Most people walk into this question thinking the answer is about their salary. It partly is. But for many borrowers, the bigger variable isn’t how much they earn — it’s what their existing debts are quietly doing to their borrowing power.
An unused $10,000 credit card can cost you $50,000–$80,000 in borrowing capacity. Closing it before you apply can change your approval range significantly.
As a starting point, most lenders will consider lending 5–6 times your annual income. At the national average borrower income of $131,500, that puts you in the $640,000–$695,000 range. A joint application often stretches that considerably further.
The things that quietly reduce your number
Credit card limits
Lenders assess every credit card as if it’s fully drawn, at roughly 3% of the limit as a monthly commitment. A $20,000 limit across two cards can cost you $100,000+ in borrowing capacity — even if the balance is zero.
Buy-now-pay-later and forgotten accounts
Afterpay, Zip, Humm — lenders see them. Even accounts you haven’t used in months. Before you apply, it’s worth auditing everything.
HECS and personal loans
Both reduce your assessed income. HECS repayments in particular are often underestimated in their impact — especially at higher incomes where the mandatory repayment percentage is higher.
Serviceability buffer
Lenders add 3% to the current interest rate and test whether you could still afford repayments at that higher rate. This buffer alone typically reduces borrowing capacity by 15–20% compared to what the headline rate suggests.
The deposit question
A 20% deposit opens up the widest range of lenders and typically offers more suitable interest rates. A 5% deposit — with the government’s expanded scheme — can work well for eligible buyers and means entering the market years earlier. The right deposit isn’t always the biggest one.
Investing or refinancing?
Investors benefit from rental income being included in the assessment at 70–80% of the projected figure. If you’re refinancing with built-up equity, your capacity is often stronger than you expect because lenders treat equity differently to saved cash.
The number that matters isn’t the national average. It’s the highest approval you can get, across the right lender for your situation, before you start making offers. That’s the calculation worth doing first.
This is general information only. Speak with a licensed mortgage broker for advice tailored to your circumstances. Credit criteria, fees and charges apply. All loans are subject to lender approval.
Sources: ABS, Average Weekly Earnings Nov 2024; RBA, Serviceability Buffer Policy 2023; APRA Prudential Practice Guide APG 223; Housing Australia First Home Guarantee 2025–26.
