How much rental income do lenders count for serviceability?

For property investors, how a lender treats rental income can be the difference between a deal stacking up and falling short. Lenders rarely count rent in full, and the proportion they use varies. Here is how rental income shading works and why it matters.

What rental income shading is

When a lender assesses an investment loan, it generally does not count the full rent toward your serviceability. Instead it shades the rent, counting only a portion, to allow for periods of vacancy, property management fees, maintenance and other holding costs. The shaded figure is what feeds into your borrowing capacity.

The common approach

A common approach is to count around 80 per cent of the rent, though the exact figure is set by each lender. The reasoning is that no property is rented every day of the year and ownership carries costs, so a buffer is built in. This shading is one reason an investor borrowing power can look lower than the headline rent suggests.

Some lenders count more

Some lenders count a higher proportion of rent, in some cases up to the full amount, particularly where the income is well evidenced through a lease or a property manager statement. Whether a lender does this varies, and it can meaningfully lift borrowing power for an investor, which is why the choice of lender matters.

Why it makes such a difference

For an investor relying on rental income to service the loan, the gap between a lender shading rent heavily and one counting most of it can be substantial. Across a portfolio, small differences in shading compound, so the lender policy on rent can shape how far you can grow.

Evidence helps

Lenders count rent more confidently when it is well evidenced. A current lease, a rental appraisal from a property manager, or a history of rent received all help. The clearer the evidence that the rent is real and sustainable, the more comfortably a lender can include it.

It interacts with other costs

Rental income is only one side of the ledger. Lenders also count the costs of holding the property, and the loan repayment is stress tested at a buffered rate. So even generous rent shading sits within a broader serviceability assessment that includes all your income and commitments.

Find a lender whose policy suits

Because shading varies so much, the useful step is to match your investment plans to a lender whose rental policy supports them. A broker who works with investors can identify lenders that count rent favourably for your situation, usually at no cost to you. This is general information, not advice.