How to Secure an Investment Loan as a Dentist

Borrowing capacity for dentists is assessed differently

Lenders treat dental income as stable and recurring, which usually translates to stronger borrowing capacity for investment purposes. Your base salary, if you're employed, is taken at face value. Practice owners and associates working on a percentage split face closer scrutiny, but the documentation path is well established.

Consider a general dentist earning $180,000 as a salaried employee at a private practice. With no other debt, a 20 per cent deposit and rental income factored in at around 80 per cent of market rent, that dentist might access an investment loan amount close to $650,000, depending on the lender and the property's location. The rental income assumption matters because lenders apply a vacancy buffer and ongoing cost deductions before adding it to serviceability. This reduces the net benefit of the rent, but it still improves your position compared to an owner-occupier loan of the same size.

Self-employed dentists can apply the same logic, though the documentation shifts to tax returns and accountant declarations. Many practice owners hold income within a structure or distribute it across multiple financial years. If that describes your setup, speak to your accountant before lodging the investment loan application so the most recent financials reflect a consistent and defensible income position. Lenders will average two years of taxable income, so a single low year can pull the assessment down even if current earnings are higher.

How deposit size affects your loan structure and LMI cost

A 20 per cent deposit avoids Lenders Mortgage Insurance on most investment loan products. Below that threshold, LMI applies and the premium scales quickly as the loan to value ratio increases. At 90 per cent LVR, the premium on a $500,000 loan might sit near $20,000. At 95 per cent, it could exceed $30,000. These figures vary by lender and postcode, but the principle holds: each increment below 80 per cent LVR costs more.

Some lenders offer LMI waivers to medical and dental professionals, though the criteria have tightened. Where a waiver is available, it typically extends to 90 per cent LVR for investment purposes, occasionally 92 per cent. Not all lenders offer this concession for investment property finance, and those that do may restrict it to your first or second property. If you're expanding a portfolio, expect standard LMI treatment beyond the second asset.

If you're using equity from an existing property, the deposit question shifts to how much usable equity you can release without triggering LMI on the original loan. The calculation involves the current market value, the outstanding balance, and the maximum LVR the lender will accept across your total position. Most lenders cap combined exposure at 90 per cent for professional borrowers accessing equity release, though some will stretch to 95 per cent in specific cases. Each lender's policy differs, so this part of the process benefits from a structured comparison rather than a single application.

Interest only repayments and cash flow planning

Interest only investment loans allow you to hold repayments lower during the initial period, typically one to five years. The loan amount does not reduce, which means you're not building equity through repayment, but the cash flow benefit can be significant if you're managing multiple properties or preserving capital for other purposes.

As an example, a $600,000 loan at a variable interest rate of 6.5 per cent costs around $3,250 per month on an interest only basis, compared to roughly $4,100 per month on principal and interest over 30 years. That difference of $850 per month can cover holding costs during vacancy periods or be redirected into offset accounts, additional investments, or practice expenses. The choice depends on whether your priority is reducing debt or retaining flexibility.

From a tax perspective, interest on an investment loan remains deductible whether you choose interest only or principal and interest, provided the funds are used to purchase or hold the rental property. Principal repayments are not deductible because they reduce the debt rather than fund the income-producing activity. If you're subject to the new negative gearing rules from 1 July 2027, the deductibility remains but the way losses are applied changes. For properties acquired on or after 12 May 2026, rental losses can only offset other residential rental income or be carried forward, not offset against your dental salary. Properties held before that date retain full negative gearing under the existing rules.

Fixed or variable rate for investor borrowers

Fixed rate investment loans lock in certainty for one to five years, though most dentists we work with choose terms between two and four years. Variable rate products offer flexibility and typically come with offset accounts and unlimited additional repayments, features that are restricted or unavailable on most fixed investment loan products.

Splitting the loan across both fixed and variable components is common. You might fix 50 to 70 per cent of the loan amount for rate security and leave the remainder on a variable rate linked to an offset account. This structure allows you to park surplus cash against the variable portion, reducing interest without locking funds away, while maintaining predictable repayments on the fixed portion.

Rate discounts vary by lender, loan size, and LVR. Investor interest rates are typically 0.3 to 0.6 percentage points higher than equivalent owner-occupier rates. Lenders apply higher capital requirements to investor lending under APRA prudential standards, and that cost flows through to pricing. If you're refinancing an existing investment loan, the gap between your current rate and available refinance rates might justify the switch even after accounting for discharge fees and application costs.

What lenders assess beyond income

Lenders test your capacity to service the new loan at an interest rate 3 percentage points above the actual product rate. If you're applying for a variable rate loan at 6.5 per cent, the lender assesses whether you can afford repayments at 9.5 per cent. This buffer has been in place since late 2021 and was reconfirmed in mid-2026. It reduces the loan amount you can access compared to the headline rate, but it also builds in a margin for rate rises.

