how much can i borrow home loan: a practical guide to borrowing power

What lenders look at

Lenders calculate your borrowing capacity by testing whether repayments remain affordable under higher rates. They apply a serviceability buffer, assess your after‑tax income, and subtract realistic living costs and existing debts.

• Income type and stability (salary, bonuses, rental)
• Expenses and dependants
• Existing loans, credit cards, and Buy Now Pay Later
• Interest rate, loan term, and repayment type
• Deposit size and whether LMI applies

Estimating your limit

A quick rule is a debt‑to‑income ratio of around 4–6 times gross income, but policies vary. Use a lender or broker calculator, then compare results; pre‑approval confirms only that you pass today’s checks, not a guarantee.

Ways to improve your capacity

Pay down revolving credit, close unused limits, and trim discretionary spending for three months. Choose a longer term or principal and interest if required. A larger deposit reduces LMI and repayments. Keep a clean credit record and avoid new debts before application.