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SMSF Loan Eligibility: What Lenders Look For

Getting an SMSF loan approved is a bit different from a normal home loan. The lender is assessing your super fund, not just you. Here’s what most lenders check, and how to get your fund ready.

1. Your fund is set up correctly

  • A properly established SMSF with a trust deed that allows borrowing
  • A separate holding trust (bare trust) to hold the property while the loan is in place
  • Many lenders prefer, and some require, a company as trustee of the SMSF and of the holding trust
  • The fund must be registered with the ATO and have an ABN and bank account

Set this up before you sign a contract. If the contract is signed in the wrong name, fixing it can mean extra stamp duty or a failed purchase.

2. Enough money for the deposit and costs

Lenders commonly lend 70% to 80% of the property value, so the fund needs the rest plus stamp duty, legal and set-up costs. The deposit has to come from the fund itself.

3. Money left over after you buy

Most lenders want the fund to keep some cash or other assets after settlement, as a safety buffer for vacancies or rate rises. The amount varies between lenders. A fund that would be emptied by the purchase is unlikely to be approved.

4. Income that covers the repayments

The lender adds up what flows into the fund each year:

  • Expected rent from the property
  • Employer super contributions (the super guarantee) for each member
  • Any regular personal contributions

This must cover the loan repayments and the fund’s running costs, with a buffer. More members contributing usually means more borrowing power.

5. The property itself

Lenders are pickier with SMSF loans. Some won’t lend on small units, rural land, or properties in certain postcodes. Residential properties must be genuine investments that no related party will live in or rent. Commercial properties may be leased to your own business at market rent.

6. You, as the trustees

Members usually sign personal guarantees, so lenders also look at your credit history and personal finances. A clean credit file still matters.

Quick eligibility checklist

  • SMSF and holding trust set up, ideally with corporate trustees
  • Deposit and costs available in the fund
  • A buffer left in the fund after settlement
  • Rent and contributions comfortably cover repayments
  • A property the lender will accept
  • Advice from your accountant and a licensed financial adviser

Back to SMSF loans or read SMSF loan rates and lenders.

Check if your fund qualifies

Albert Waldron is a Credit Representative (407514) of Australian Finance Group Ltd, Australian Credit Licence 389087. This is general information only and does not take into account your personal circumstances. Please seek advice before acting. SMSF loans are complex. We arrange the loan only. Get advice from a licensed financial adviser and your accountant about whether an SMSF or property investment suits you.