How Much Can I Borrow
on My Salary?

What lenders look at

When a lender assesses your borrowing capacity, they look at your total income (salary, rental income, bonuses, overtime), your monthly living expenses, any existing debt repayments (car loans, personal loans, credit card limits), the number of dependents you have, and the interest rate on the loan you are applying for.

Importantly, lenders do not assess your repayments at the actual interest rate you will pay. They add a buffer — typically 2.5 to 3 percentage points — to stress-test whether you can still afford repayments if rates rise. This buffer is the single biggest factor limiting borrowing power in the current market.

Why borrowing power varies between lenders

Not all lenders calculate borrowing capacity the same way. Some are more conservative with expense estimates, while others use higher buffers or treat certain income types differently. Two lenders can look at the same borrower and arrive at borrowing figures that differ by $50,000 or more.

This is where a broker adds real value. Rather than accepting the first number your bank gives you, a broker compares your borrowing power across 50+ lenders and identifies which one gives you the best outcome for your specific situation.

How to increase your borrowing power

• Reduce credit card limits — lenders assess the full credit limit, not just what you owe. Cancelling unused cards or reducing limits can immediately boost capacity
• Pay down existing debts — reducing car loans or personal loans directly increases the amount you can borrow
• Reduce discretionary spending — lenders review your bank statements. Reducing non-essential spending in the months before applying improves your position
• Apply with a partner — combined income significantly increases borrowing power

Use the borrowing power calculator in our Perth first home buyer guide to get an estimate, or read our refinancing guide if you already have a home loan and want to check your options.

Frequently asked questions