Published 28 September 2026. Figures and market conditions described here were current at that time and may have changed since.
Most people assume their borrowing capacity is determined primarily by how much they earn. Income is certainly a key factor, but lenders look at the full picture of your financial position, and there are several things entirely unrelated to your salary that can reduce how much you are able to borrow.
Understanding these factors before you apply can help you address any issues early and avoid surprises during the assessment process.
Credit card limits
Lenders assess credit cards at their full limit, not the outstanding balance. A credit card with a $15,000 limit is treated as a $15,000 debt regardless of whether you owe $500 or nothing at all.
If you have multiple cards or a high combined limit, this can reduce your borrowing capacity. Reviewing your credit card limits before applying is worth discussing with a mortgage broker as part of your preparation.
Buy now, pay later accounts
Buy now, pay later balances and active accounts are increasingly scrutinised as part of the home loan assessment process. Even small balances can be flagged, and multiple active accounts can signal to a lender that your discretionary spending is higher than your bank statements alone might suggest. Clearing any outstanding buy now, pay later balances and closing accounts you no longer need before you apply is worth considering.
HECS-HELP debt
Student debt through the HECS-HELP scheme can affect your net income, as repayments are automatically deducted from your salary once you earn above the repayment threshold. Lenders factor this into their serviceability assessment, which means a significant HECS balance can reduce your borrowing capacity even if your gross income looks strong. The larger the debt and the higher your income, the more noticeable the impact is likely to be.
Number of dependants
Lenders use living expense benchmarks that increase with the number of dependants in a household. Two applicants with identical incomes can have different borrowing capacities simply because one has children and the other does not. This is not something you can change, but it is important to understand when you are working out what you can realistically borrow and planning around it.
Existing loan commitments
Any existing debt, including a car loan, personal loan, or an existing mortgage, can affect the amount a lender is willing to extend on a new loan. Each commitment reduces your assessed capacity to service additional debt. For applicants with several existing debts, the impact on borrowing capacity can be significant, even when each individual loan seems manageable on its own.
A mortgage broker can review your position and help you compare your options.
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