How much you can borrow depends on your income, your living expenses, your existing debts, your deposit and the lender’s own assessment rules. Every lender calculates borrowing power a little differently, so the same person can get quite different answers from different lenders.
It’s the number one question we get asked, and fair enough. It shapes your whole property search. Let’s unpack how it actually works.
How do lenders calculate borrowing power?
Lenders are trying to answer one simple question: can you comfortably afford the repayments, now and if things change? To work it out, they look at:
- Your income. Salary, wages, and sometimes overtime, bonuses, commissions, rental income or self-employed income (some of these may only be partly counted).
- Your living expenses. What you actually spend each month, compared against a benchmark the lender uses.
- Your existing debts. Car loans, personal loans, HECS-HELP, buy now pay later and credit cards.
- Your dependants. Kids and other people who rely on your income.
- The loan itself. The loan term, type and structure.
What is the serviceability buffer?
This one surprises a lot of people. Lenders don’t just check whether you can afford repayments at today’s rate. The banking regulator, APRA, expects lenders to test whether you could still afford repayments if rates were 3 percentage points higher than your actual rate.
It’s a safety net designed to protect you (and the lender) if rates rise or life throws a curveball. It also means your borrowing power is usually lower than a simple “what can I afford today” calculation would suggest.
Do credit cards reduce how much I can borrow?
Yes, often more than people expect. Lenders typically assess your credit card based on its limit, not what you owe. So a card with a $15,000 limit can count against you even if the balance is zero.
If you’ve got cards you don’t use, reducing the limit or closing them before applying may help your borrowing power. Have a chat with us before you make changes, though, as timing matters.
Is there a limit on how much I can borrow compared to my income?
There’s no single fixed cap for every borrower, but since February 2026 APRA has limited how much new lending banks can do where a borrower’s total debt is six times their gross income or more. Banks can still write these loans, just only up to a set share of their new lending.
For most borrowers this won’t change much. If you’re stretching for a bigger purchase or have other debts, it’s another reason to get your numbers checked early.
Why do different lenders give me different answers?
Each lender has its own policies. One might count more of your overtime, another might treat your HECS-HELP debt differently, and another might use a different expense benchmark. That’s where a broker can be handy: we can compare how different lenders may assess the same situation.
How can I increase my borrowing power?
There’s no magic trick, but these may help:
- Pay down or close debts like personal loans and unused credit cards.
- Keep your spending steady and sensible in the months before applying.
- Save a bigger deposit to reduce the loan you need.
- Check your credit report for errors.
- Consider the loan structure with your broker, such as the loan term.
Just remember: what you can borrow isn’t always what you should borrow. Leave yourself breathing room for life’s surprises (and the odd weekend at Sawtell).
Where should I start?
Our online calculators are a great place to get a ballpark figure. For a proper assessment based on how lenders would actually look at your situation, book a chat with Team Rhythm.
Frequently asked questions
It gives a rough estimate only. Lenders apply their own rules, buffers and expense benchmarks, so your actual figure may be different.
It can, because the compulsory repayments reduce your take-home pay. How it’s treated varies between lenders.
A joint application includes both incomes, but also both sets of debts and expenses. It doesn’t always double your borrowing power.
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on it, consider whether it’s appropriate for your circumstances. Your full financial situation will need to be reviewed before acceptance of any offer or product. It does not constitute legal, tax or financial advice. Lending criteria, fees and charges apply. Rhythm Finance Co Pty Ltd (Credit Representative 532711) is authorised under Australian Credit Licence 389328.
