Investment Property Lending FAQs: How APRA Changes Affect Investors
Published: January 18, 2026
Reading Time: 10 minutes
Location Focus: Melbourne, VIC
Your Questions About APRA Changes and Investment Property Lending Answered
If you're a property investor in Melbourne, you've likely heard about APRA's new debt-to-income lending limits coming into effect on February 1, 2026. You might be wondering how these changes affect your investment strategy, your ability to purchase additional properties, or your existing investment loans. We've compiled the most common questions we receive from investors and provided comprehensive answers.
Q1: Will APRA's New DTI Limits Stop Me From Buying Investment Properties?
A: Not necessarily. APRA's new rule limits banks to lending no more than 20% of their new quarterly mortgage lending to borrowers with DTI ratios of 6 times income or higher. This means that 80% of new lending remains unrestricted.
For most investors, this rule won't directly impact your ability to borrow. If you're purchasing a single investment property or your second property, you'll likely have a DTI ratio below 6 times income. The rule primarily affects investors with multiple properties or very high debt levels.
However, if you're a sophisticated investor with multiple properties and high DTI ratios, you may find it slightly more difficult to access the highest DTI lending. You might need to consider alternative strategies, such as increasing your deposit, using equity from existing properties, or spacing out property purchases.
Q2: How Is My DTI Ratio Calculated?
A: Your DTI ratio is calculated by dividing your total annual debt obligations by your annual income. This includes your mortgage repayments, investment property loan repayments, personal loans, credit card debt, and any other regular debt payments.
For example, if you earn $120,000 annually and have total debt obligations of $480,000 (including investment property mortgages), your DTI ratio would be 4 times income. This is well below the 6 times threshold that triggers APRA's new limit.
A mortgage broker can calculate your DTI ratio and explain how it affects your borrowing capacity. They can also show you how purchasing an additional property would affect your DTI ratio and whether you'd remain below the 6 times threshold.
Q3: Does APRA's Rule Apply to My Owner-Occupier Mortgage?
A: No. APRA's DTI limit applies separately to owner-occupier and investor lending. This means your owner-occupier mortgage and investment property mortgages are assessed separately for DTI purposes.
This separation is important because it means the new rule doesn't pit first-home buyers against investors. If you're purchasing your first home while also holding investment properties, your owner-occupier mortgage won't be restricted by the investor DTI limit.
Q4: What If I'm Already Above the 6x DTI Threshold?
A: If you're already above the 6 times DTI threshold, APRA's rule doesn't force you to reduce your debt. The rule only limits new lending at high DTI ratios. Your existing loans remain unchanged.
However, if you're refinancing an existing investment property loan, you'll be subject to the new rule. This means you might need to refinance at a lower DTI ratio or consider alternative strategies.
A mortgage broker can help you navigate refinancing if you're above the 6 times threshold. They might recommend restructuring your loans, using equity from existing properties, or timing your refinance strategically to manage the DTI impact.
Q5: How Does This Affect My Investment Strategy?
A: For most investors, APRA's new rule won't significantly change your investment strategy. If you're purchasing properties gradually and maintaining reasonable DTI ratios, you'll continue to access financing as usual.
However, if you're pursuing an aggressive growth strategy with multiple properties and high DTI ratios, you might need to adjust your approach. You could consider spacing out property purchases, increasing deposits on new properties, or using equity from existing properties to reduce your DTI ratio.
The key is to work with a mortgage broker who understands investment property financing and can help you structure your loans strategically within the new regulatory environment.
Q6: Will APRA's Rule Affect Interest Rates on Investment Properties?
A: APRA's DTI limit is a quantity restriction, not a price control. It limits the amount of high-DTI lending banks can do, but it doesn't directly control interest rates.
However, there could be indirect effects. If banks find it more difficult to lend at high DTI ratios, they might become more competitive on other lending products to maintain market share. This could potentially benefit investors with moderate DTI ratios.
Conversely, if the rule reduces overall investment property lending, it could reduce competitive pressure in that market segment. The net effect on interest rates will depend on how lenders respond to the new rule.
Q7: Should I Rush to Refinance Before February 1?
A: Not necessarily. Rushing to refinance just to beat the deadline could result in a poor decision. Instead, focus on whether refinancing makes financial sense for your situation.
If you're currently on a high interest rate and can refinance to a significantly lower rate, refinancing makes sense regardless of the APRA deadline. However, if you're already on a competitive rate, rushing to refinance might not be worthwhile.
A mortgage broker can help you analyze whether refinancing makes financial sense. They can calculate your break-even point and show you exactly how much you'll save by switching lenders.
Q8: How Can I Optimize My Borrowing Capacity as an Investor?
A: Several strategies can help you maximize your borrowing capacity within APRA's new framework.
First, increase your income. If you have investment property income, ensure your tax return reflects all rental income. Some investors underreport income, which reduces their borrowing capacity. Maximizing reported income can significantly increase your DTI capacity.
Second, reduce your non-property debt. Paying down personal loans, credit cards, or car loans reduces your total debt obligations and improves your DTI ratio. This is often the quickest way to improve your borrowing capacity.
Third, use equity strategically. If you have significant equity in existing properties, consider using that equity to fund new purchases. This reduces your new borrowing and improves your DTI ratio.
Fourth, structure your loans strategically. A mortgage broker can help you structure investment property loans in ways that optimize your borrowing capacity while maintaining flexibility.
Q9: What If I'm Considering My First Investment Property?
A: If you're purchasing your first investment property, APRA's new rule is unlikely to affect you. Most first-time investors have DTI ratios well below the 6 times threshold.
However, it's still important to work with a mortgage broker who understands investment property financing. They can help you structure your loan optimally, explain the tax implications of investment property ownership, and ensure you're not overextending yourself financially.
Q10: Should I Lock in a Fixed Rate on My Investment Property Loan?
A: This depends on your financial situation and market outlook. Fixed rates provide certainty about your repayments, which is valuable if you're managing tight cash flow on investment properties.
However, investment property loans often include features like offset accounts and redraw facilities that are more valuable on variable rates. A mortgage broker can help you analyze the trade-offs between fixed and variable rates for your investment property loan.
Getting Expert Advice
APRA's new DTI lending limits represent an important regulatory change, but they don't fundamentally restrict investment property financing for most investors. By working with a mortgage broker who understands investment property lending and the new regulatory environment, you can continue to build your property portfolio effectively.
A broker can help you understand how the new rules affect your specific situation, optimize your borrowing capacity, and structure your loans strategically to achieve your investment goals.
Ready to discuss your investment property financing strategy? Call Frontier Finance at 0413 798 731. Our brokers specialize in investment property lending and can help you navigate APRA's new rules while building your property portfolio.
Disclaimer: This article provides general information only and should not be considered personal financial advice. DTI calculations and lending policies vary by lender. APRA's rules may be subject to change or clarification. Please consult with a qualified mortgage broker or financial advisor to discuss your specific investment property financing circumstances.