budget.

If you live in North Lakes and are thinking about buying an investment property, the rental market matters twice. It affects whether the property suits your goals, and it affects how a lender sees your application. Let's walk through both, one step at a time.

How Do Lenders Count Rental Income on an Investment Loan?

Lenders usually count no more than 80 per cent of expected rent. APRA, the banking regulator, says prudent lending policies apply a minimum 20 per cent haircut to allow for periods when a property is empty.

So for every $100 of expected rent, a lender following that guidance counts up to $80. The haircut covers vacancy only. It does not cover management fees, repairs or other holding costs, which you still need to budget for yourself.

Lenders also tend to place less weight on a rental appraisal than on rent actually received. A property with a tenant and a lease history is generally easier to assess than one with an estimate alone. Each lender sets its own rules on what rental evidence it accepts, so it pays to check before you apply. You can read more about the process on our investment loans page.

What Is the Serviceability Buffer for an Investment Loan?

Banks, credit unions and building societies must test new borrowers at an interest rate at least 3.0 percentage points above the loan's rate. This applies to investment loans as well as home loans.

Non-bank lenders are not bound by that buffer, although they set their own credit rules. Here is an illustrative example using a 6.75% p.a. rate.

Consider a buyer who has found a North Lakes investment property with an advertised rent estimate but no rental history. Using 6.75% p.a. as an example rate, a bank would test their repayments at 9.75% p.a. The buyer feared the test would shrink their options. Together with a broker, they counted only 80 per cent of the estimated rent, included their existing debts, and ran the numbers at the tested rate before making an offer. The result was a clear loan amount that still held up under the test. They could then choose a property price range with confidence instead of guessing. If you want to see your own starting point, our borrowing capacity page explains how it is worked out.

Which Rental Market Figures Should You Check Before Buying?

Before you buy, look at how long similar properties take to find a tenant, what rent they have actually achieved, and what it costs to hold the property each year. Those three things show how reliable your rental income is likely to be.

A local property manager can tell you about recent lettings in North Lakes. Online listings show asking rents, but achieved rents and re-letting times tell you more. Add council rates, insurance, management fees and repairs to the picture. If the property is a unit or townhouse, add body corporate levies too.

Then build in a buffer for an empty month or two. A property that still works when the rent stops for a while is a calmer one to own. Our local team at Mortgage Broker in North Lakes can help you line these figures up against a loan structure.

How Do the Negative Gearing Changes Affect Rental Analysis?

Whether you can use a rental loss against your salary now depends on when you buy and what you buy. The rules changed with the 12 May 2026 announcement, so your purchase date matters.

Losses on residential investment properties held at 7:30pm AEST on 12 May 2026, including those under contract and awaiting settlement, can continue to be deducted against other income until the property is sold. Eligible new builds acquired after that date can also still be deducted against all income.

From the 2027-28 income year, net rental losses on established residential properties bought after that time can only be deducted against other residential property income, including residential capital gains. Excess losses can be carried forward. Properties bought between 12 May 2026 and 30 June 2027 can use the current rules until 30 June 2027 only.

This means a property you expect to run at a loss needs to stand up without relying on a salary offset. The rules around new builds are detailed, and tax outcomes depend on your situation, so speak with your accountant before you commit.

Interest-Only or Principal and Interest: What Do the Rent Numbers Say?

Interest-only repayments are lower in the early years, but you pay down none of the loan. They also do not raise how much you can borrow.

When a bank assesses an interest-only loan, it tests whether you could afford principal and interest repayments over the remaining term after the interest-only period ends. A 30-year loan with five years interest-only is assessed over the remaining 25 years. That usually means a lower maximum loan than a principal and interest loan would allow.

The interest on a loan used for a rental property is generally deductible. The principal part of a repayment is not. Because the balance on an interest-only loan stays the same, the interest charged does not fall through repayments. Your accountant can show you how this plays out in your own tax position.

If you are weighing up a switch on an existing loan, our refinancing page covers what to consider, including costs that vary by lender.

At Vast Finance and Mortgage Broking, we like to take the time to understand your goals before we talk about products. Call one of our team or book an appointment at a time that works for you, and we will go through your rental numbers together.

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