Most articles on how to increase your borrowing power for a home loan can be summarised by, “earn more, spend less”.

Ahhhhhhh… yep.

Both of those things absolutely work. But they’re also moves that can take time (and are super-obvious).

In this article we explain how to maximise your home loan borrowing capacity fast by first understanding how borrowing power is calculated, then shaping your file to match what lenders want to see.

Let’s get started…

How lenders calculate borrowing power

The first step to increasing your borrowing power is to understand how it’s calculated.

Every lender uses the same broad approach. But the way they apply it is different enough to matter.

Lenders add a 3% interest rate buffer

Banks don’t just test your ability to repay the loan at your actual interest rate (say, 6%). They add another 3% buffer (in line with APRA rules) and assess your loan as if you were paying 9% interest.

While this decreases the amount you can borrow, it also helps to keep borrowers and the whole system safer.

High debt-to-income loans are limited

Banks also apply a second rule designed to limit high Debt-to-Income (DTI) loans in the market as a whole. (“high” refers to loans that are greater than 6X the borrower’s income.)

Since 1 February 2026, APRA has capped high debt-to-income loans to 20% of a lender’s new mortgages.

This is why it’s important to understand:

The bank doesn't calculate your maximum borrowing power. It calculates its maximum lending appetite.

In many cases there's a six-figure difference between what you qualify for in the whole market vs what an individual bank will lend you.

Now that you understand how banks calculate borrowing power, let’s look at what moves the needle in your favour…

9 strategies to increase borrowing power fast

1. Reduce your credit card limits

How much it's worth Roughly $37,000 to $47,000 for every $10,000 of limit you cancel.

This is the highest-return hour of work available to most borrowers.

Lenders assess credit cards on the limit, not just the balance.

A card with a $10,000 limit and nothing owing is treated as though you could max it out tomorrow, so they factor in a monthly repayment for it anyway.

That imaginary repayment runs at about 3% to 3.8% of the limit each month. So on that card it’s $300 to $380 a month of commitment you didn’t know you had.

Run $300 a month through a serviceability calculation at a 9% assessment rate over 30 years and that’s roughly $37,000 of borrowing capacity gone. At the top of the range, $380 a month costs you about $47,000.

Every $10,000 of credit card limit costs you $37,000 to $47,000 of what you can borrow, whether you've used it or not.

Two tips to know:

  • Reducing a limit works nearly as well as closing the card. Want to keep a credit card for incidental expenses? Drop the limit to $2,000 and keep it.
  • Limit reductions have to be processed, not just requested. The lender assesses what your credit file says on the day. Get the reduction confirmed in writing and allow a few weeks for it to land.

Do this: Ring every card provider this week. Close the cards you don’t need and cut the rest to the smallest limit you’d genuinely use.

2. Close out Buy Now Pay Later (BNPL) arrangements

How much it's worth Roughly $7,500 to $9,500 per $2,000 of limit.

A $2,000 Afterpay limit is assessed the way a $2,000 credit card is. It costs you somewhere around $7,500 to $9,500 of borrowing capacity just by existing, used or not.

Look at what you get in return. Two thousand dollars of spending power, on things you’d mostly have bought anyway, split into four payments. You’re handing over about four dollars of home loan for every dollar of BNPL limit. Nothing else on your file trades that badly.

Do this: If you’re buying in the next 12 months, stop using BNPL and close the accounts.

3. Pay out car and personal loans if you have the funds

How much it's worth Roughly $75,000 in borrowing capacity on a typical $600 a month car repayment.

A car loan feels smaller than a mortgage, so people assume it counts for less. It’s the opposite, and the reason is the term.

Your $35,000 car loan is squeezed into five years, which makes the monthly repayment big relative to what you owe. The lender doesn’t care that the balance is small. It just subtracts the repayment.

At $600 a month, that car is eating around $75,000 of borrowing capacity. More than twice what you still owe on it.

Obviously nobody pays out a car loan on a whim. But there are three realistic options:

  • Pay out a small balance with savings. If the loan is nearly paid off, this is the cleanest win available.
  • Use money you’d earmarked for the deposit. You’re trading roughly a dollar of deposit for several dollars of borrowing capacity. The catch is a smaller deposit means a higher Loan to Value Ratio (LVR), which can trigger lenders mortgage insurance. This option is worth modelling with your mortgage broker to see if it makes sense.
  • Fold it into the home loan. This drops the monthly repayment, which helps you qualify. But be aware of the cost: you’re stretching a five-year car loan debt across thirty. Even at a lower rate that can mean paying more interest overall.

Do this: List every non-mortgage debt, as well as the balance and the monthly repayment. Wherever the repayment looks big against the balance, that’s your candidate. Ask your broker to model paying it out versus keeping the cash before you decide.

4. Get your declared living expenses right

How much it's worth Tens of thousands, and it costs you nothing.

Every mortgage application asks what you spend. Here’s what most people don’t realise: your answer is only half the input.

Lenders compare what you declare against the Household Expenditure Measure (HEM), a benchmark of what a household your size and income typically spends. Then the bank uses whichever number is higher.

