Pre-approval gives you a borrowing limit and a timeline, not a commitment
A pre-approval for an investment loan confirms the amount a lender will allow you to borrow and the period during which that approval stands. It does not lock in the property itself or guarantee settlement. The lender assesses your income, existing debts, and serviceability but does not value a specific property until you have a contract. Pre-approval typically lasts between 90 and 180 days, depending on the lender.
For IT project managers with variable income components such as bonuses, RSUs or contract payments, pre-approval clarifies how lenders calculate your servicing position. Some lenders will accept a percentage of variable income immediately, while others require a track record. Knowing this before you start property searches removes uncertainty about your upper limit.
How the DTI limit affects investor borrowing from February 2026
APRA introduced a debt-to-income lending limit on 1 February 2026. Each bank can lend no more than 20 per cent of its new investor loans to borrowers with a total DTI of six times or greater. That ratio includes all your debts, both personal and investment, divided by your gross annual income.
Consider a project manager earning $160,000 annually who already holds a $500,000 owner-occupied loan. If they want to borrow $400,000 for an investment property, their total debt reaches $900,000 and their DTI sits at 5.6 times. That falls within the limit. If they wanted to borrow $480,000 instead, total debt becomes $980,000 and the DTI climbs to 6.1 times. The loan may still be approved, but it now draws from the lender's 20 per cent allocation for high-DTI borrowers. If that allocation is full in the current quarter, the application will be declined or deferred unless the borrower reduces the loan amount or waits for the next quarter.
Pre-approval lets you model the DTI ratio in advance. If your ratio sits close to six times, locking in approval early, or adjusting your structure to keep the ratio below the threshold, becomes a tangible advantage.
Structuring the loan to match your deposit and cashflow
Investment loans can be structured as interest-only or principal-and-interest, and with variable or fixed rates. Each combination affects your monthly repayments, your after-tax position, and your ability to service additional borrowing later.
Interest-only loans reduce monthly repayments during the interest-only period, typically up to five years. This structure suits investors prioritising cashflow or planning to sell before the principal-and-interest period begins. Interest-only loans also preserve deductible debt, which can be relevant if you later convert an investment property to your primary residence.
Principal-and-interest loans pay down the balance each month, building equity faster and reducing total interest over the life of the loan. This structure works well if rental income covers repayments and you intend to hold the property long-term.
Fixed rates lock in your repayment amount for a set period, usually one to five years. They offer certainty but typically include restrictions on additional repayments and may carry break costs if you refinance or sell early. Variable rates move with the market and usually include offset accounts and redraw facilities.
Most lenders allow split loans, where part of the balance is fixed and part remains variable. This approach balances certainty with flexibility.
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Negative gearing rules changed in May 2026 and apply from the 2027-28 income year
Under legislation passed in June 2026, losses from established investment properties purchased after 7:30pm AEST on 12 May 2026 can only be offset against income from other residential properties, including capital gains on those properties, from the 2027-28 income year onward. Excess losses carry forward to future years but cannot be deducted against salary, wages or other non-property income.
Properties held at 12 May 2026, including those under contract awaiting settlement at that time, continue to allow full negative gearing against all income until sold. New builds purchased after 12 May 2026 are also exempt and retain full negative gearing against all income indefinitely.
For project managers planning to purchase an established property in the next 12 months, this means interest and holding costs will not reduce your taxable salary from the 2027-28 financial year. Cashflow becomes more important than tax savings when assessing whether the property is affordable. If you expect the property to be cashflow-neutral or positive from the outset, the change has minimal impact. If you were relying on tax refunds to subsidise a shortfall, that subsidy no longer exists for new purchases.
Pre-approval applications now require a cashflow assessment that assumes no offset of losses against salary. Lenders have updated their serviceability calculators accordingly. If you are comparing properties acquired before and after the legislative change, or considering a new build versus an established dwelling, the tax treatment is no longer uniform and should be factored into your decision.
Variable income and how lenders assess IT project manager earnings
IT project managers often receive income from multiple sources: base salary, short-term incentive payments, retention bonuses, and in some cases RSUs or equity grants. Lenders treat each component differently when calculating serviceability for investment loans.
Base salary is accepted at 100 per cent. Bonuses and STIs are typically accepted at 80 to 100 per cent if they have been paid consistently over two years and are confirmed in an employment contract or recent payslips. RSUs are treated as capital, not income, by most lenders unless they are vested and converted to cash, at which point they may be assessed as a one-off payment rather than ongoing income.
