Most articles on how to increase your borrowing capacity for a home loan can be summarised by, “earn more, spend less”. Ahh… yeah.
Both of those things work. But they’re also moves that can take time. In this article we take you behind the scenes and explain some of the other levers you can pull to maximise your borrowing power, without a payrise. We also rank each strategy by how much of a difference it can make. So let’s get started…
How lenders calculate borrowing capacity in Australia
Every lender uses the same basic method. They take your income, subtract what they reckon a household like yours spends, subtract your existing repayments, and see what’s left over each month. That leftover decides your loan size.
Same method, wildly different answers. Every one of those inputs is a policy choice the lender makes for itself, and no two lenders make them the same way.
Here’s the part that surprises people: they don’t test you at the rate you’ll actually pay. APRA makes every lender add three percentage points on top. So if your loan is priced at 6%, you’re assessed as though you’re paying 9%. APRA reviewed that rule in May 2026 and left it alone, so it isn’t going anywhere.
That extra 3% is why your number comes back smaller than you expected. It’s also why every repayment you’re already making hurts more than the repayment itself suggests, because it’s coming out of a surplus that’s already been squeezed. Which is exactly why the first few strategies below are about the debts you’re carrying, not the income you earn.
From 1 February 2026 there’s a second limit, and this one’s a quota. APRA caps high debt-to-income lending at 20% of a lender’s new mortgages, where “high” means borrowing six times your income or more.
Say you and your partner earn $150,000 between you and you want $950,000. That’s more than six times, so you’re in the capped bucket. You can pass every affordability test and still get knocked back, simply because that lender has already filled its quota this month. The lender down the road with room left says yes. Same file, same week.
Which brings us to the key point:
Your bank didn't tell you your maximum. It told you its maximum.
On most files those two numbers are six figures apart. Close that gap and you're not just looking at a slightly better house. You're looking in a different suburb.
Strategy 1: Reduce your credit card limits
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 the balance. A card with a $15,000 limit and nothing owing is treated as though you could max it out tomorrow, so they charge you a monthly repayment for it anyway. That imputed repayment runs at about 3% to 3.8% of the limit each month depending on the lender, so on that card it’s $450 to $570 a month of commitment you didn’t know you had.
Run $450 a month through a serviceability calculation at a 9% assessment rate over 30 years and it’s worth roughly $56,000 of borrowing capacity.
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 things to know:
- Cutting a limit works nearly as well as closing the card. Want to keep one for travel insurance or fraud protection? Drop it to $2,000 and keep it.
- It has 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 what you don’t need and cut the rest to the smallest limit you’d genuinely use.
Strategy 2: Close out Buy Now Pay Later (BNPL) arrangements
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.
It’s got worse recently, too. Missed BNPL payments can now land on your credit file the way a card default would. And even where there’s no formal limit reported, three months of instalment payments across your bank statements invites exactly the line-by-line scrutiny you don’t want.
Do this: If you’re buying in the next 12 months, stop using them and close the accounts.
Strategy 3: Pay out your car and personal loans
Worth: roughly $75,000 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 moves, and one of them usually fits:
- Pay out a small balance with savings. If the loan is nearly done, 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 LVR, which can trigger lenders mortgage insurance. Worth modelling both ways before you commit, because on some numbers the deposit genuinely wins.
- Fold it into the home loan. This drops the monthly repayment, which helps you qualify. Be honest with yourself about the cost: you’re stretching a five-year debt across thirty, and even at a lower rate that can mean paying more interest overall.
Do this: List every non-mortgage debt with two numbers next to it, the balance and the monthly repayment. Wherever the repayment looks big against the balance, that’s your candidate. Get someone to model paying it out versus keeping the cash before you decide.
Strategy 4: Get your declared living expenses right
Worth: tens of thousands, and it costs you nothing.
Every 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, a benchmark of what a household your size and income typically spends. Then they use whichever number is higher. Say HEM reckons $4,200 a month:
- Declare $3,000 and you’re assessed on $4,200 anyway.
- Declare $5,500 and you’re assessed on $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 since March, 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 benchmark, which is the honest answer to why the same income buys 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. Do it before you apply, not after.
Strategy 5: Time your application around your spending
Worth: whatever your last big month cost you, often $20,000 to $50,000.
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. Nobody’s accusing you of anything. It’s just that the assessor sees the number, not the reason.
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.
Strategy 6: Check your HECS debt
Worth: roughly $47,000 on a $100,000 salary.
HECS rules recently changed in borrowers’ favour, twice.
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 still comes out of your pay, so it still counts against you. On a $100,000 salary that’s around $381 a month, which is roughly $47,000 of borrowing capacity.
So: small balance and some savings, paying it out can be worth more than holding the cash. 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 rather than trusting an article, including this one.
Do this: Divide your HELP balance by your annual repayment. Under one, ask which lenders will disregard it. Over two, don’t bother paying it down. Talk to your accountant before any lump sum.
Strategy 7: Ensure the lender counts every dollar you earn
Worth: around $32,000 on a single rental property, more if your pay is variable.
This one keeps the no-pay-rise promise. It’s about money you already receive that a lender is quietly discounting.
