How much can I borrow? The factors lenders consider
Learn how Australian lenders assess home loan borrowing capacity, including income, expenses, debts, deposits, interest-rate buffers and credit history.
“How much can I borrow for a home loan?” is often one of the first questions asked by a prospective buyer.
There is no single answer that applies across all lenders. Each lender uses its own credit policy, assessment rate, income rules and expense calculations.
A borrowing-power calculator can provide an initial estimate, but it is not an approval or guarantee.
Income
Lenders may consider income from sources including:
- salary and wages
- overtime and allowances
- bonuses and commission
- self-employment
- rent
- government benefits
- child support
- investment income.
Not every lender treats each income type in the same way. Some may use only part of variable, rental or secondary income. Others may require a minimum history or additional evidence.
Self-employed applicants may need business financial statements, tax returns, notices of assessment, bank statements or accountant-prepared information, depending on the lender and loan type.
Living expenses
Lenders assess recurring household expenses, which may include:
- food and groceries
- utilities
- insurance
- transport
- childcare and education
- medical expenses
- subscriptions
- recreation
- rent or board
- property expenses.
Applicants should provide realistic figures. Understating expenses can delay the application or create concerns when the figures are compared with bank statements and other information.
Existing debts and credit limits
Borrowing capacity can be affected by:
- personal loans
- car loans
- credit cards
- buy now, pay later accounts
- HELP or student debt
- existing mortgages
- guarantees
- business debts for which you are liable
- child support or maintenance commitments.
A credit card can affect borrowing capacity based on its approved limit, even when the balance is $0.
The serviceability assessment rate
Lenders generally assess whether you could afford repayments at a rate higher than the actual loan rate.
As at July 2026, APRA has confirmed that the mortgage serviceability buffer for regulated banks remains 3 percentage points. This is intended to provide a contingency for possible rate rises or changes in a borrower’s circumstances. Individual lenders may apply their own additional policies or minimum assessment rates.
Deposit and loan-to-value ratio
Your deposit affects how much you need to borrow and the loan-to-value ratio, commonly called the LVR.
A higher LVR may:
- limit the lenders or products available
- result in lender’s mortgage insurance
- attract different pricing
- require stronger evidence of savings
- create additional property restrictions.
Low-deposit pathways may be available to eligible borrowers through government schemes or lender policies, but eligibility and lending approval are separate assessments.
Credit history and repayment conduct
A lender may review:
- your credit score and credit report
- previous applications for credit
- late or missed payments
- defaults
- hardship arrangements
- account conduct
- the stability of your financial position.
Credit issues do not always prevent approval, but they may reduce available options or require a more detailed explanation.
Property type and location
Borrowing capacity is only one part of the assessment. The property must also be acceptable security.
Lenders may impose restrictions for:
- small apartments
- serviced apartments
- rural or remote properties
- high-density developments
- specialised accommodation
- properties with commercial use
- unusual construction
- company-title properties.
Approval amount versus comfortable repayments
The amount a lender is prepared to approve should not automatically become your target budget.
Consider your own tolerance for:
- interest-rate movements
- reduced income
- parental leave
- business volatility
- maintenance costs
- insurance and council rates
- future family expenses
- unexpected costs.
Obtain a personalised assessment
A mortgage broker can compare how different lenders may assess your income, liabilities and proposed property.
Call to action: Speak with a finweb mortgage broker for an indicative borrowing-capacity assessment and an explanation of the assumptions behind it.
Calculations and borrowing estimates are indicative only. They are not loan approvals. Actual borrowing capacity depends on lender policies, verified information, the property and your financial circumstances.