In short: How much you can borrow depends on your income, your living expenses, your existing debts and current interest rates — not just your deposit. Lenders also test you at a rate a few percent higher than the actual rate (the serviceability buffer), so your approved amount is usually lower than a basic online calculator suggests.
Plenty of first home buyers fall in love with a place, then discover the bank won’t lend that much. Here’s what actually drives your borrowing power.
What lenders look at
- Income — salary, and how lenders treat bonuses, overtime or self-employed income.
- Living expenses — your real spending, often benchmarked against minimums.
- Existing debts — car loans, HECS/HELP, credit card limits (even unused ones).
- Deposit and the loan size — which sets your loan-to-value ratio.
The serviceability buffer
Lenders don’t assess you at today’s rate — they add a buffer and check you could still repay if rates rose. This buffer is guided by the regulator, APRA, and it’s the main reason your real borrowing capacity is lower than a headline-rate calculation. It’s there to stop you being over-extended.
What quietly cuts your borrowing power
Credit card limits count as debt even if the balance is zero, buy-now-pay-later accounts can hurt, and high living expenses reduce what’s left to service a loan. Tidying these up before you apply can lift the number.
How to improve it
- Lower or close unused credit card limits and BNPL accounts.
- Pay down or pay off small consumer debts.
- Show stable, documented income.
- Save a bigger deposit — it cuts the loan size and can remove LMI.
In our experience, the biggest surprise for first home buyers is often the gap between what they think they can borrow and what a lender will actually approve. Even a difference in living expenses, credit card limits, HECS/HELP debt, employment type, or deposit size can move borrowing capacity by tens of thousands of dollars. This is why we encourage buyers to check their real borrowing position early, instead of relying only on online calculators.
Borrowing power works hand-in-hand with your deposit, and once you know your number you’ll want pre-approval to lock it in. Start from the first home buyer guide for the full picture.
Talk to a broker before you commit
Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.
Frequently asked questions
How much can I borrow for a home loan?
It depends on your income, expenses, existing debts and current rates. Lenders also test you at a higher buffer rate, so the approved amount is usually lower than a basic calculator shows. A broker can give you a realistic figure.
Why is my borrowing power lower than expected?
Mostly the serviceability buffer (lenders test you at a higher rate) plus debts like credit card limits and living expenses. Reducing these can lift your borrowing power.
Does HECS/HELP affect how much I can borrow?
Yes — compulsory student loan repayments reduce your assessable income for servicing, which lowers borrowing capacity until the debt is small or cleared.
General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.