If a lender told you what you could borrow twelve months ago, that number is almost certainly wrong today — even if your income hasn't moved a dollar.
Three cash rate rises this year have reduced what most people can borrow. A new lending rule took effect on 1 February. And the everyday things lenders look at — your credit card limits, your HECS debt, the car loan you've nearly paid off — each move the figure in ways that surprise people.
The good news is that several of these are within your control, and the differences between lenders are wider than most borrowers realise.
When lenders assess a home loan, they don't test whether you can afford the repayment at today's rate. They test whether you could afford it if rates climbed further.
The Australian Prudential Regulation Authority requires lenders to assess borrowing capacity using a buffer of 3 percentage points above the actual interest rate. So a loan advertised at 6% is assessed as though you were paying 9%.
That buffer hasn't changed. What has changed is the rate it sits on top of. Every increase in the underlying rate lifts the assessment rate by the same amount, and the amount you can borrow falls accordingly. This is the single biggest reason a borrowing capacity figure goes stale.
It's worth understanding the buffer isn't lenders being difficult. It exists because plenty of borrowers who comfortably afforded repayments in 2021 were under real pressure by 2023. The buffer is what stops that happening at scale.
This one is genuinely new, and it's widely misunderstood.
From 1 February 2026, APRA limits authorised deposit-taking institutions to lending up to 20% of their new mortgage lending at debt of six times income or more, applied separately to owner-occupier and investor lending and measured quarterly.
The critical distinction: this doesn't change your borrowing capacity calculation at all. It's a cap on the lender's book, not on you. Your DTI ratio is your total debt divided by your gross annual income — so a household earning $150,000 with $900,000 of total debt sits at six times.
What it means in practice is that if your DTI is at or above six, the question becomes which lender has room. Banks retain discretion to lend to creditworthy high-DTI borrowers within the limit, in line with their own risk appetite. Some will have capacity when you apply. Some won't. That's a lender-selection problem, and it's exactly the sort of thing a broker sees across a panel that a single bank can't tell you.
Bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings are exempt from the cap. APRA excluded them deliberately — bridging loans are temporary, and construction lending supports new housing supply.
If you're building rather than buying established, the cap simply doesn't apply to your loan.
Not very, yet. High-DTI loans were running at around 5.5% of new lending when the cap was announced — well under the 20% ceiling. APRA described the limit as not currently binding at an aggregate level, with only a small number of lenders expected to be near it for high-DTI investor lending.
So for most borrowers this is background rather than an obstacle. If you're an investor with several properties, or a high earner stretching into an expensive suburb, it's worth knowing which lenders have headroom before you apply.
Credit card limits — the one people get wrong most often
Lenders assess your credit card limit, not your balance. A card with a $20,000 limit that you've never used and pay off every month still reduces your borrowing capacity, because the lender has to assume you could draw the full amount tomorrow.
The rule of thumb is that every $10,000 of unused card limit can cost you somewhere in the order of $40,000 to $50,000 of borrowing capacity, though it varies by lender. If you're carrying two or three cards you don't use, reducing the limits or closing them before you apply is one of the few levers that works quickly.
Close them properly and keep the confirmation. A card that's cancelled but still showing on your credit file will still be assessed.
The Household Expenditure Measure is a benchmark lenders use to sanity-check declared living expenses. If your stated expenses come in below the benchmark for your household size and income, the lender generally uses the benchmark figure instead.
This catches out frugal people. You might genuinely spend $3,000 a month, but if the benchmark says $4,200, you're assessed on $4,200.
The right response isn't to inflate your figures — that's not honest and it doesn't help. It's to declare accurately and understand that the benchmark sets a floor. Where genuine one-off costs are inflating your recent statements (a wedding, a medical bill, a move), those can often be explained and excluded.
Car loans, personal loans and buy-now-pay-later commitments are assessed on the committed repayment, and they hit hard relative to their size. A $500 monthly car payment can reduce borrowing capacity by roughly $60,000 to $80,000.
Paying out a small personal loan before applying often does more for your capacity than saving the equivalent amount toward your deposit. Whether that's the right move depends on your circumstances, and it's worth modelling both ways rather than assuming.
Debt consolidation can also help, but carefully. Rolling a five-year car loan into a thirty-year mortgage reduces the monthly repayment and increases the total interest paid substantially. It can be the right call when it makes a purchase possible, and the wrong one when it just moves the problem.
This is where lender policy varies most. Some lenders assess the full compulsory repayment. Some reduce or disregard it where the balance will be repaid within a short window. Some treat it as an ongoing commitment regardless.
For a graduate with a substantial balance, the difference between lenders on this single factor can be tens of thousands of dollars of capacity. It's rarely worth paying out a HECS debt to improve borrowing power before checking whether a different lender simply treats it more favourably.
Borrowing capacity isn't a fixed property of your finances. It's the output of each lender's assessment model, and those models differ — on how they treat overtime, bonuses and commission, on self-employed income and how many years of returns they want, on rental income shading, on HECS, on whether they'll count a second job.
Two lenders looking at identical financials can land more than $100,000 apart. That isn't unusual and it isn't a mistake by either of them.
This is the practical case for a broker. Not that we can make a lender say yes — we can't — but that we can see where the same income is assessed most favourably, and steer the application there before it becomes a credit enquiry on your file.
The honest answer is that it takes a conversation and a proper assessment, not a calculator.
An online calculator gives you one lender's rough model with none of your detail in it. What's useful is a comparison across lenders using your real income, your real commitments and the policies that apply to your situation — and, where the number falls short of where you want it, a clear picture of which changes would actually move it and by how much.
Sometimes the answer is that waiting three months and closing two credit cards puts the property you want within reach. Sometimes it's that a different lender already lends what you need. Occasionally it's that the number is what it is and the honest advice is to adjust the plan.
We work across a panel of more than 45 lenders, and under the Best Interests Duty we're required to recommend what suits your circumstances.
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This article contains general information only and does not take into account your objectives, financial situation or needs. It is not tax, legal or financial advice. Borrowing capacity examples are illustrative and will differ for your circumstances and by lender. Information current as at 16/08/2026.
'We', 'us' and 'our' refer to McIntyre Finance (Credit Representative number 519302 is authorised under Australian Credit Licence Number 389328) and our related businesses.
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