Understanding Your Borrowing Power
Christian Stevens, Mortgage Broker
Published January 31, 2025, 2:10 p.m ET
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Article Breakdown
🔑 Key Facts
- Borrowing power is the maximum amount a lender is likely to approve based on your income, expenses, debts, and financial profile.
- It varies significantly between lenders due to different policies, buffers, and income treatment.
- Improving your borrowing power often means reducing debt, increasing savings, or optimising your loan structure.
- Flint helps you assess, maximise, and strategically use your borrowing capacity — so you can buy with confidence.
What Is Borrowing Power?
Borrowing power is the amount of money a bank or lender will allow you to borrow for a home loan. It’s based on your ability to repay the loan under stress-tested conditions.
It considers:
- Your income (including salary, rental, bonuses, etc.)
- Your living expenses and number of dependants
- Your existing debts (e.g. credit cards, car loans)
- Loan term and interest rate
How Is Borrowing Power Calculated?
Lenders use a formula that includes:
- Gross income (before tax)
- Living expenses — often benchmarked to a minimum threshold
- Debt obligations — including credit cards (based on limits, not balances)
- Loan buffer — lenders assess at 2–3% above current rates to account for potential rate rises
Because of these buffers, your approved loan amount is often lower than what you could theoretically afford based on real-world repayments.
How to Increase Your Borrowing Power
Each lender applies their own:
- Income scaling (e.g. treating overtime or commissions differently)
- Expense assumptions (based on location, family size)
- Maximum allowable debt-to-income ratio
This means two banks could offer you very different loan amounts — even with the same financial information.
How to Increase Your Borrowing Power
- Reduce existing debts — pay down loans or reduce credit card limits
- Increase income — regular overtime, bonuses, or rental income helps
- Tighten your spending — some lenders review actual bank statements
- Avoid new liabilities before applying (e.g. BNPL or car finance)
- Add a co-borrower to combine incomes if applicable
Tools to Estimate Your Borrowing Power
Use Flint’s in-house borrowing power calculator for a tailored estimate — or get a broker assessment using real lender policies to understand:
- How much you can borrow
- Which lenders will offer the most
- What conditions apply (LVR, DTI, etc.)
📞 Want to Know How Much You Can Borrow?
At Flint, we help you:
- Assess your borrowing power across multiple banks
- Understand what impacts your maximum loan amount
- Strategically increase your borrowing capacity over time
Talk to Flint today and let’s help you buy smarter — with clear numbers, real options, and expert support.
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