Can a self-managed super fund (SMSF) borrow to buy property?
Yes, but through a specific structure with strict rules. The arrangement is called a Limited Recourse Borrowing Arrangement (LRBA).
“Limited recourse” means that if the loan cannot be repaid, the lender can claim only against the property that was purchased, not against the other assets in the SMSF.
How is the structure usually set up?
- The SMSF is the borrower and applies for the loan.
- Legal title to the property is not registered in the SMSF’s own name. It is held by a separate bare trust (also called a holding trust) on the SMSF’s behalf.
- Once the loan is repaid, title is transferred to the SMSF.
- Repayments are funded mainly by rental income and members’ super contributions, not by members topping up personally.
The trust deed, investment strategy, bare trust documents and loan documents all need to be right, so this is work for professionals who know SMSFs.
Some of the hard rules
- The sole purpose test. SMSF investments must be made to provide retirement benefits for members, not for present-day personal benefit.
- No living in it and no renting it to related parties. Residential investment property generally cannot be lived in or rented by members or their relatives.
- No buying residential property from a related party. Tight limits apply.
- One borrowing, one “single acquirable asset”. Several properties cannot be bundled into one loan.
- Borrowed money cannot be used to “improve” the property (for example a major extension). Ordinary repairs and maintenance may be fine, but check in advance which side of the line your plans fall on.
- Your trust deed must permit borrowing, and your investment strategy must take the loan and its risks into account.
Lenders are usually stricter
SMSF loans are structurally unusual, so fewer lenders offer them than for ordinary mortgages, and they tend to be stricter on:
- the deposit (loan-to-value ratio), usually more conservative than for a normal investment loan;
- liquidity, where the fund is expected to keep some cash in reserve to cover repayments and costs;
- the fund’s size, members’ contribution capacity and the type of property.
The specifics differ between lenders and change over time, so we do not quote a single figure here.
Questions to settle before you start
- Does my trust deed allow borrowing?
- Is this right for my overall super strategy? That is financial and tax advice, and it needs a licensed financial adviser or accountant.
- Does the property meet the rules (not from a related party, not for personal use, no plan to borrow for improvements)?
- Will rent and contributions cover the loan and costs?
As your mortgage broker, our job is to match you with lenders that do SMSF lending and set up the loan side properly. Whether an SMSF suits you, and whether to buy this property, is a decision for your financial adviser and accountant.
Want to see how the loan side would work?
Read about our SMSF lending service or book a free consultation and tell us where your SMSF stands. The assessment is free, with no fee if we cannot succeed.
This article is general information only and is not financial product, tax or superannuation advice. SMSF rules are complex and change over time. Before making any decision, speak with a licensed financial adviser, accountant or SMSF specialist, and rely on the latest ATO and lender requirements. Written October 2026.
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