Guide · Loan basics
How Much Can I Borrow for a Home Loan?
It's the first question almost everyone asks me, and the honest answer is: it depends. Here's what actually drives the number, and what you can do to move it.
Your borrowing power is the maximum a lender will let you borrow based on your income, your expenses, your existing debts and the buffer they apply to interest rates. Two people on the same salary can get very different answers, so it pays to understand the moving parts.
What lenders look at
- Your income. Salary, but also bonuses, overtime, rental income and self-employed earnings. Lenders treat each type differently.
- Your living expenses. They'll benchmark these, and your actual spending matters, so the months before you apply are worth tidying up.
- Your existing debts. Car loans, personal loans, HECS and credit card limits all chip away at what you can borrow, even cards you never use.
- The assessment buffer. Lenders test you at a rate a few percent above the actual rate to make sure you can cope if rates rise.
Quick win
Closing or lowering credit cards you don't use is one of the fastest ways to lift your borrowing power. A $10,000 limit can reduce your capacity by tens of thousands, even at a zero balance.
How to increase your borrowing power
- Pay down or close small consumer debts before applying.
- Reduce credit card limits to what you genuinely need.
- Keep your spending steady and clean in the three to six months before you apply.
- Talk to a broker early, so we can pick the lender whose calculator treats your income most favourably.
That last point matters more than most people realise. Every lender assesses income and expenses slightly differently, so the same applicant can be approved for more with one bank than another. Finding that fit is a big part of my job.
Want your real number?
A calculator gives you a rough guide. I'll give you a figure a lender will actually stand behind.
Frequently asked questions
Is an online borrowing calculator accurate?
It's a useful starting point, but it only knows what you type in. Real assessments factor in your specific income types, debts and the individual lender's policy, which can shift the number a fair bit.
Does HECS or HELP debt affect how much I can borrow?
Yes. Your compulsory repayments reduce your assessable income, which lowers your borrowing power. It usually isn't a dealbreaker, but it's worth factoring in.
Important information
This information is general in nature and does not take your personal objectives, financial situation, or needs into account. It is not credit assistance or a recommendation to enter into any particular credit contract. Consider whether it is right for you and seek advice before acting. Lending is subject to a lender's eligibility and approval criteria. Terms, conditions, fees, and charges apply.
Greenwood Finance · ABN 23 671 049 693 · Credit Representative No. 551942.
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