Say your HEM figure is $4,200 a month:

  • If you declare $3,500 in living expenses, you’re assessed on $4,200 anyway.
  • If you declare $5,500, you’re assessed on the full $5,500.

So lowballing gets you nowhere, and overstating costs you real money. What actually helps is not carrying expenses you don’t use.

Run a bill-buster afternoon. The streaming service you haven’t opened for 3 months, the gym you’ve been meaning to quit, the subscription that renewed itself, the insurance you’ve never compared. Cancel them and they stop counting against you.

This is the one part of “spend less” that works fast, because you’re cutting things you weren’t getting value from anyway.

Dependants are the other big mover, and there’s no trick there. Each child raises the HEM benchmark, which is why the same income supports a smaller loan for a family than for a couple.

Do this: Go through the last three months of transactions and cancel anything you’re not actually using.

5. Time your application around your spending

How much it's worth Whatever your last big month cost you, often $20,000 to $50,000 in borrowing capacity.

Most lenders read the last three to six months of your transactions. Which means the window you’re being judged on is the one you’re living in right now.

A three-month stretch with a holiday, a wedding and a new laptop in it reads as your normal spending unless somebody explains otherwise.

There are two ways to handle it. If you can control the timing, let the spike fall out of the window before you apply. If you can’t, keep the evidence so genuine one-offs can be shown as one-offs rather than treated as your monthly baseline.

Do this: If you’ve just had an expensive quarter and you’re not in a hurry, wait a month or two. It’s the only strategy here that costs you nothing but patience.

6. Check your HECS debt

How much it's worth Roughly $47,000 in borrowing capacity on a $100,000 salary.

Since 30 September 2025, banks leave your HELP balance out of the debt-to-income ratios they report to APRA. And a number of lenders will now ignore the repayment entirely if you can show the debt will be cleared within about 12 months.

The repayment itself comes out of your pay, so it still counts against you. On a $100,000 salary that’s around $381 a month, which equals around $47,000 of borrowing capacity.

So, if you have a small balance and some savings, paying it out can be worth more than holding the cash.

If you have a big balance, leave it alone and find a lender whose HECS policy suits you. Thresholds and indexation change each year, so check the current figures with the ATO.

Do this: Work out roughly how many years your HELP debt has left, by dividing the balance by your annual repayment. Under one year, ask which lenders will ignore the repayment altogether, because several will. More than two years, don’t bother paying it down, and look for a lender whose HECS policy suits you instead. Talk to your accountant before any lump sum payment.

7. Ensure the lender counts every dollar you earn

How much it's worth Around $32,000 on a single rental property, more if your pay is variable.

This strategy has nothing to do with getting a pay rise (although that would be nice). It’s about ensuring money you already receive is fully counted by the lender.

Lenders apply a haircut, called shading, to any income they see as less reliable than base salary. Overtime, bonuses, commissions, allowances, second jobs, rent. How big the haircut is comes down to each lender’s policy, not any rule.

Rent shows it clearest. A property renting at $600 a week brings in $31,200 a year. One lender counts 70% of that. Another counts 80%. That gap is about $32,000 of borrowing capacity, on identical facts, decided purely by whose calculator your file lands in.

The same spread runs through everything. Some lenders shade overtime, others count it in full for nurses and paramedics on stable rosters. Some want two years of bonus history, others accept one.

You can’t change any of that about yourself. You can absolutely change where the application goes.

Do this: Make sure your broker checks the lenders with generous shading policies, if your income isn’t all base salary.

8. Choose the right loan term and structure

How much it's worth Varies, and it's the one with a real cost attached.

A longer loan term equals higher borrowing power (and higher total interest)

A 30-year term means a smaller monthly repayment than a 25-year term, and serviceability is calculated on the repayment. So, a longer loan term buys you capacity.

It also means more interest over the life of the loan. On a first home purchase where the alternative is not buying, that’s often a trade worth making. On your fourth loan when you’re closer to retirement, maybe not.

Interest-only loans squeeze your borrowing power

Another gotcha is with loans that have an interest-only repayment period. Say you ask for a 30-year loan, with the first 5 years interest only (IO) and the remaining 25 years principal and interest (P&I).

The bank will assess your borrowing power as if you were clearing the whole loan in 25 years. That costs you about 4% of your borrowing power.

Where you hold debt can matter too

One more structural piece matters most to investors. Lenders differ in how they assess debt you hold at other institutions. Sometimes they only count your actual repayment, sometimes they apply a stress-tested rate.

If you’re buying a second or third property, how each purchase is structured does more for what you can do next than the rate on any single loan.

Do this: If servicing is tight, ask for your maximum across a few different terms and structures before you settle on one.

9. Apply to the right lender

How much it's worth Six figures. More than everything above put together.

Most of the strategies in this article relate to making relatively minor tweaks in order to put your best foot forward when applying for a home loan.

