How Much Can I Borrow For A Home Loan

One of the most common questions Australian homebuyers ask is, "How much can I borrow?" The answer depends on a range of factors that lenders use to assess your ability to repay a loan. Understanding these factors helps you prepare and potentially increase your borrowing capacity.

Income & Employment

Lenders look at your gross income, including salary, bonuses, commissions and rental income. Self-employed borrowers usually need two years of tax returns and financial statements. Stable, permanent employment is viewed favourably, but casual and contract workers can still qualify with sufficient evidence of consistent earnings.

Living Expenses & Debts

Your existing financial commitments reduce your borrowing power. This includes credit cards, personal loans, car loans, HECS-HELP debt and other mortgages. Lenders also apply a minimum living expense benchmark based on your household size and location, even if your actual spending is lower.

Credit History

A clean credit file with no late payments, defaults or court judgments strengthens your application. If you have past credit issues, some lenders specialise in non-conforming loans, though these typically come with higher rates. Checking your credit report before applying is always a smart move.

Deposit Size

A larger deposit means a lower loan-to-value ratio (LVR), which reduces lender risk and can unlock better interest rates. A 20% deposit avoids LMI. Some lenders accept smaller deposits with guarantor support or under specific first home buyer schemes.

How to Increase Your Borrowing Power

Pay down credit cards, reduce or close unused accounts, avoid taking on new debt before applying, and save a larger deposit. If you are applying with a partner, combining incomes increases your capacity. A broker can also match you with lenders who use more generous servicing calculators.