Your borrowing power — the maximum a lender will give you — sets your real property budget. It's not simply your income multiplied by a number. It's the result of a serviceability assessment that weighs your income against your expenses, debts, and a deliberately conservative interest rate. Here's how it's calculated, and how to move the number up.

What actually determines your borrowing power

Income — base salary, plus how the lender treats overtime, bonuses, commission, rental and self-employed income (often discounted)
Living expenses — assessed against a benchmark (HEM) and your actual bank statements, whichever is higher
Existing debts — credit cards, personal and car loans, buy-now-pay-later, and HECS/HELP
Dependants — each one raises your assessed expenses
Deposit & LVR — a bigger deposit lowers risk and can widen your options
The assessment rate — the buffered rate you're tested at, not the actual rate

The assessment rate is the hidden lever

Lenders don't test you at today's rate — they add a buffer of around 3% and check you could still repay if rates rose. So a 6.2% loan is assessed near 9.2%. This is why borrowing power has fallen as rates rose: the same income simply services a smaller loan once it's stress-tested.

Why it feels unfair: you might comfortably afford the real repayment, but the bank says no because the buffered repayment tips you over their threshold. It's a regulatory safety margin (APRA's serviceability buffer), not the lender being difficult.

How debts quietly slash your limit

Small commitments have an outsized effect because lenders assess the limit, not the balance:

Credit cards — assessed at ~3.8% of the limit per month, regardless of balance. A $15,000 limit can cost you ~$45,000–$60,000 in borrowing power.
Car & personal loans — the full repayment counts; a $500/month car loan can reduce borrowing power by $30,000+.
Buy-now-pay-later — increasingly scrutinised; recurring use signals reliance on credit.
HECS/HELP — counts as an ongoing deduction until it's cleared.

Rough borrowing estimates

As a very rough guide for 2025, with minimal debts, lenders may offer somewhere around 5 to 6 times gross household income — but the buffer and your expenses move this a lot:

$80,000 single → roughly $400,000–$480,000
$120,000 single → roughly $600,000–$720,000
$160,000 couple → roughly $800,000–$950,000

Treat these as starting points only. The borrowing capacity calculator gives a tailored estimate in under a minute.

Five ways to increase your borrowing power

Reduce or cancel credit card limits — the single fastest lever for most buyers
Pay out or refinance high-repayment debts like car loans before applying
Show stable, evidenced income — lenders treat consistent income more generously
Trim discretionary spending for 3 months before applying — your statements are read closely
Compare lenders — serviceability models differ; one lender may approve a loan another won't. A broker checks many at once.

Borrowing power vs what you should borrow

The maximum you can borrow is rarely the amount you should. Leave room for rate rises, life changes and a cash buffer. Run your shortlist through the repayments calculator to see what the monthly cost actually feels like before you stretch.

Next step: a mortgage broker can confirm your exact borrowing power across 30+ lenders and find the ones whose rules suit you — usually free to you. Get matched with a broker → Already own and want to free up capacity? See the Refinancing Guide.

General information only — it doesn't consider your personal circumstances. Confirm your borrowing power with a licensed mortgage broker or lender before acting.