Investor lending — three structural spreads that decide borrowable.
Investor lending isn't a rate decision. It's a structural
decision — and three structural levers (rental income shading,
the 95% LVR investor cliff, negative gearing add-back
methodology) produce a $300k+ spread in borrowing capacity on
the same file depending on which lender writes it. The right
lender on the day is policy-determined, not rate-determined.
Run the spread on your investor file first
The investment borrowing capacity calculator takes your
household income, existing debt, gross rental income, property
type and target LVR — and applies each panel lender's actual
shading methodology, DTI cap, and negative gearing treatment
to surface the borrowable spread across the panel.
Take an investor with $44,200 gross rental income (a typical
$850k property at 5.2% yield) on standard long-term lease. The
assessable rental income each lender will use varies by
$11,050:
NAB Tailored at 85% shading = $37,570.
Mainstream panel at 80% shading = $35,360.
Short-stay (Airbnb/Stayz) at 60% shading at
most lenders = $26,520. Mining-town postcodes at 70% = $30,940.
At a 7× DTI multiplier feeding into household income, that
$11,050 difference is $77,350 of borrowing
capacity from rental shading alone. Layer in the 95% LVR
investor cliff (only Bank of Melbourne writes investor above
90% mainstream) and negative gearing add-back methodology
($25-40k spread on the same tax shield) and the panel spread
on identical investor files routinely lands at $250-350k.
Lender selection beats rate optimisation by an order of
magnitude on investor files.
01.
The three structural spreads
These are the three structural levers that decide which lender
writes the investor file and how much they'll lend. None of them
show up on a rate-comparison table; all three are policy
decisions that vary materially by lender.
Rental income shading
Spread 1 · the load-bearing variable.
Most panel lenders shade gross rent by 20% (use 80%) for
long-term lease properties — the shaded portion covers
vacancy, rates, insurance, maintenance, management. NAB
Tailored is the outlier at 85%. Short-stay (Airbnb/Stayz)
gets further shading: 60-70% at most mainstream lenders;
outright declined at some. Mining-town and regional postcodes
may apply additional shading. Property type matters more than
rent quality.
On gross rent of $44,200 (standard long-term lease), assessable
rental income spread: $26,520 (60%) → $37,570 (85% NAB).
At 7× DTI = $77,350 borrowing capacity spread from
this lever alone.
The 95% LVR investor cliff
Spread 2 · the access lever.
Mainstream Big-4-stable lenders cap investor LVR at 90% — LMI
capitalised, with the LMI premium materially higher on investor
than owner-occupier (typically +0.40-0.60%). Above 90% LVR for
investor, exactly one mainstream door exists: Bank of
Melbourne (the only Westpac sister brand writing 95%
LVR investor). At 97% LVR, only Credit Union SA
writes — the highest investor LVR on the panel, sitting in the
non-bank tier. Everyone else declines.
On $850k investor purchase: BoM 95% LVR access vs waiting
18 months for 90% deposit = ~$73k favouring buy-now in a
Melbourne 4%-growth market. CUSA 97% LVR vs Big 4 90% = 9
properties vs 5 over a 10-year acquisition curve at $200k
starting deposit. $2.8M portfolio differential
from this lever alone.
Negative gearing add-back methodology
Spread 3 · the policy variation.
Negative gearing produces a tax-shield on the difference
between rental income and total holding costs. Lenders
treat the resulting after-tax benefit differently. Three
methodologies on the panel: full add-back
(Westpac, CBA — full tax-shield benefit added to assessable
income), shaded add-back (NAB Tailored,
Macquarie — 50% of the shield), and no add-back
(ANZ conservative, Bankwest near-prime — tax shield ignored,
only rental income counts).
On a $850k investor file with $5,200 annual tax shield, full
add-back lenders count $5,200 of assessable income; no-add-back
lenders count $0. At 7× DTI = $25k-$40k borrowing
capacity spread on the same return pack.
02.
The investor LVR ladder — who writes what
Each LVR band has a distinct lender shortlist. The cliff at 90%
matters most because Big 4 and most mainstream lenders cap there;
only two doors exist above.
The routing patterns below are how I sequence investor files
before lodging. The right first-choice depends on file shape;
rental shading and LVR are the two highest-weight variables.
Big 4 exited SMSF residential 2018-2022; specialist lenders only
La Trobe, Liberty
04.
The two structural decisions that compound
Beyond lender selection, two decisions on the loan structure
itself compound over 10-30 year holds. Both have real dollar
answers; both deserve more thought than the rate.
Interest-only vs P&I. IO is genuinely
tax-advantaged on investment property (interest deductible,
principal not), but prices ~0.10-0.30% above equivalent P&I
and APRA caps the IO term at 5 years for owner-occupier
portions. Right call for investors on accelerating income
curve with strong external savings discipline. Wrong call for
investors using IO to mask affordability. The
repayment + offset
calculator models the cashflow vs total-cost trade-off.
Debt-recycling structure. Progressively
converting non-deductible home loan debt into deductible
investment debt by redrawing principal repayments into
income-producing investments. Done properly the ATO accepts
the deductibility. Done sloppily (mingled redraw,
deposit-out-of-non-deductible) the ATO pushes back. Mainstream
lenders with clean split architecture: CBA, Westpac, Macquarie,
AMP. The structural setup matters more than the rate on the
loan itself — get this wrong and you lose the tax shield.
Run your file across the panel
The investment borrowing capacity calculator applies each
panel lender's rental shading, DTI cap, and negative gearing
methodology to your specific file — and surfaces the spread
and winning lender. Pair with the LMI break-even calculator
if 95% LVR is on the table.
Most shade gross rent by 20% (use 80%) for long-term lease.
NAB Tailored at 85%. Short-stay 60-70%. Mining-town further
shaded. On $44,200 gross rent the assessable spread is $11,050
= $77k borrowing capacity at 7× DTI.
What's the maximum LVR for investor loans?
Most lenders cap 90%. Only Bank of Melbourne writes 95%
investor among mainstream. CUSA writes 97% in the non-bank
tier. Above 97%, none on panel.
What is debt recycling?
Progressively converting non-deductible home loan debt into
deductible investment debt by redrawing principal repayments
into investments. Requires clean split architecture — CBA,
Westpac, Macquarie, AMP. Done sloppily, ATO disallows.
Should I get an interest-only investment loan?
IO is genuinely tax-advantaged on investment property. Prices
~0.10-0.30% above P&I; APRA caps IO term at 5 years on OO
portions. Right call for accelerating-income investors with
external savings discipline. Wrong call for affordability
masking.
What's the DTI cap for investors in 2026?
APRA banks 7.0×. Macquarie tightens to 6.5× on investor.
Non-banks 7.5-8×. La Trobe lease-doc 8-9× on commercial
security.
Which lenders are best for investors?
Depends on file. 80% LVR strong rent: NAB Tailored. 90% LVR
clean PAYG: Macquarie. 95% LVR: Bank of Melbourne (only door).
97% LVR: CUSA. Multi-property mixed LVR: MyState flat-curve.
Short-stay reliant: Heritage or Suncorp.
Investor lending is the file shape where lender selection
compounds across a portfolio — the same structural decision
made at deal one ripples through five more deals. The three
structural spreads above are what I assess before lodging on
every investor file. Rental shading and the 95% LVR cliff are
the two variables that materially shift outcomes; the
negative-gearing add-back methodology is the quieter third. All
three refresh against Connective quarterly matrix release — last
refresh 14 May 2026.