Buying a home or investment property?
Your borrowing capacity plays a crucial role in how much you can secure from lenders—and ultimately, the type of property you can afford. Whether you’re a first-time buyer or seasoned investor, understanding how to increase your borrowing capacity for a home loan is essential in today’s competitive market.
At The Brokerage Connection, our expert mortgage brokers in Sydney and Brisbane work with buyers daily to help maximise their potential and match them with tailored finance solutions.
Let’s explore the top 7 strategies to boost your borrowing power—plus actionable tips, expert insights, and links to helpful tools along the way.
1. Improve Your Credit Score
Lenders closely examine your credit score before approving your loan. A high score often translates to better borrowing capacity and lower interest rates.
How to improve it:
- Pay bills and existing debts on time
- Avoid applying for multiple credit cards or loans
- Check your credit report regularly for errors
Use our guide on how to check your credit score in Australia for step-by-step advice.
2. Reduce Existing Debts
Your existing liabilities directly affect how much you can borrow. Car loans, credit cards, and personal loans all reduce your borrowing power.
Practical tip:
Pay off or consolidate debts before applying. Even closing unused credit cards with high limits can make a big difference.
3. Increase Your Income (and Declare All of It)
Your income is one of the biggest influencers on your borrowing capacity for a home loan. Lenders assess your ability to repay, so the higher your stable income, the higher your borrowing limit.
Suggestions:
- Take on additional work or side gigs (and declare this income)
- Include rental income or dividends, if applicable
- For investors: learn how to leverage your SMSF for property success
4. Minimise Living Expenses
Lenders often request bank statements to understand your regular expenses. The less you spend, the more you can borrow.
Cost-cutting tips before applying:
- Reduce dining out and discretionary spending
- Cancel unused subscriptions
- Demonstrate consistent budgeting behaviour over at least 3 months
Use our budgeting calculator to map out your monthly expenses and find saving opportunities.
5. Consider a Longer Loan Term
Choosing a longer loan term can reduce your monthly repayments, making your application more favourable from a lender’s perspective. While you may pay more in interest over time, it can significantly increase your borrowing capacity.
Talk to a mortgage broker in Brisbane or Sydney to understand the trade-offs and find the right balance.
6. Apply with a Co-Borrower
Applying with a partner or family member can improve your chances of approval and increase how much you can borrow. Lenders consider both incomes and divide financial responsibility.
Important: Both parties are equally responsible for the debt, so ensure this decision is well-considered and legally documented.
7. Work with a Qualified Mortgage Broker
Every lender has different rules. Some may assess your borrowing capacity more generously than others. A qualified mortgage broker in Sydney or Brisbane can compare multiple lenders, structure your application strategically, and ensure you meet the right criteria.
At The Brokerage Connection, we:
- Access over 30 lenders across Australia
- Assist with pre-approvals and strategy
- Offer long-term support for homeowners and investors
Learn more about your borrowing power and how we can help you optimise it.
Bonus: Use Professional Buyers Agents to Your Advantage
If you’re looking for an edge in the market, a buyers agent in Sydney or buyers agent in Brisbane can help you identify properties within your adjusted budget—and often below market value.
Read more: Why would I use a buyers agent?
FAQs About Borrowing Capacity
What is the meaning of borrowing capacity?
Borrowing capacity is the maximum amount a lender is willing to let you borrow based on your income, debts, expenses, and financial history.
What is capacity in a mortgage loan?
Capacity refers to your ability to repay the loan. Lenders assess this based on your income, job stability, living expenses, and existing debt obligations.
How to calculate borrowing capacity for a home loan?
Use tools like our borrowing power calculator or speak with a broker. It factors in income, debts, expenses, and interest rates.
What is the maximum you can borrow for a mortgage?
There’s no one-size-fits-all answer. It depends on your financial profile and the lender’s criteria. Some lenders may offer higher limits to applicants with strong credit, stable income, and low debts.
Make Borrowing Capacity Work For You
Improving your borrowing capacity for a home loan isn’t just about the numbers—it’s about strategy. From managing your credit score and income to choosing the right loan structure, each step adds up.
By following the tips above, you’ll position yourself for a better outcome—whether you’re buying your first home or expanding your investment portfolio.
Ready to take action?
Contact The Brokerage Connection today for expert help from our mortgage brokers in Sydney and Brisbane, and tap into the power of our connected network of buyers agents and finance specialists.