How much money can I borrow for an investment property?


If you’re wondering ‘How much can I borrow for an investment property?’, you’re not alone. We break down the two key factors that influence your borrowing power.

Buying an investment property for the first time is an exciting step. But before you get started on your investment journey, the first thing you need to find out is how much money you’re able to borrow.

There are two key factors that can affect the amount you can borrow and your ability to take out a property investment loan: your deposit, and your loan serviceability.

In this article, we’ll take a closer look at how these two elements affect your borrowing capacity.

Understanding your deposit

When it comes to an investment property purchase, how much you can put down as a deposit will have a big influence on the amount you’re able to borrow.

How much deposit will I need?

Every lender has different lending criteria that determines how much deposit they require, but some key influencing factors include:

  • The purchase price of your property
  • Evidence of genuine savings
  • Your credit history

For owner-occupiers looking to make a home purchase, banks may be willing to lend up to 95% of the property’s value, meaning you’ll need to provide a minimum 5% deposit as well as your other upfront costs (i.e. stamp duty). For investment loans, lenders generally have a minimum deposit requirement of 10%.

If you’re borrowing any more than 80% of the property value, most lenders will require you to pay Lender’s Mortgage Insurance on top of your home loan to account for the higher risk they’re taking on. This usually sits around 1-3% of your mortgage value and can be paid off over the life of the loan.

Other factors that can influence your deposit and upfront costs

As well as property price and savings history, there are a number of other factors that can influence the amount of deposit you need. We’ve listed some of the common ones below:


While the above figures demonstrate the typical loan amounts banks are willing to lend to borrowers, there are some suburbs that lenders consider ‘higher risk’ post codes when investing in property. In these cases, lenders may require a higher deposit as security.

This may be the case if there’s a significant oversupply of similar property types in the area, which means it may be harder to sell the property in the future, negatively impacting its resale value if the buyer defaults on the loan.

Home equity

If you already own your own home, then you may be able to leverage the value that’s tied up in your property as part of your deposit.

Equity is the difference between your home’s market value and the balance owing on your loan. Your lender is looking for its usable equity (“lending equity”), which generally corresponds to 80% of the value of your home minus the balance of your home loan.

This effectively enables you to use the value of your current property to reduce your deposit amount. Check out our recent article to learn more about using your home equity as a deposit, and how to calculate your current home’s usable equity.

Understanding your loan serviceability 

Another deciding factor in whether a bank will actually lend to you in the first place is your loan serviceability. This is your ability to make your mortgage repayments — or to ‘service’ your home loan.

Your serviceability is calculated to ensure you can take on a mortgage, and safely pay it off, with minimal risk to the lender.

What factors can influence my serviceability?

Your level of income, existing liabilities, and living expenses all factor into your loan serviceability. To calculate this, your lender will dig deep into your bank statements to determine your financial situation and borrowing power.

1. First, they calculate your income and its overall stability. This includes your salary, and may also comprise additional income from bonuses, overtime, and rental income from any investment properties. The way a lender treats these additional sources will vary from bank to bank; for instance, while some will consider overtime work in full, others may only factor a percentage of these incomings into their calculations. The same principle applies to employment type, with banks looking less favourably on contracted and part-time roles from a stability perspective.

2. The lender will also calculate your debt-to-income ratio, which measures the amount of debt you carry compared to your total income. This covers things like any existing home loans, personal loan debts, credit card debts and HELP debts—it even takes into account your interest repayments and credit card limits.

Top tip: The higher your liabilities, the less you may be able to borrow, so it’s wise to try and pay down as much unnecessary debt as possible before looking to borrow money for a new home loan.

3. Finally, they assess your spending habits and living costs to determine your ability to take on the proposed monthly loan repayments. As part of this, they will also consider factors such as the size of your family and the number of dependents within your household.

Get the right advice first

While lenders will often have general guidelines on the amount they will lend to borrowers, how much you can borrow will ultimately depend on your personal circumstances, as well as the policies of each individual lender. The most important thing you can do to maximise your borrowing power is to invest in the right advice when taking out a mortgage.

The majority of property investors will opt to engage a mortgage broker, who will explore different lending products on their behalf. Brokers will use their knowledge of lender policies to advise on the best bank and investment property loans to use based on your individual circumstances.


Find out how much you can borrow for an investment property

If you’re looking to secure finance for your next property, our expert team of finance brokers can help you explore your lending options and determine how much money you can borrow from different lenders. Get in touch today via the form below to request a consultation.

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