How Do Lenders Treat Rental Income When Assessing My Investment Loan Application?
The difference between a lender that counts 70% of rental income and one that counts 80% can represent $50,000–$100,000 in approved borrowing capacity on the same property. It’s not a detail — it’s the question.
Rental income counts — but not at face value. Lenders apply a shading factor before including it in your assessment, and the percentage they accept varies meaningfully across the panel.
The Shading Factor
Most lenders will count 70–80% of projected rental income in their assessment. The remaining 20–30% is discounted to allow for vacancy periods, property management fees, maintenance, and rate risk. Some lenders use 75% as a flat rule; others vary by property type or location.
Existing Investment Properties
If you already hold investment properties, lenders include rental income from those as well — but with shading applied to each. For investors with multiple properties, the cumulative effect can significantly reduce the income available to service new borrowing.
What Happens When There’s No Tenancy History
For a property you’re purchasing without an existing tenant, most lenders will accept a real estate agent’s rental appraisal letter as evidence of expected rental income. Some require a formal rental assessment — your broker will know what the specific lender needs.
You may wish to speak with a licensed mortgage broker to assess your personal circumstances.
This is general information only. Rental income shading factors and assessment policies vary by lender. Speak with a licensed mortgage broker for advice tailored to your investment situation. All loans are subject to lender approval.
Sources: APRA Prudential Practice Guide APG 223; CoreLogic, Australian Property Investment Report 2025; MFAA Industry Intelligence Service Report 2025.
