Financing an investment property in Australia isn't the same as financing the home you live in. Lenders treat investment loans differently, with higher rates, stricter deposit requirements, and more detailed income assessments. Here's what you need to understand before you apply for an investment property loan.

Investment Loans Carry Higher Interest Rates

Investment loans consistently attract higher interest rates than equivalent owner-occupier loans. The reason is risk: lenders view investment properties as higher risk, because in financial difficulty a borrower is more likely to continue paying the mortgage on their home than on a rental property.

According to RBA data, the average variable rate for investment loans runs roughly 0.25% above owner-occupier rates. The gap can be larger depending on the lender and the loan type. Over a large loan balance, that difference adds up to a significant amount of interest over the life of the loan.

Deposit Requirements Are Stricter

For owner-occupied properties, some lenders will accept deposits as low as 5% with government support. For investment properties, most lenders require a 20% deposit to avoid LMI, and some won't lend at all above 80% LVR for investment purchases.

This means you'll generally need either a 20% cash deposit or sufficient equity in an existing property to cover the 20% threshold. The deposit requirement is one of the reasons many investors use equity from their owner-occupied home as the starting point rather than cash savings.

Rental Income Is Counted, But Not in Full

When assessing your ability to service an investment loan, lenders include rental income in their calculations. However, they typically apply a discount, usually 70% to 80% of the expected rent, to allow for periods of vacancy and property management fees. This means your full rental income doesn't count dollar for dollar when lenders are working out whether you can afford both loans.

The Application Is More Detailed

Investment loan applications require more documentation than owner-occupier applications. If you already own rental properties, you'll need current lease agreements and rental statements for each one. Lenders assess your combined loan servicing across all properties, not just the new one.

Serviceability is also assessed at a higher buffer rate than the actual loan interest rate, meaning lenders test whether you could still service the loans if rates increased by 3% from where they are today.

The 2026 Environment: What's Changed

Two regulatory changes in February 2026 are relevant for property investors. The RBA raised the cash rate to 3.85%, increasing borrowing costs directly. And APRA activated new debt-to-income limits, which cap the share of new mortgage lending that can go to borrowers with a DTI ratio above 6. For investors with existing loans and high existing debt levels, this may reduce what they can borrow from certain lenders.

Lenders are also applying greater scrutiny to interest-only investment applications than they were a few years ago. Being prepared with clean financial documentation and a clear plan for the property will help your application.

Loan Structure for Investors

The structure of your investment loan matters as much as the rate. Key decisions include whether to go interest-only or principal-and-interest, how to set up the loan relative to your owner-occupied mortgage, and whether an offset account or redraw facility is appropriate for your strategy. Getting these decisions right from the start can affect both your cash flow and your tax position over the life of the investment.

Get the Right Investment Loan from the Start

At Swish, we work with investors at all stages, from those buying their first investment property to those expanding an existing portfolio. We compare investment loans across our lender panel, advise on structure, and help you understand the full picture before you commit.

Book a free call with Swish to talk through your investment property loan options.