Can I afford an investment property in 2026?
You can afford an investment property if you pass five checks: enough cash for the deposit and costs, the bank's repayment test at your rate plus 3 points, the six times income limit, the weekly shortfall, and a buffer for when things go wrong. On a $750,000 purchase that means $118,900 to $177,900 in cash and about $295 a week from your own income.
"Can I afford it" sounds like one question. A bank treats it as two, and you should treat it as five. Plenty of people pass the bank's tests and then find the property eats their weekend money for a decade.
We will take one buyer through all five. The purchase is a $750,000 established home in New South Wales.
The numbers behind the checks, as at 3 October 2026
- Average rate on new investor loans: 6.41% in July 2026
- Bank test rate: your rate plus 3 points, so 9.41% on that figure, or 9.66% once September's rise is passed on
- Debt to income: banks are limited above six times income
- Stamp duty on $750,000 in New South Wales: $27,937
- National gross rental yield: 3.85%
Sources: Reserve Bank of Australia, APRA, Cotality
Check 1: do you have the cash?
| Deposit, duty and insurance | |
|---|---|
| 10% deposit | $118,914 |
| 20% deposit | $177,937 |
Source: Presm Stamp Duty Calculator and LMI Calculator, October 2026. Before legal and lender fees.
| 10% deposit | 20% deposit | |
|---|---|---|
| Deposit | $75,000 | $150,000 |
| Stamp duty | $27,937 | $27,937 |
| Lenders mortgage insurance | about $15,977 | nil |
| Total | $118,914 | $177,937 |
The cash can be savings, or usable equity in a home you own. If it is equity, remember it has shrunk with prices this year. See how much equity you can use.
Check 2: do you pass the bank's test?
The bank tests the repayment at your rate plus 3 points.
| Loan | Repayment at 6.41% | Repayment the bank tests, at 9.41% |
|---|---|---|
| $600,000 (20% deposit) | $3,757 a month | $5,006 a month |
| $675,000 (10% deposit) | $4,227 a month | $5,631 a month |
If your lender has passed on September's rise, the rate is 6.66% and the test 9.66%. That lifts the tested repayment to about $5,115 on $600,000 and $5,755 on $675,000.
You have to show room for the right hand column, on top of your living costs and every other debt you have. The bank will count some of the expected rent, but not all of it.
Check 3: are you under six times income?
Add up everything you would owe after the purchase. Divide by your household's gross income.
- A $600,000 loan and nothing else: six times is an income of $100,000.
- The same loan plus $400,000 still owing on your home: $1,000,000 in total, so six times is about $166,700.
Above six, a bank can still approve you, but it has a limited quota for those loans. Loans for new dwellings sit outside the limit.
Checks 2 and 3 are worked through in borrowing power in late 2026.
Check 4: can you carry the shortfall?
The bank does not ask this one. You should.
At the national rental yield of 3.85%, a $750,000 property rents for about $28,875 a year. Interest on a $600,000 loan at 6.41% is $38,460. Allow for running costs and the gap is about $295 a week before tax. We set out every line in a worked year of cash flow.
Under the new tax law, if you buy an established home now, that loss stops reducing your tax from 1 July 2027. So budget to carry it in full.
Check 5: do you have a buffer?
Things that happen to real investors: the tenant leaves and it takes six weeks to find another. The hot water system fails. The Reserve Bank raises rates again, as it has four times this year.
We would want three to six months of the property's full costs set aside, apart from the money for the purchase. For this example the interest and running costs come to about $3,700 a month, so that is roughly $11,000 to $22,000.
Scoring it
| Check | Pass looks like |
|---|---|
| Cash | Deposit, duty and insurance covered without touching your buffer |
| Bank test | Room for the tested repayment after all other costs |
| Six times income | Total debt under six times income, or a new build |
| Shortfall | About $295 a week you would not miss |
| Buffer | Three to six months of costs, set aside |
Five passes: you can afford it. Four passes and a near miss on the shortfall or the buffer: you can get the loan, and you may regret it. Wait, save, or buy something cheaper.
Our view
Falling prices make this feel like the moment. They may be. But the same rate rises that pushed prices down have made all five checks harder to pass, so the saving is smaller than it looks.
The buyers who do well from here are the ones who can hold through a bad year without selling. Affordability, properly measured, is exactly that.
For all the up front numbers in one place, see the five numbers to run before you buy.
Frequently asked questions
How much income do I need to buy an investment property?
It depends on your other debts. For a $600,000 investment loan and no other debt, six times income is $100,000. If you also owe $400,000 on your home, total debt is $1,000,000 and six times income is about $166,700. You also need to pass the bank's repayment test.
How much cash do I need to buy a $750,000 investment property?
In New South Wales, about $177,900 with a 20% deposit, or about $118,900 with a 10% deposit if you pay the mortgage insurance in cash. That covers the deposit, stamp duty and insurance, before legal fees.
Can I buy an investment property with no savings?
Only if you have enough usable equity in a property you already own and can pass the bank's tests on both loans together. Equity is 80% of your home's value less what you owe.
How much will an investment property cost me each week?
On a $750,000 purchase with a 20% deposit, at the latest published average rate and yield, about $295 a week before tax, or about $324 if September's rate rise is passed on. See our worked year for each line.
Sources
- Reserve Bank of Australia, lenders' interest rates, July 2026
- APRA, limit on high debt to income home loans
- Cotality Home Value Index, 1 October 2026
- Duty and insurance figures are from the Presm Stamp Duty Calculator and LMI Calculator, October 2026
The worked buyer is an example, not advice for your situation. This is general information, not financial or credit advice. Speak to your broker and accountant.