Your home loan borrowing power is not based on salary alone. Lenders look at the wider picture to estimate how comfortably you could manage repayments, both now and if circumstances change.

That means two people earning the same income may receive very different borrowing estimates.

What Lenders Consider

Each lender has its own assessment process, but common factors include:

• Your income, including how it is earned and how consistent it is

• Living expenses, from groceries and utilities to childcare and insurance

• Existing debts, including personal loans, car finance and HELP repayments

• Credit card limits, even when the balance is low or fully repaid

• Dependants and other ongoing financial commitments

• Your deposit and the value of the property you want to purchase

• The proposed loan, including its term, rate and repayment type

Lenders also test whether you could manage repayments at a higher assessment rate. This creates a buffer for potential rate rises or unexpected changes to your finances.

Why Borrowing Power Differs Between Lenders

Lenders do not all treat income and expenses the same way. One may accept more of your overtime, commission, bonus or rental income, while another may take a more conservative view.

Policies can also vary for self-employed applicants, casual workers, contractors and borrowers with several existing properties. This is why one online calculator cannot show every option available to you.

Your Maximum Is Not Necessarily Your Budget

Being eligible to borrow a certain amount does not automatically mean you should spend it all.

Consider how the repayments would sit alongside your lifestyle, savings goals and future plans. Leave room for ownership costs such as council rates, insurance, repairs and strata, as well as expenses that may change over time.

Final Thoughts

Borrowing power gives you a starting range, not a spending target. A proper assessment can help you understand what lenders may offer and what repayment level still leaves you comfortable.

Prestige Finance Brokers can review your complete position, compare suitable lender policies and help you build a clearer property budget.

General information only. Lending criteria, rates, fees and eligibility vary between lenders.