How Much Can I Borrow? The 6 Factors Lenders Actually Look At

If you’ve ever jumped onto a borrowing calculator and wondered, “Can I really borrow that much?” — you’re not alone. Online calculators are a great starting point, but they don’t tell the full story. Every lender looks at a few key things before deciding how much they’ll lend you.

Here are the six main factors that determine your borrowing power — and how you can strengthen each one.

1. Your Income

Your income is the foundation of your loan application. Lenders want to know not only how much you earn, but how stable that income is.

They’ll look at your base salary, overtime, bonuses, rental income, and even government benefits (where applicable).

💡 Tip: If you’ve recently changed jobs but are still in the same industry, most lenders will still consider your income stable.

2. Your Living Expenses

Lenders assess your day-to-day spending to make sure you can comfortably afford your repayments.

They’ll review your recent bank statements to see what you spend on groceries, utilities, subscriptions, and leisure.

💡 Tip: Track your spending for a month before applying — trimming unnecessary expenses can improve your borrowing power.

3. Existing Debts

Credit cards, car loans, Afterpay, and personal loans all reduce your available borrowing capacity.

Even unused credit cards are counted based on their limit, not their balance.

💡 Tip: Reduce or close unused credit cards and personal loans before applying to boost your borrowing potential.

4. Your Deposit and Savings History

A healthy deposit (typically 10–20%) shows lenders that you’re financially responsible. But they’ll also look for genuine savings — money you’ve built up over time, not just a recent lump sum.

💡 Tip: Even if you’re getting help from family, having some of your own savings can strengthen your application.

5. Your Credit Score

Your credit score tells lenders how well you manage debt. A higher score often means lower perceived risk — and sometimes even sharper rates.

💡 Tip: Check your credit report for free before applying. If there are any old defaults or errors, get them corrected early.

6. Loan Type and Property Type

The kind of loan you’re applying for and the type of property you’re buying both affect how much you can borrow.

For example, an investment loan usually has tighter servicing criteria than an owner-occupied loan.

💡 Tip: If you’re buying something unusual (like rural or high-rise property), check with your broker early — some lenders have stricter policies.

💬 Final Thoughts

Understanding how lenders calculate borrowing power puts you in control. By preparing early — improving your savings, managing your debts, and knowing what lenders look for — you’ll be in a stronger position to buy with confidence.

Summary

This article explains the six key factors lenders assess when calculating home loan borrowing power in Australia: income, living expenses, existing debts, savings history, credit score, and property type. It provides practical tips to help borrowers improve their loan eligibility and increase borrowing capacity. The blog is written by an Australian mortgage broker and targets keywords such as how much can I borrow, borrowing power, and home loan tips. The intent is educational, designed to help first home buyers and refinancers understand what affects their borrowing limit and how a broker can assist in securing finance.

👉 Need a clear idea of your borrowing limit?

I can run through your numbers and show what’s possible with today’s lending criteria — no pressure, just clarity.

📞 Call Matthew: 0448 517 831

📧 Email: matthew.teasdale@loanmarket.com.au

🌐 Website: https://broker.loanmarket.com.au/euroa/about/working-with-a-broker/