How much more can I borrow as a property investor?
Equity versus serviceability: the two limits on your next purchase and how to lift both.
Short answer
Your next purchase is capped by whichever is lower: your usable equity or your serviceability. Usable equity is usually 80% of your properties' value minus what you owe, while serviceability depends on each lender's calculator and can differ by hundreds of thousands of dollars between lenders.
The two limits on your next purchase
Every investor's next purchase is capped by two separate limits. The lower one wins.
- Equity: how much deposit you can release from the properties you already own.
- Serviceability: how much extra debt a lender believes you can repay at its assessment rate.
Plenty of investors have strong equity but hit a serviceability wall, or the reverse. Knowing which one limits you tells you exactly what to work on.
Step 1: work out your usable equity
Most lenders will lend up to 80% of a property's value without lenders mortgage insurance. Your usable equity is 80% of the combined value of your properties, minus everything you owe on them.
| Example | Amount |
|---|---|
| Combined property value | $2,200,000 |
| 80% of value | $1,760,000 |
| Current loans | $1,330,000 |
| Usable equity | $430,000 |
To buy at 80% of the price, you need a 20% deposit plus stamp duty and costs, which together commonly come to 24% to 26% of the purchase price depending on your state. In this example, $430,000 of usable equity supports a purchase of roughly $1.6 million to $1.75 million, if serviceability allows it.
Step 2: understand serviceability
Serviceability is where most investors get surprised, because every lender runs its own calculator. The main inputs are:
- Assessment rate. Banks typically test your repayments at around 3 percentage points above the actual rate. Some non-bank lenders use a smaller buffer.
- Rental income shading. Lenders usually count only 70% to 90% of your rent, to allow for vacancies and costs.
- Living expenses. Lenders use the higher of your declared expenses or a benchmark called HEM (the Household Expenditure Measure).
- Existing debts. Your current loans are usually assessed at the buffered rate, not what you actually pay.
- Credit cards. Lenders assume a monthly repayment of around 3% to 3.8% of each card's limit.
- Negative gearing. Some lenders add back tax benefits from investment losses, others cap them at the rental income, and some ignore them entirely.
Why the answer varies so much between lenders
On a recent investor scenario we ran across our panel, the same borrower's maximum borrowing ranged from about $47,000 to about $690,000 across 30+ lenders. Nothing about the borrower changed. Only the lender's policy did.
If you only ask your current bank, you are getting one answer out of thirty.
Step 3: check your debt-to-income ratio
Since February 2026, banks can only write 20% of new loans at six times income or more. If your new total debt would take you over six, your options narrow, and lender selection matters even more. Read DTI over 6: can you still get a home loan?
Seven ways to increase your borrowing power
- Choose lenders by policy, not just rate. Rental shading and buffers vary more than rates do.
- Reduce credit card limits you don't use.
- Pay out small debts such as car and personal loans.
- Use a 30-year loan term where suitable, to lower assessed repayments.
- Document all income, including rent, bonuses and overtime.
- Sequence your lenders. Use the strictest lenders early and keep more flexible ones for later purchases. See structuring for your second, third and fourth property.
- Avoid cross-collateralisation so each property can be refinanced or sold on its own terms.
When to bring in a strategy
If you are building a portfolio rather than buying one property, the order of purchases and lenders matters as much as the properties themselves. Our sister business, Handle Properties, plans and buys high-growth investment properties, and we structure the finance alongside it.
How Rate Engine helps
We run your numbers across 30+ lenders, show you both limits, and line up the lenders that suit your next purchase. It costs you nothing, and on loans of $1M or more you get $1,000 cashback on top of any lender cashback. See our investment loan service.
Frequently asked questions
Can I use equity from my home to buy an investment property?
Yes. Many investors release equity from their home as a separate loan split to fund the deposit and costs. Keeping it as a separate split makes the purpose of the debt clear, which matters for tax. Speak to your accountant about deductibility.
Why does my bank say I can borrow less than an online calculator?
Online calculators usually skip the assessment buffer, rental shading and HEM living costs. The bank's calculator applies all three.
Does rental income from the new property count?
Usually yes. Lenders typically count a shaded share of the expected rent, often supported by a rental appraisal.
How often should I check my borrowing power?
Whenever rates, your income or property values change materially, and at least once a year if you are actively investing.