The easiest way to finance a duplex investment

Buying a duplex as an investment property means you're securing two rental incomes under one title.

You'll generally need a 10 to 20 per cent deposit, depending on whether you want to avoid Lenders Mortgage Insurance, and lenders will assess your borrowing capacity using both rental incomes. The biggest difference from a standard house loan is how vacancy is calculated and whether both dwellings are tenanted when you apply. Most lenders will assess dual occupancy properties more favourably than a standard house because the rental income is split across two tenancies, which reduces the risk of total income loss if one tenant leaves.

How lenders assess rental income on a duplex

Lenders will typically use 75 to 80 per cent of the combined rental income when calculating how much you can borrow. That figure accounts for vacancy, maintenance, and management costs. If one side of the duplex is vacant at the time you apply, some lenders will still accept a rental appraisal for that dwelling, while others will only count the tenanted side. If both sides are vacant, you'll need two rental appraisals from a licensed property manager, and some lenders may reduce the percentage they apply or ask for a larger deposit.

Consider a FIFO driver looking to purchase a duplex returning $450 per week on one side and $420 per week on the other. The combined gross rental income is $870 per week, or roughly $45,240 per year. At 80 per cent, the lender would assess $36,192 of annual rental income when calculating serviceability. That figure is added to your FIFO income, then tested against the loan repayment at the product rate plus a 3 percentage point buffer, as required under current APRA settings.

If you're holding other investment properties, the rental income from those is also assessed, but any net rental losses will reduce your borrowing capacity unless the properties were held before the negative gearing changes took effect in July 2027. Properties purchased after that date under the new rules can only offset losses against other residential rental income, not against your wage.

Interest-only or principal and interest repayments

Most investors choose interest-only repayments for the first few years to keep the loan repayments lower and maximise cash flow. Interest-only loans for FIFO workers are structured so that you're only paying the interest component each month, not reducing the principal. This can increase the amount of the interest deduction each year, which is still fully claimable on properties held before May 2026 or on eligible new builds.

The downside is that you're not reducing the loan balance, so when the interest-only period ends, the repayments will jump because you'll start repaying both interest and principal over the remaining loan term. If you plan to hold the duplex long term and build equity through capital growth rather than repayments, interest-only can work. If you want to pay the loan down faster or you're concerned about rate rises during the interest-only period, principal and interest repayments from the start may suit you more.

Loan to value ratio and deposit size

Lenders will typically lend up to 90 per cent of the property value for an investment loan, but that will trigger Lenders Mortgage Insurance. To avoid LMI, you'll need a 20 per cent deposit plus costs. Some lenders offer LMI waivers for FIFO workers in certain occupations, but these are more common on owner-occupied loans than investor loans, and the waiver is usually capped at 90 per cent LVR.

If you're using equity from your existing home to fund the deposit, the lender will value both properties and calculate your total LVR across the entire loan portfolio. In that scenario, you may be able to access the deposit and costs without selling any assets, but your borrowing capacity will be assessed using the total debt across both properties and the rental income from the duplex.

Stamp duty, conveyancing, building and pest inspections, and any initial repairs or vacancy costs need to be paid upfront and are not usually included in the loan amount. Budget for these separately and make sure you've got genuine savings or accessible equity to cover them.

What changed in July 2027 and how it affects duplex purchases

Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, residential investment properties purchased on or after 7:30pm AEST on 12 May 2026 are subject to quarantined negative gearing from 1 July 2027. That means if your duplex makes a net rental loss after interest, rates, insurance, and other claimable expenses, you can only offset that loss against other residential rental income or carry it forward to offset future rental income or capital gains. You can't offset it against your FIFO wage.

Eligible new builds are exempt. If the duplex was constructed on previously vacant land, or if it replaced an existing dwelling and increased the total number of dwellings on the site, you can still negatively gear it against your wage under the old rules. A knock-down rebuild that replaces one house with one duplex qualifies because the dwelling count increased. A knock-down rebuild that replaces one house with one house does not.

Properties held at 7:30pm AEST on 12 May 2026, including those under contract at that time, are grandfathered and continue under the old negative gearing rules until sold. If you're looking at an established duplex purchased after that date, the quarantined loss rules will apply from July 2027, so the tax benefit depends on whether you're generating a net profit or loss and whether you hold other rental properties that can absorb the loss.

Capital gains tax also changed. For properties subject to the new rules, the 50 per cent CGT discount is replaced with cost base indexation and a minimum 30 per cent tax rate on real gains. Eligible new builds can elect between the old 50 per cent discount and the new indexed method. Gains accrued before 1 July 2027 on properties you already hold continue under the old rules.

Structuring the loan and using offset accounts

If you're buying the duplex with a partner or co-borrower, you'll need to decide whether the loan is held jointly or as tenants in common, and how the rental income and deductions are split. Most lenders will require both borrowers to be on the loan and the title, but the ownership split and the tax treatment can differ depending on how you structure it.

Some investors use an offset account linked to the investment loan to park cash and reduce the interest charged without reducing the loan balance. The benefit is that the interest deduction remains based on the full loan amount, not the reduced balance. Offset accounts are more common on variable rate loans. If you choose a fixed rate, offset may not be available, or it may come with a higher rate.

Another option is splitting the loan between fixed and variable, so you've got rate certainty on part of the debt and flexibility on the rest. This is common when you're not sure how long you'll hold the property or whether you'll need to access equity later. Investment loan refinancing for FIFO workers can be useful once the fixed period ends or if a lower rate becomes available, but you'll need to weigh the cost of any break fees or discharge fees against the saving.

Preparing your application

Lenders will want to see recent payslips covering at least your last three FIFO swings, proof of your roster, and a letter from your employer confirming your ongoing role. If you've been in the same FIFO role for at least 12 months, most lenders will assess your income at the full amount including allowances. If you've only just started or you're on a casual contract, some lenders will reduce the assessable income or ask for a longer work history.

You'll also need a rental appraisal or lease agreement for the duplex, a copy of the contract of sale, strata or body corporate records if applicable, and a full list of your current debts including credit cards, car loans, and any existing mortgages. Lenders will run a credit check and calculate your existing commitments using the actual repayment or a minimum percentage of the limit for credit cards, whichever is higher.

If you're planning to use this duplex as the first in a larger portfolio, make sure the loan structure supports that. Some loan products limit the number of investment properties you can hold, or they increase the interest rate or reduce the LVR once you exceed a certain number of securities. Check the lender's policy before you commit, especially if expanding your property portfolio is part of your longer-term plan.

Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions