Rental Yield and Borrowing Power — What Australian Lenders Count

Gross rental yield = (Annual rent / Property price) × 100. For borrowing power purposes, most lenders count 80% of gross rent. A $700/week property generates $36,400/year gross rent — lenders count $29,120/year ($2,427/month) toward your income.

What is a good rental yield for an investment property in Australia?

In 2026, gross yields of 4%–5% are considered acceptable for metro properties. Regional properties can achieve 5%–8%. The "right" yield depends on your goals — cash flow vs capital growth.

Does rental income reduce my mortgage repayments?

Rental income doesn't reduce your mortgage balance but offsets your carrying costs. The gap between interest costs and net rent is your negative gearing loss, which is tax-deductible.

Why do lenders only count 80% of rent?

Lenders shade rental income to account for vacancies (2–4 weeks/year), property management fees (7–10%), and unexpected costs.