How much can I borrow in 2026? Home loan borrowing capacity explained

Two people earning exactly the same salary can have very different borrowing capacities. Give one a HECS-HELP debt, a $10,000 credit card limit or two dependants, and their borrowing power can fall significantly. Put those same borrowers in front of different lenders and the numbers can change again.

That's because home loan borrowing capacity isn't simply a multiple of your income. Lenders look at what you earn, your living expenses, existing debts and financial commitments, then calculate how much income you have left to comfortably service a home loan.

Small differences can have a big impact

Take HECS-HELP debt, for instance. For example, according to NAB's own figures from 2024, someone earning $125,000 but with a $26,500 HECS-HELP debt can borrow $497,000. Clear the debt and that borrowing power rises to $587,000. 

Credit cards can have a similar effect. Compare the Market found that someone earning $100,000 with a $10,000 credit card limit could borrow $505,000 that same year, but $552,000 if they cancelled the card.

Importantly, lenders generally look at your approved credit card limit, not simply what you owe. So even a card you pay off every month can affect your borrowing capacity.

Dependants can also reduce borrowing power because lenders allow for the additional household expenses they create. For property investors, rental income helps, but lenders don't necessarily count every dollar of rent and the proportion they accept can vary.

How the serviceability buffer works

Banks don't assess a mortgage using today's interest rate alone. The banking WATCHDOG, APRA, requires regulated lenders to apply a serviceability buffer of at least three percentage points.

So, if your home loan rate were 6%, you would generally need to show you could afford repayments calculated at 9%. The idea is to leave room in your budget if interest rates rise or your financial circumstances change.

Why the lender matters

The calculation doesn't stop there because lenders have their own credit policies.

Some lenders, for example, now treat HECS-HELP debt more favourably in particular circumstances. NAB says eligible borrowers with $20,000 or less remaining on their HECS-HELP debt can have it excluded when their borrowing power is calculated.  CBA takes a different approach again, setting aside debt due to clear within 12 months. Others count every dollar. Nothing about the borrower has changed.

There can also be exceptions for refinancing. Some lenders allow eligible borrowers completing a like-for-like refinance to be assessed using a reduced serviceability buffer. That can help someone who has demonstrated they can comfortably make their existing repayments but doesn't pass another lender's standard assessment.

Non-bank lenders provide another set of options. That’s because non-bank lender credit policies can differ from those of banks, which can be useful for borrowers who don't fit neatly within traditional lending criteria.

First home buyers may also have options through the Australian Government 5% Deposit Scheme, while some lenders offer Lenders Mortgage Insurance (LMI) waivers to eligible professionals. These policies don't necessarily increase home loan borrowing capacity, but they can reduce the deposit or upfront costs needed to purchase.

So, how can you boost your borrowing capacity?

There isn't one universal answer to how much you can borrow – but there may be ways to improve the position you're in.

Depending on your circumstances, reducing unused credit card limits, paying down certain debts or restructuring existing commitments could increase the income a lender considers available for home loan repayments. For investors, the way a lender assesses rental income can also make a difference.

But improving borrowing power doesn't always require changing your finances. Sometimes it comes down to finding a lender whose credit policy is a better fit for your circumstances. 

At Eventus Financial, we look at all the factors affecting your borrowing capacity and explore suitable lending options across the market to identify opportunities to potentially boost your borrowing power. 

Eventus Financial is an award-winning Sydney mortgage broker with over 400 five-star Google reviews. Schedule a no-obligation consultation with Alex to see what's possible.