How Much Can I Borrow for a Home Loan?

If you’re thinking about buying a property, this is usually the first question. The short answer is that borrowing capacity depends on your income, expenses, existing debts, and the lender’s policy. The more useful answer is how those factors are assessed in practice, and what you can do to improve the outcome.

How Lenders Work Out Your Borrowing Capacity

Lenders don’t just look at your salary. They assess whether you can comfortably afford repayments over the long term, including under higher interest rates.

At a high level, they look at:

1. Your Income

This includes salary and wages, casual and part-time employment, bonuses and overtime (often averaged or partially discounted), rental income, and self-employed income (typically assessed using the last 1–2 years of financials).

Not all income is treated equally. Casual income is generally accepted under PAYG, but some lenders require a minimum employment period before including it. Variable income like bonuses or overtime may only be counted at a reduced amount by some lenders, rather than the full figure.

2. Your Living Expenses

Lenders compare your declared expenses against benchmark figures, which are often higher than what people actually spend. If your declared expenses are too low, the lender will default to their benchmark. This can reduce borrowing capacity even if you live relatively frugally.

3. Existing Debts

All liabilities are factored in, including:

• Credit cards (assessed at the full limit, not the balance)

• Personal loans and car loans

• Buy now pay later accounts

• Existing home loans

• HECS/HELP debt

HECS is treated as an ongoing financial commitment and reduces your assessed income. The higher your HECS balance and repayment threshold, the more it can affect your borrowing capacity.

4. Interest Rate Buffers

Lenders assess your loan at a higher stress-tested rate, not the actual rate you’ll pay. This ensures you can still afford repayments if rates rise, but it also means your real-world borrowing capacity is often lower than expected.

5. Household Situation

Number of dependants, whether income is single or combined, and future plans all feed into serviceability calculations.

Why Different Lenders Give Different Borrowing Amounts

Two lenders can assess the same application and produce very different results. This comes down to how they treat income (especially variable or casual), their expense benchmarks, risk appetite, and policy differences around debts and dependants.

This is where structuring matters. Choosing the right lender can increase borrowing capacity without changing your financial position.

What Reduces Your Borrowing Capacity

The most common factors are high credit card limits, personal loans or car finance, HECS/HELP debt, dependants, high declared living expenses, and irregular or short employment history. In many cases, small changes like reducing unused credit limits can have a noticeable impact.

How to Increase Your Borrowing Capacity

Reduce or restructure debt - Lowering credit card limits or paying out small personal loans can free up serviceability, even if the balances are low.

Review your living expenses - Ensure what you declare is accurate. Lenders will apply their own benchmark if figures look understated.

Choose the right lender - Different lenders assess income and risk differently. This is often the biggest lever available and one of the main reasons using a broker matters.

Consider loan structure - In some situations, how the loan is structured can also affect what you qualify for.

How Much Can I Borrow With a Low Deposit?

Borrowing capacity and deposit size are related but not the same. You may be able to borrow a high amount, but a smaller deposit increases risk, may require Lenders Mortgage Insurance, and some lenders impose tighter limits. Low deposit options are available but need to be structured carefully.

Why Online Calculators Only Tell Part of the Story

Online calculators are a useful starting point, but they use simplified assumptions, don’t reflect individual lender policies, and often overestimate borrowing capacity. A tailored assessment will usually produce a more accurate figure.

Next Step: Get a Personalised Borrowing Estimate

Borrowing capacity isn’t just about the maximum number. It’s about what is sustainable and aligned with your goals. A proper assessment should consider your current position, your future plans, and the most suitable lender and structure.

Book a free discovery call. We will walk through your numbers and tell you exactly where you stand.