Lenders take a haircut, called shading, on anything 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: Write down every dollar that arrives in your account, including what you’ve written off as not counting. Overtime, site allowances, bonuses, commission, a second job, rent. Then find the paperwork, usually two years of payslips or tax returns for anything variable. Nobody can count income they haven’t been shown.
Strategy 8: Choose the right loan term and structure
Worth: varies, and it’s the one with a real cost attached.
A 30-year term means a smaller monthly repayment than a 25-year term, and serviceability is calculated on the repayment. So a longer term buys you capacity.
It also means more interest over the life of the loan. You’re borrowing capacity from your future self. On a first purchase where the alternative is not buying, that’s often a trade worth making. On your fourth loan, much less so.
The other structural piece matters most to investors. Lenders differ in how they assess debt you hold elsewhere, some at your actual repayment, some at 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: Ask for your maximum at a 30-year term and at your remaining term, with the total interest for each. Decide with both numbers in front of you.
Strategy 9: Apply to the right lender
Worth: six figures. More than everything above put together.
This is where most articles about borrowing capacity go quiet, because the biggest lever is the one a single bank can’t write about.
Everything above changes your file. This changes whose opinion of your file you’re asking for. Add up what we’ve covered: expense benchmarks set differently, rent counted at 70% or 80%, overtime accepted or discounted, HECS included or ignored, existing debts assessed at actual or stress-tested rates. Every one of those is a policy choice, not a law, and they stack up in the same direction on any given file.
Which is how the same borrower, same income, same debts, same week, gets quoted six figures apart. Not because one lender is generous and another is mean. Because your particular shape of income and commitments fits some rulebooks better than others.
The February 2026 quota adds to it. A lender near its 20% limit tightens up regardless of how good you look on paper. One with room doesn’t.
That’s the case for looking across the market rather than a claim that any one lender wins. A broker working across a 30-plus lender panel is comparing the rulebooks before anything gets submitted anywhere, which is a different job from comparing advertised rates. Best interests duty applies to every broker in Australia, so the answer still has to suit you rather than just being the biggest number on offer. Those aren’t always the same thing.
Do this: Get your file compared across a panel before you lodge anything. Every application leaves a credit enquiry behind and a burst of them looks bad to the next lender, so a knock-back costs you more than the time it wasted. Compare first, apply once.
What doesn’t increase borrowing capacity
Four things get recommended constantly and don’t do what people think.
A guarantor. A family guarantee is genuinely powerful, and it fixes a different problem. It uses a relative’s equity to cover your deposit shortfall, so you can buy sooner and without LMI. It doesn’t add their income to your application, so what you can service is unchanged. There’s a rarer arrangement using a parent’s income, which most lenders won’t do and which deserves its own legal advice. Worth understanding how guarantor structures work before you ask anyone.
A bigger deposit. More deposit means a bigger purchase and possibly no LMI. It doesn’t change what a lender will lend you, because serviceability runs off income and commitments, not savings.
Your credit score. A clean 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 score dial that scales the number up and down.
The First Home Guarantee. Since 1 October 2025 there are no income caps and no cap on places, and eligible first home buyers can buy with a 5% deposit and no LMI. Genuinely useful, but it’s a deposit lever. Working out the deposit is a separate job from working out capacity.
The pattern: these all change what you can buy. The nine strategies above change what you can borrow. Most of the frustration in this process comes from people hauling on a deposit lever and wondering why the approval won’t move.
Do them in this order
- Pull your credit file and add up every limit. Cards, BNPL, overdrafts. Biggest recoverable capacity usually sits here.
- Cut or close what you can, and get it in writing. Allow three to four weeks to hit your file.
- Decide on the car or personal loan. Model paying it out against keeping the cash.
- Cancel what you’re not using. Bill-buster afternoon.
- Check your last three months. Bad quarter? Consider waiting it out.
- Check your HECS balance against a year’s repayments.
- List every income source, including the ones you assume won’t count.
- Then compare lenders, not rates.
Doing step eight first is the classic mistake. People get a number from their own bank, treat it as the ceiling, and quietly shrink their property search around a figure that was never fixed.
Keeping your borrowing capacity current
All of the above is only accurate on the day you check it. Credit policies change quietly and often. A lender shading your overtime at 80% last quarter might be at 100% this quarter, and the quota with room in March might be full by September.
That’s a problem when you’re doing this alone, because the job never really ends. It’s a much smaller problem when someone keeps the file open. The Approov model monitors your position after settlement rather than closing the file at handover, with a licensed broker on the account for the calls that need judgement rather than arithmetic.
Want to know your actual maximum instead of one bank’s version of it? Book a strategy session. We’ll run your income, commitments and HECS position across a 30-plus lender panel and show you the top of the range as well as the bottom, plus which of the nine strategies are worth your time and which aren’t. Fifteen to thirty minutes, no obligation. If you’re weighing that up against going straight to your own bank, the broker versus bank comparison covers where each one genuinely wins.
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 $15,000 limit that’s around $56,000 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?
Depends on the size. Close to clearing it, a lump sum can free up real serviceability and open up lenders that disregard the repayment. Large balance, the cash is usually worth more as deposit and you’re better off finding a lender whose policy suits. 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.