An SMSF can lend to unrelated parties on commercial terms, but it cannot lend to a fund member or their relatives under any circumstances — that is prohibited outright, with no dollar threshold. There is no allowable limit under superannuation law for loans to members or relatives; if it happens, the loan must be repaid in full to the fund. Lending to a related company or trust is only permitted within the 5% in-house asset limit, and all lending must be at genuine arm’s length.

The major banks have exited the SMSF borrowing scene, and the gap has been filled by second-tier and specialist lenders. Each has its own policy on property type, minimum fund balance, LVR and pricing, subject to lender panel. Because that panel is narrow and policy-driven, matching the fund to the right lender matters more here than in standard home lending.

The 5% rule is the in-house asset limit. A fund is restricted from having in-house assets that make up more than 5% of the market value of its total assets — meaning loans to, leases to, or investments in related parties, measured at 30 June. Business real property leased between the fund and a related party is a key exception. If in-house assets exceed 5% at year end, the trustee must prepare a written plan to reduce them to 5% or below before the end of the following financial year.

The most common “6-month rule” is the trustee–member grace period. Under s 17A of the SIS Act, if a fund temporarily ceases to satisfy the definition of an SMSF — commonly after a member dies or becomes a disqualified person — a six-month grace period allows the fund to continue and restructure while keeping its complying status. It is an estate-planning safeguard, not a borrowing rule, and prompt action is still advised.

There is no fixed ATO cap — capacity is set by LVR and the fund’s serviceability. There is no fixed borrowing cap; lenders assess each application, and SMSF LVRs are lower than personal home loans, typically around 65–75% for commercial and business real property (some specialist lenders higher), subject to lender panel. Lenders generally use 80% of gross rental or lease income when assessing serviceability. New residential borrowing is being closed by the 2026 legislation. Figures are indicative and subject to lender assessment.

Outside super, there is no statutory cap on lending to family, though Centrelink gifting limits (broadly $10,000 a year and $30,000 over five years) and tax treatment can apply for pension and deprivation purposes. Inside an SMSF the position is different and absolute: a fund cannot lend to a member or relative at all, regardless of amount. Personal circumstances vary — take advice before acting.

An SMSF places full legal responsibility on the trustees: compliance, an annual independent audit, a documented investment strategy, and rigorous record-keeping. Trustees spend on average more than 8 hours a month — over 100 hours a year — managing an SMSF, and it can be expensive to set up and run. It is generally only cost-effective above a meaningful balance, and there is no government compensation scheme for fraud or theft as there is with APRA-regulated funds. Advice on whether an SMSF suits you is essential.

As a rough guide for a standard home loan, many lenders would look for broadly $90,000–$110,000 in gross income to support a $500,000 mortgage, but this shifts with interest rates, living expenses, other debts and deposit size — subject to lender assessment. Note that an SMSF loan is not assessed on your salary at all; serviceability is read on the fund’s rental income and contributions.

No. Accessing your super before you meet a condition of release is illegal early access and carries serious penalties. Be wary of anyone offering to set up an SMSF to withdraw super to pay off debts — it is likely to be illegal. The fund itself can borrow to invest through an LRBA, but you as a member cannot borrow from it.