In our experience, project managers moving from permanent roles to contract positions during the pre-approval period can face delays or declines. Lenders generally require 12 to 24 months of continuous contracting income before accepting it for serviceability. If you are planning a role change, securing pre-approval before the change takes effect avoids this issue. You can read more about how lenders assess contract income.
Deposit requirements and LMI on investment loans
Most lenders require a minimum 10 per cent deposit for an investment property, with some requiring 20 per cent. At LVRs above 80 per cent, Lenders Mortgage Insurance applies. LMI premiums for investment loans are higher than for owner-occupied loans at the same LVR, typically by 15 to 30 per cent.
Pre-approval does not finalise the LMI premium because that calculation depends on the specific property value and loan amount. However, the lender will indicate whether LMI is required and provide an estimate. You can choose to capitalise the premium into the loan or pay it upfront. Capitalising increases your loan amount and your monthly repayments but preserves cash for settlement costs.
Some lenders offer LMI waivers for specific professions, though these are more commonly available for owner-occupied loans than for investment loans. Where a waiver is available for investors, it usually applies only at LVRs up to 90 per cent and requires a clean credit history and strong serviceability.
If you are using equity from an existing property as your deposit, the lender will require a valuation of that property before granting pre-approval. The valuation determines how much equity you can access and whether any LMI applies to the combined position.
What happens between pre-approval and unconditional approval
Pre-approval is conditional on locating a suitable property, providing a signed contract of sale, and the lender completing a valuation. The valuation must meet or exceed the purchase price. If the valuation comes in below the contract price, the lender reduces the loan amount proportionally, and you must make up the difference or renegotiate the contract.
The lender also reassesses your financial position at the time of full application. If your income has changed, your debts have increased, or your credit file shows new enquiries or defaults, the pre-approval may be withdrawn or adjusted. For this reason, avoid applying for new credit, changing jobs, or taking on additional liabilities during the pre-approval period unless unavoidable.
Once you provide the contract and the valuation is complete, the lender issues unconditional approval, also called formal approval. Settlement typically occurs 30 to 90 days after the contract is signed, depending on the terms agreed with the vendor. Your pre-approval timeline must accommodate this. If pre-approval expires before settlement, you will need to reapply, and the lender will reassess your position under current policy, which may include changes to interest rates, serviceability rules or DTI allocations.
Structuring multiple loans when building a portfolio
Project managers planning to acquire more than one investment property often ask whether to cross-collaterise loans or keep them separate. Cross-collateralisation means using equity in one property as security for another loan. It simplifies initial approval and may reduce costs, but it also means the lender holds security over multiple properties, and releasing one property from the loan later requires the lender's consent and a refinance.
Keeping loans separate, with each property securing only its own loan, gives you flexibility to refinance or sell individual properties without affecting others. Most brokers recommend this approach for investors intending to expand their property portfolio over time.
Pre-approval for a second or third investment loan depends on the rental income from your existing properties. Lenders typically assess rental income at 80 per cent of the actual rent received, to account for vacancy, maintenance and management costs. If your existing investment property generates $600 per week in rent, the lender will include $480 per week as income when calculating your serviceability for the next loan.
Call one of our team or book an appointment at a time that works for you
If you are planning to purchase an investment property and want to confirm your borrowing capacity, loan structure and pre-approval timeline before you start searching, Tech Home Loans can walk through your income, existing debts, and the options available from lenders across Australia. Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
What does pre-approval for an investment loan confirm?
Pre-approval confirms the amount you can borrow and the period the approval lasts, typically 90 to 180 days. It does not guarantee settlement or lock in a specific property until you provide a signed contract and the lender completes a valuation.
How does the February 2026 DTI limit affect investment loan borrowing?
From 1 February 2026, each bank can lend no more than 20 per cent of its new investor loans to borrowers with a total debt-to-income ratio of six times or greater. If your ratio exceeds six times, approval depends on the lender's remaining allocation for that quarter.
Do negative gearing rules apply to investment properties purchased in 2026?
Losses from established investment properties purchased after 7:30pm AEST on 12 May 2026 can only be offset against income from other residential properties from the 2027-28 income year. Properties held at that date and new builds remain exempt and retain full negative gearing against all income.
How do lenders assess variable income for IT project managers?
Base salary is accepted at 100 per cent. Bonuses and short-term incentives are typically accepted at 80 to 100 per cent if paid consistently over two years and documented in contracts or payslips. RSUs are generally treated as capital, not income, unless vested and converted to cash.
What happens if the property valuation comes in below the purchase price?
If the lender's valuation is lower than the contract price, the loan amount is reduced proportionally. You must make up the difference with additional deposit funds or renegotiate the contract price with the vendor.
