How Much Can I Borrow? A Clear Guide for First Home Buyers

The reality most buyers don't expect

One of the first questions people ask is: "How much can I borrow?"

The frustrating part is that the answer is rarely simple. You might hear one number from a bank calculator, another from a broker, and something completely different once you actually apply.

That's because borrowing capacity isn't based on one number — it's based on how a lender interprets your entire financial position.

What we'll cover

• How banks calculate borrowing capacity

• What reduces your borrowing power

• What you can do to improve it

How banks actually calculate borrowing power

Banks look at three main areas:

1. Income

• Salary (PAYG or self-employed)

• Overtime, bonuses, allowances (often shaded)

• Rental income (usually discounted)

2. Expenses

• Living expenses (based on benchmarks or actual spending)

• Existing commitments (loans, credit cards, HECS)

3. Buffers

Banks don't assess your loan at today's rate. They add a buffer (typically ~3%) to ensure you can afford repayments if rates rise.

What reduces your borrowing capacity

These are the big ones:

• Credit card limits (even if unused)

• Personal loans and car finance

• HECS / HELP debt

• High living expenses

• Irregular income

What increases your borrowing capacity

• Reducing or consolidating debts

• Lowering credit card limits

• Strong, stable income

• A clean repayment history

What this means for you

Most people don't have a borrowing problem — they have a structure problem.

Small adjustments can make a meaningful difference:

• Removing a $10,000 credit card limit can increase borrowing power

• Restructuring debt can unlock options

Common mistakes

• Relying on online calculators

• Assuming income = borrowing power

• Ignoring credit card limits

• Applying too early without preparation

Next step

If you want a clear answer based on your actual situation (not a generic calculator), you can book a quick call and I'll walk you through it.