By Varun Agarwal, co-founder of PropRetire · Published 13 Nov 2026 · Law as read 13 Nov 2026 · 3 min read

How much of your rent does a bank count when you borrow?

Part of it, at most 80% where a bank follows APRA's guide, which calls a cut of at least 20% prudent and more where a home is more likely to sit empty.

For example, when your rental brings in $600 a week and you borrow for the next one, the rent in the numbers is smaller than the rent you get. Each lender sets its own share from there.

At most 80% where it follows APRA, which regulates the banks. Its guide APG 223, paragraph 43, says "prudent serviceability policies incorporate a minimum haircut of 20 per cent on expected rental income", with larger cuts where a home is more likely to sit empty.

At $600 a week, $31,200 a year, a 20% cut leaves $24,960 counted. The part left out allows for weeks with no tenant.

Usually. The same paragraph says banks "would normally place less reliance on third-party estimates of future rental income than on actual rental receipts from a property".

So rent shown in an agent's statements, from a home already let, weighs more than an agent's appraisal for a home not yet rented.

Yes, in one of two ways. A prudent bank counts "a borrower's investment property-related fees and expenses (e.g. strata requirements)", APG 223 says, either inside the living costs it allows for or by taking them off the rent.

Often not. "Good practice would be for an ADI to place no reliance on a borrower's potential ability to access future tax benefits from operating a rental property at a loss", APG 223 says. Where a bank counts it, the guide calls it prudent to work it out at today's rate, not the tested one.

From 2027-28, a loss on an established home contracted from 7.30 pm Canberra time on 12 May 2026 no longer comes off wages. It is held for later years, under section 26-155 of the Income Tax Assessment Act 1997. Does the negative gearing change apply to property you own? covers which homes it reaches.

At least 3 percentage points over the loan's rate. APRA's standard APS 220, Attachment C paragraph 4, says a bank "must apply a buffer over a loan's interest rate", ignoring any discounted opening rate, and that it "must be at least 3.0 per cent".

On 28 May 2026 APRA said the buffer will remain at 3 percentage points. On that setting, a loan at 6% is tested at 9% or more.

The law asks it to. Before a home loan to a person, a lender must "make reasonable inquiries about the consumer's financial situation" and "take reasonable steps to verify" it, under section 130 of the National Consumer Credit Protection Act 2009.

It then judges whether the loan is unsuitable, under section 131, such as where repaying it would be likely only "with substantial hardship". Section 5 of the National Credit Code brings a person's loan to buy an investment home into this too.

No. APRA's 20% is the least cut it calls prudent for banks and other lenders that take deposits, and each sets its own policy from there. Lenders that don't take deposits follow the same credit law with their own rules. So the same rent can count for a different amount from one lender to the next.

What a mortgage broker needs when you already own rentals covers the papers for each rental.

Each rental's lease, and the agent's statements for the last year, with the rent and the costs such as strata, rates and insurance.

The borrowing power calculator sets the share of rent counted and the buffer, for an estimate. Lenders differ.