But another huge factor is where you apply. Take factors such as:

  • Overtime accepted or discounted

  • HECS included or ignored

  • Rental income counted at 70% or 80%

  • Existing debts assessed at actual or stress-tested rates

Every one of those is a policy choice by the lender, not a law.

This is why the same borrower, same income, same debts, same week, gets quoted wildly different borrowing capacity figures from different banks.

4 things that don’t increase borrowing power

There’s a lot of confusion about what increases borrowing capacity and what doesn’t. Here are four that can’t.

A guarantor won’t increase your borrowing power

A family guarantee is a powerful tool, but it fixes a different problem. It uses a relative’s equity to cover your deposit shortfall, so you can buy sooner and without Lenders Mortgage Insurance (LMI). It doesn’t add their income to your application, so what you can service is unchanged.

A bigger deposit won’t increase your borrowing power

A larger deposit means a bigger purchase and possibly no LMI. Indirectly, a bigger deposit may also give you flexibility to close out personal loans etc. in order to reduce monthly commitments and therefore boost your your borrowing power. But on its own, a larger deposit doesn’t change what a lender will lend you, because serviceability runs off income and commitments, not savings.

A strong credit score won’t increase your borrowing power

A clean credit file gets you in the door and a poor one shuts doors. It doesn’t set your capacity. There’s no Australian equivalent of a credit score dial that scales your borrowing capacity number up and down.

The 5% Deposit Scheme won’t increase your borrowing power

What used to be the Home Guarantee Scheme is now the Australian Government 5% Deposit Scheme, with the First Home Guarantee sitting inside it. There are no income caps and no cap on places, so eligible first home buyers can buy with a 5% deposit and no LMI. It’s a genuinely useful scheme, and it works on your deposit rather than your capacity. Working out the deposit is a separate job from working out capacity.

The number your bank gave you was never the ceiling

Every lever in this article is worth something, and one is worth more than all the others put together: whose rulebook you’re assessed under.

To talk the whole picture through, book a strategy session and we’ll present you with options and a way forward.

Frequently asked questions

How can I increase my borrowing capacity quickly?

Cut your credit card limits. It takes a phone call and removes a repayment you were never actually making. On a $10,000 limit that’s around $37,000 of capacity. Allow three to four weeks for the change to reach your credit file, since lenders assess what it says on the day.

How much does a credit card reduce borrowing capacity?

Roughly $37,000 to $47,000 for every $10,000 of limit, and your balance is irrelevant. Lenders charge you an imputed repayment of about 3% to 3.8% of the limit each month, then subtract it. A card you’ve never touched costs you exactly as much as a maxed-out one.

Does Afterpay or buy now pay later affect your borrowing power?

Yes, and badly for what you get out of it. A $2,000 limit costs roughly $7,500 to $9,500 of borrowing capacity, which is about four dollars of home loan for every dollar of limit. Missed payments can now reach your credit file too. Buying within 12 months? Close the accounts.

Does HECS debt affect borrowing power?

Yes, though less than it used to. The repayment reduces your assessable income, which on a $100,000 salary is around $381 a month or roughly $47,000 of capacity. Since 30 September 2025 the balance is excluded from the debt-to-income ratios banks report to APRA, and some lenders now ignore the repayment entirely if the debt clears within about 12 months. So which lender you pick matters a lot here.

Should I pay off my HECS debt before applying for a home loan?

It depends on the size of the balance. If you’re close to clearing it, a lump sum can free up real serviceability and open up lenders that disregard the repayment. If the balance is large, the cash is usually worth more as a deposit, and you’re better off finding a lender whose policy suits you. Check with your accountant before any lump sum.

Does having a guarantor increase borrowing power?

Generally no, and it’s one of the most common mix-ups in Australian lending. A standard family guarantee uses a relative’s equity to cover your deposit shortfall, which removes LMI and gets you in sooner. Your income and commitments don’t change, so what you can service doesn’t either.

Does a bigger deposit increase my borrowing capacity?

No. Serviceability comes from your income minus your expenses and commitments, and savings don’t appear in that sum. A bigger deposit lowers your LVR, which can remove LMI and improve your pricing, and it raises the total price you can reach. The maximum loan stays where it was.

Why do different banks give me different borrowing capacity figures?

Because the calculators are built from credit policy, and every lender writes its own. Expense benchmarks, how much of your rent and overtime counts, whether HECS is included, how debt with other banks is assessed. Stack those differences on one file and a six-figure spread across a panel is completely ordinary.

How much can I borrow on a $100,000 salary?

There’s no single answer, which is the honest version of a question people want a number for. It depends on your commitments, your household size, your existing debts and whose rulebook you’re assessed under. The spread between the top and bottom of a lender panel on identical inputs is routinely more than $100,000. A calculator hands you one point in that range without mentioning it’s a range.

Disclaimer: This is general information, not personal credit advice. Every dollar figure above is illustrative and based on typical lender assessment methods at the date of publication. What any lender will actually lend you depends on their policy on the day and on your full circumstances, so treat these numbers as a guide to how the levers work rather than a quote, an approval, or a promise about your file. Credit policy changes often and without notice.