How Much Can You Borrow Now? What’s Cut Your Borrowing Power, and How to Rebuild It

Summary:

This guide shows what your borrowing power is, what cut it, and how to rebuild it, so you shop with a real number.

• Borrowing power is your income minus your expenses and commitments, tested against a safety buffer, so a higher repayment on paper leaves less room to borrow.
• Four rate rises since February 2026 cut borrowing capacity for a household on a median income by almost $90,000, around 9%, according to Cotality.
• Two people on the same salary can borrow very different amounts once dependants, expenses, existing debts and each lender’s policy are counted.
• Credit card limits, car loans, HELP or HECS debt and buy-now-pay-later accounts all count as commitments, even when the balances feel small.
• Cutting limits and clearing debts before you apply raises the income a lender can base your loan on, and how your income is counted matters as much as how much you earn.
• The same income can support a bigger loan with the right lender, because each lender counts income, expenses and the buffer differently.

If you are asking how much you can borrow on a home loan right now, the honest answer has shifted over the past year. The same income does not stretch as far as it did, and plenty of buyers are finding their budget sits lower than they expected. This guide explains what borrowing power really is, what has pulled it down, and the practical levers that build it back up. You will also see why two people on the same salary can get very different numbers.

If you already hold a home loan pre-approval, a rate change raises its own questions. We covered those in a recent explainer on what the latest Reserve Bank cash rate decision means for an existing pre-approval and your borrowing power.

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What does borrowing power actually mean, and how does a lender work it out?

Borrowing power is the most a lender will lend you, based on your income minus your living expenses and existing commitments. The lender checks that enough is left over to cover the new repayment plus a safety buffer. That buffer is set by the regulator, the Australian Prudential Regulation Authority (APRA), at three percentage points above the loan rate. The industry calls this test serviceability.

In practice, a lender starts with your gross income, takes off tax, your declared living costs and anything you already repay. It then tests what remains against that buffered rate. The buffer is why the figure a lender gives you is lower than a simple repayment sum suggests. The lender builds it in so you could still manage if rates rose.

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How much less can you borrow after the 2026 rate rises?

Quite a lot less. According to Cotality, the four rate rises since February 2026 cut borrowing capacity by almost $90,000 for a household on a median income. That is around 9% of its purchasing power (Cotality, 29 September 2026). On 29 September 2026 the Reserve Bank of Australia raised the cash rate to 4.60%.

Higher rates do not change your salary, but they do change the repayment a lender has to test you against. Add the APRA buffer on top, and the assessed repayment climbs further. The same income supports a smaller loan today than it did at the start of the year. The point here is your capacity to borrow, not a view on whether it is a good or bad time to buy.

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Why does the same salary buy two people different amounts?

Because a lender assesses far more than your salary. Two people earning the same amount can have different dependants, different living costs, and different debts. Each of those changes the surplus a lender has to work with. Lender policy differs too. The result is two honest answers to the same question that can sit thousands of dollars apart.

This is where our team earns its keep. We assess you as you are on the day you apply, then match your full position to a lender whose policy treats it kindly. The same numbers, read by a different lender, can land very differently.

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What’s dragging your borrowing power down?

The commitments you barely think about. A credit card is assessed on its limit, not the balance you clear each month, so a high limit you rarely use still counts against you. Car and personal loan repayments count in full. A compulsory HELP or HECS repayment counts too, and so do buy-now-pay-later accounts. Small pieces add up.

Our brokers see the same pattern often. A client leaning on a credit facility to get through the month reads as stress to a lender, even when nothing is overdue. The fix is usually simpler than people fear: reduce a limit, clear a small debt, or fold several repayments into one. We cover how in the next section.

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The levers that rebuild your borrowing power

You have more control here than you might think. Reducing a credit card limit, clearing or consolidating a small debt, and tidying up spending before you apply all help. Each one lifts the income a lender can lend against. How your income is counted matters just as much as how much you earn.

A borrowing power calculator can give you a rough starting figure, but it cannot weigh your full position the way a lender does. If a first home is your goal, our guide to first home buyer home loans walks through deposits, grants and up-front costs.

Here is one from our own files. We recently had a client we could only make work with a lender that counted 90% of their rental income. That treatment gave them about $300 a month more in servicing, which stacked up to roughly $25,000 more in maximum borrowing capacity. Same client, same property, same rent. The lender’s policy was the whole difference.

Want a sense of your own number before you go further? A no-obligation chat with our team gives you a real read on your borrowing power, with no credit check and no pressure to proceed. Call us on 07 3505 3099 whenever it suits.

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Why does the right lender mean a bigger loan on the same income?

Because no two lenders assess a file the same way. Each one counts income types differently, benchmarks expenses differently, and applies the buffer differently. One lender might count all of your income and land on a comfortable yes. Another might discount part of it and come back lower. With the same income, the lender’s policy is what moves the number up or down.

Bill Robb on our team saw this recently. A client with a mix of foreign and Australian income had been declined by two other brokers. We placed the loan with a lender that accepted the overseas income at 90% of the property value. That switch reduced the client’s monthly outgoings by almost $4,000. Two brokers had called it impossible. The right lender made it work.

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Borrowing power is not the same as approval

A borrowing power figure is an estimate of what a lender may be prepared to lend, not a promise. It is based on the details you enter, before any lender has verified your income or valued a property. A full assessment can land higher or lower. You may be eligible at that level, but the real number comes from a formal application. Treat the estimate as a guide, not a guarantee.

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Talk to Fox about what you can really borrow

If you want a clear, honest read on how much you can borrow on a home loan, start with a conversation. We will look at your full position, work out your true borrowing power, and match you to a lender whose policy fits. From there, we handle the heavy lifting on the paperwork and the lender. Fox Home Loans, your trusted mortgage broker on the Sunshine Coast, works with clients right across Australia.

Get started with our team today. It is a free, friendly chat with no pressure to proceed. Apply now or call us on 07 3505 3099.