Debt to income limits also apply. From February 2026, lenders are restricted to funding no more than 20 per cent of new investor loans at a DTI of 6 times gross income or above. For a dentist earning $180,000, that threshold sits at $1,080,000 in total borrowings. If your total position exceeds that ratio, the lender may need to adjust your application or decline it altogether, depending on how much of their monthly portfolio sits above the cap. This limit applies at the lender level, not across your whole position, so switching lenders can sometimes resolve the issue if one has already allocated their high-DTI capacity.

Existing liabilities reduce serviceability. HECS debt, car loans, credit cards and practice finance all count, even if you're not drawing on them. A $30,000 credit card limit might reduce your borrowing capacity by $100,000 or more, depending on the lender's assessment rate for revolving credit. Closing unused cards or reducing limits before you apply can recover a significant portion of that capacity.

Rental income and how lenders treat it

Lenders apply a shading factor to the rental income you nominate, typically accepting 80 per cent of the market rent to account for vacancy periods, management fees and maintenance costs. If the property you're purchasing will rent for $600 per week, the lender will include $480 per week in the serviceability calculation. This shading applies regardless of whether you have a tenant in place at settlement.

If you're buying in an area with a high vacancy rate or seasonal rental demand, some lenders will apply a heavier discount or request a rental appraisal from a licensed property manager. Unit developments with a large proportion of investor-owned stock can trigger additional scrutiny, particularly if the building has more than 50 units or a pending special levy.

For dentists purchasing a second or third property, rental income from existing properties is included in the same way, provided you can demonstrate a lease agreement or rental history. If an existing property is temporarily vacant, most lenders will still accept 80 per cent of market rent as long as the vacancy is recent and you can show the property was previously tenanted.

Claimable expenses and structuring for tax efficiency

Interest on the investment loan, property management fees, council rates, insurance, body corporate fees, repairs, and depreciation on the building and fixtures are all claimable against rental income. Loan establishment fees and LMI premiums can be claimed over five years or the life of the loan, depending on the amount and your accountant's approach.

If you're borrowing to fund the deposit using equity from your principal place of residence, the interest on that portion is only deductible if the released funds are used to purchase the investment property. Mixing purposes such as using part of the released equity for a car or holiday means you need to split the loan and only claim the investment portion. Most lenders will structure this as two separate loan accounts to keep the paper trail clear for the ATO.

Stamp duty on the property purchase is not deductible as an ongoing expense but forms part of the cost base for capital gains tax when you eventually sell. Legal fees, building and pest inspections, and other acquisition costs are treated the same way. Keep records of everything because the cost base calculation can run years into the future, particularly if you're holding the property long term to build wealth.

Where new negative gearing rules affect your planning

For properties purchased on or after 12 May 2026, net rental losses from 1 July 2027 onward can only be offset against other residential rental income or carried forward. They cannot be deducted against your salary or other non-rental income. If the property you're purchasing is an eligible new build, the existing negative gearing rules continue to apply, which preserves the ability to offset losses against your dental income.

An eligible new build includes a dwelling constructed on previously vacant land or a development that increases the total number of dwellings on the site. A knock-down rebuild that replaces one dwelling with one new dwelling does not qualify. If the new build is occupied for more than 12 months before you purchase it, it loses eligibility, so buying off the plan or acquiring immediately after completion is necessary to retain the concession.

If you hold an investment property purchased before 12 May 2026, the existing negative gearing rules continue to apply for as long as you own it. This grandfathering applies regardless of when you settle, provided the contract was exchanged before the 12 May 2026 cutoff. Properties acquired after that date but settled before 1 July 2027 can be negatively geared under the old rules until 30 June 2027 only, after which the quarantine applies.

Portfolio growth and managing multiple properties

Once you own one investment property, acquiring a second or third depends on serviceability and the amount of equity you've built. Lenders assess your entire portfolio when you apply for the next loan, so rental income, existing debt, and cash flow across all properties feed into the calculation.

If your first property has increased in value or if you've paid down the loan, you can access that equity as a deposit for the next purchase without needing to save again. The process involves a valuation, a top-up application, and a revised loan structure. Most lenders allow you to borrow up to 90 per cent of the updated value across your total position, though some will only go to 80 per cent for subsequent investment purchases.

Debt recycling is another option if you have a principal place of residence with available equity and a low or variable interest rate. By releasing equity, purchasing an investment property, and directing income or bonuses toward the non-deductible home loan, you gradually shift your debt from non-deductible to deductible. This approach requires careful structuring and regular review, but it can improve your after-tax position over time. You can read more about this on our debt recycling page.

Call one of our team or book an appointment at a time that works for you. We'll review your current position, compare investment loan options from lenders across Australia, and structure the application to match your income type, deposit size, and whether you're buying an established property or an eligible new build.

Frequently Asked Questions