Your borrowing power determines how much property you can buy. With Australian property prices remaining high in 2026, maximising your borrowing capacity can mean the difference between getting into the market and missing out. Here's exactly how to do it.
Borrowing power (or borrowing capacity) is the maximum amount an Australian lender will approve you for based on your financial situation. It's calculated using your income, living expenses, existing debts, dependants, and the lender's assessment rate — not the actual loan rate.
| Factor | Impact on Borrowing Power |
|---|---|
| Gross income | Higher income = higher capacity |
| Living expenses (HEM) | Higher expenses = lower capacity |
| Existing debt repayments | Every $500/month debt reduces capacity by ~$80,000 |
| Credit card limits | Full limit counted even if balance is $0 |
| Number of dependants | Each dependant reduces capacity by ~$30,000–$50,000 |
| Deposit size | Larger deposit = lower LVR = sometimes better rate |
| Assessment rate | Set by APRA — currently ~3% above standard variable |
This is the single fastest win. Lenders count your full credit limit — not your balance — as a potential liability. A $10,000 credit card limit you never use can reduce your borrowing power by around $40,000–$50,000. Cancel cards you don't need before applying.
Every $500/month in existing debt repayments reduces your home loan borrowing power by roughly $80,000–$100,000. Eliminating a car loan or personal loan before applying can make a major difference.
Lenders use the higher of your declared expenses or the Household Expenditure Measure (HEM) benchmark. If your actual expenses are below HEM, you can't gain by reducing them further. But if your declared expenses are above HEM, cutting costs before application genuinely helps.
A pay rise, taking on a second job, or including proven rental income all increase borrowing power. Most lenders will also count consistent overtime (usually 80% of it) and bonuses if you have a 2-year history.
Adding a partner or family member's income to the application can significantly increase your capacity. Both incomes are assessed together, though both applicants' debts and expenses are also included.
A bigger deposit doesn't directly increase how much you can borrow, but it reduces LMI (Lenders Mortgage Insurance), which saves thousands — money you could redirect to your purchase budget. Deposits of 20%+ avoid LMI entirely.
Calculate Your Borrowing Power Now →As a rough guide in 2026, a single person earning $100,000 with average expenses and no existing debts could borrow approximately $520,000–$600,000. Use our calculator for a personalised estimate based on your full situation.
Yes. HECS/HELP repayments are compulsory once your income exceeds the threshold and lenders treat them as an ongoing liability, which reduces your borrowing power. The repayment amount (typically 2–10% of income depending on earnings) is factored into their assessment.
Some changes are immediate — cancelling credit cards takes effect within 30 days. Paying off debts takes as long as it takes. Income increases take effect straight away if you have payslips showing the new amount. Give yourself at least 3 months of clean finances before applying.