Lenders assess investment loans using the same broad tests, but their credit policies differ in the details that decide how much you can borrow. All banks test repayments at least 3 percentage points above the actual rate, yet they count different shares of your rent, assess your existing loans differently and accept different property types and incomes. Those differences can change an investor’s borrowing capacity by tens of thousands of dollars, which is why one lender may decline an application another approves.
What every lender checks
- Serviceability. Can you afford the new loan and your existing debts at a higher test rate, after living expenses? APRA expects banks to use a buffer of at least 3 percentage points; it kept the buffer at 3% in May 2026.
- Debt-to-income. APRA limits banks to 20% of new lending at six times income or more, so highly geared investors may find fewer banks able to help.
- Security. Is the property acceptable, and what’s the LVR on the lender’s valuation?
- Credit history. Defaults, missed payments and recent enquiries all count against you.
- Stability of income. How long you’ve been in your job or business, and whether your income is rising or falling.
Where lenders differ
| Policy area | More conservative lender | More flexible lender |
|---|---|---|
| Rental income counted | 70% of gross rent | 80% or more |
| Existing loans | Assessed at a buffered rate over the remaining term | Assessed at a buffered rate over a longer term, or at actual repayments for some loans |
| Interest-only loans | Assessed over the shorter principal and interest period left after the interest-only term | Similar, but with more tolerance for interest-only in the application |
| Self-employed income | Two years of tax returns; average of both years | Latest year if income is rising; alternative documents accepted |
| Bonuses and overtime | 50% to 80% counted, with history required | Up to 100% with a stable history |
| Property types | Restrictions on small units, high-density towers, some regional and mining towns | Fewer postcode and size restrictions |
| Maximum LVR for investors | 80% to 90% | Up to 90% or 95% with LMI |
These are typical ranges, not specific lenders’ policies, which change often. A broker can tell you how current policies compare.
Why two identical investors get different answers
Take an investor earning $160,000 with a $500,000 home loan, buying a property that rents for $650 a week. One lender counts 70% of the rent and assesses the home loan over its remaining 22 years; another counts 80% and uses a 30-year term. The second lender sees roughly $3,400 more rent a year and a lower assessed home loan repayment, which together can add $50,000 or more to the investor’s borrowing capacity. Neither lender is wrong; they’ve just set different policies.
Banks, smaller lenders and non-banks
- Major banks offer sharp rates for strong applications but often have the most conservative policies for complex or highly geared investors.
- Smaller banks and credit unions are also regulated by APRA and apply the same buffer, but may have different policies on rent, income or postcodes.
- Non-bank lenders aren’t regulated by APRA as banks, so the DTI limit doesn’t apply to them, but they still must lend responsibly under ASIC’s rules. They can be more flexible on self-employed income, credit history or property types, usually at a higher rate. See low doc home loans.
Your rate also depends on how the lender prices your risk: LVR, loan purpose and repayment type all move you between pricing tiers.
How to navigate credit policy
- Start with the lender that’s strictest on what you’ll need later. Use flexible lenders for the purchases where you need the flexibility, and save them for when you need them.
- Check the postcode and property type against the lender’s policy before you sign a contract.
- Clean up your debts. Reduce credit card limits and pay off small loans to lift your borrowing capacity with every lender.
- Use a broker who works with investors to compare policies and plan which lender to use for each purchase.
- Prepare properly. Work through our investment loan approval checklist before you apply.
Frequently asked questions
What serviceability buffer do lenders use?
Banks and other APRA-regulated lenders test new loans at least 3 percentage points above the actual rate, so an investor rate of 6.89% is assessed at about 9.89%. APRA kept the buffer at 3% in May 2026. Some lenders also apply a minimum floor rate. Non-bank lenders set their own buffers but must still lend responsibly.
How much rental income do lenders count?
Most count 70% to 80% of the gross rent to allow for vacancies, management and maintenance costs. Some lenders count less for certain property types or locations. Because this one setting can change your borrowing capacity significantly, it’s worth comparing lenders on it.
Are non-bank lenders easier for investors?
They can be more flexible, for example on self-employed income, past credit problems or property types, and APRA’s debt-to-income limit doesn’t apply to them. In return, rates and fees are usually higher. They still have to meet responsible lending obligations, so they won’t approve a loan you can’t afford.
Sources
- APRA, Macroprudential policy settings, May 2026
- Canstar, Average home loan interest rates, as at 2 October 2026
- ASIC Moneysmart, Choosing a home loan
General information only. It does not consider your objectives, financial situation or needs and is not credit, tax or financial advice.