A self-managed super fund (SMSF) can borrow to buy property, but only through a specific, tightly-regulated structure. This guide explains how the lending works in general terms. It is not financial product or tax advice, and it is not a recommendation to set up or use an SMSF — those decisions sit with a licensed financial adviser and your accountant.
What is an LRBA?
An SMSF property is typically purchased through a Limited Recourse Borrowing Arrangement (LRBA). The property is held in a separate bare (holding) trust until the loan is repaid. The loan is non-recourse, which means that if the loan defaults, the lender's claim is generally limited to that property rather than the fund's other assets.
What lenders look for
SMSF lending is a specialist area — most major banks exited it between 2018 and 2023, so it's mainly specialist and non-bank lenders today. Typical considerations include:
- A larger deposit / lower LVR than a standard loan (often around 70–80%).
- A liquidity buffer — lenders usually want the fund to retain a cash buffer after the purchase.
- Rent plus contributions assessed for serviceability, often at a higher buffer rate.
- The fund being able to meet repayments even if the property is vacant.
Our SMSF borrowing power calculator gives an indicative idea of capacity — it's a guide only.
The risks (read these first)
SMSF property is high-stakes and regulators watch it closely:
- SMSF property loans can carry higher rates and fees.
- LRBA structures can be hard and costly to unwind or change after settlement.
- The fund must keep meeting repayments and the sole purpose test and related-party rules.
- Getting it wrong can have serious tax consequences (for example, non-arm's-length income).
This is general information, not advice — your accountant and a licensed SMSF adviser should confirm what's right for your fund.
Illustrative example (not a quote)
Consider a fund with the same details approaching three different SMSF lenders. Because each lender assesses rent, contributions, liquidity and LVR differently, the fund might be offered, say, $455,000 with one lender, $360,000 with another, and declined by a third — for an identical profile. This example is illustrative only and not a policy quote; figures are changed and it is not a prediction of your result. It shows why lender choice matters in SMSF lending — which is where a broker helps.
Where we fit
We provide credit assistance — sourcing and arranging the SMSF loan and coordinating with your adviser, accountant and solicitor. We don't advise on the SMSF strategy itself. See SMSF property loans or read what your broker can and can't tell you about SMSF property.
Ready when your fund is — get in touch.