If you’ve been looking to buy a property recently, you may have noticed it feels harder than ever to secure a home.
An environment of climbing property prices, high interest rates, and intense competition can push buyers to their limits—both financially and emotionally!
My experience as a licensed mortgage broker saw many aspiring homeowners asking: How can I increase my borrowing power?
In this article, I’ll dive into what borrowing power is, and—most importantly—what you can do to increase your borrowing power. So, let’s explore the different ways I know that can increase your borrowing power and bring more properties within reach.
What is my borrowing power and why does it matter?
Let’s start with the basics. Borrowing power refers to the maximum amount of money a lender is willing to lend you for a mortgage based on your financial situation. It’s determined by obvious factors like your income, loan commitments and your living expenses. There are also less obvious factors like credit score, loan to value ratio and student debt commitments.
….the more you increase borrowing power, the more buying options you can have.
I go into the ins and outs of how a bank calculates these different pieces of your financial profile for a home loan application in my article on serviceability.
Why does it matter so much in 2025? While Australian politicians argue over how best to solve a housing shortage, the property market continues to elude many aspiring homeowners.
Understanding how to increase your borrowing power can be about taking control of your own property journey rather than waiting on much bigger housing problem, for both renters and buyers, to be addressed.
Put simply, the more you increase borrowing power, the more buying options you can have.
Key Factors Impacting Your Borrowing Power in 2025
The complex calculation of your borrowing power is unique to each lender. But there are some common themes that run through all lenders.
OBVIOUS IMPACTS TO BORROWING POWER
These are some big ticket items to understand when you are wondering what impacts your borrowing power.
Income
Increasing borrowing power is hugely dependent on your income amount – and where is comes from (a job or a side hustle). In addition to your income amount, lenders will make their own assessment of how reliable your income is.
No matter who you are or what your have, Australian law requires lenders to do checks on your income sources to feel comfortable in your ability to make repayments to your loan.
The more reliable the income, the more it can imcrease your borrowing power.
If you had a choice around how to increase your income – an extra $10,000 in base salary or extra $10,000 in commission payment – I am guessing you take the base?
Lenders lean the same way – for the same income amount the more reliable income source should increase borrowing power the most.
Expenses
Expenses seem to be (an ever-increasing) fact of life. Some will stop (like renting) when you buy a home; and some will start (like home insurance).
In the last decade, understating expenses has artificially boosted borrowing power, so lenders are performing more comprehensive checks these days.
That said, if you are spending more today because you can, you might wish to pull back once you are in your own home.
So, speak to a mortgage broker in depth about your situation becuase living expenses go a long way to determining how much is leftover for any proposed home loan repayments.
I detail here how a living expense declaration works in a home loan application.
Interest rates
Increasing your borrowing power comes will eventually boil down to maths.
Money in
– Money out
= Money available for a new loan
The lower the interest rate, the more you increase borrowing power.
LESS OBVIOUS IMPACTS TO BORROWING BOWER
Here are few less obvious factors that can impact your borrowing power. Good mortgage brokers will be ever-present to the impact of these subtle yet significant impacts to borrowing power.
Lender
Lenders differ in their risk-appetites for types of income, property and deposit amounts in an application.
If the same applicants applied for a home loan at two different lenders – they are unlikely to have the same borrowing power at each.
Lender-specific interest rate measures also come into this:
- How much of a buffer do lenders apply to the interest rate in the home loan assessment?
- How does the interest rate on the home loan product you choose impact this?
These are nuances of the industry that I would find way too confusing to navigate without the help a mortgage broker. I put people in touch with licensed mortgage brokers.
It is never too early to get in touch.
Student debt
Student debts in Australia are commonly referred to HELP or HECS debts – a loan arrangement with government. Once you are earning over income thresholds for these loans, a minimum repayment kicks in.
I consider these a silent repayment as it is usually taken from the income earner at the same time they get paid in their pay cycle – when they pay their income tax.
In my mortgage broking experience I have seen these significantly impact borrowing power.
Unused credit card limits
If you have a credit card, you most likely have access to a credit facility with set limit.
Where you use the credit card or not – it is the limit, not the balance, that impacts your borrowing power.
How to Increase Borrowing Power in 2025
I talked about some factors that impact borrowing power, now let’s explore how to increase borrowing power. This list can apply to first home buyers, as well as anyone looking buy property in 2025.
General information
This is general informration only – based on my experience.
Don’t act on these before seeing a lending professional.
Give yourself a choice of lender
All lenders are not equal. That is the number one reason to see a see a mortgage broker.
By approaching a lender directly, you can unwittingly pigeonhole yourself into their policy, products and borrowing power calculations.
Mortgage brokers consider a suite of lenders and if increasing borrowing power is a priority for you – they can narrow the field of lender options to those most likely to maximise your borrowing power.
Different lender approaches to assessing a home loan application is a key reason why I recommend seeing a licensed mortgage broker to guide you through your property buying journey.
Boost Income
It sounds obvious. I know it is not easy. But an increase income will usually increase borrowing power.
It could be a second (or third job) or an increase to your current income.
How much it boosts your borrowing power boils down to how much of your increased income a lender will use.
If a lender is very confident in your income source, they can use 100% of it to increase your borrowing power.
If they are less confident, they might only use a portion the income you earn in their borrowing power calculations.
For example, a lender might use 100% of any increase to your base salary, whereas they might only use 50% of any bonus income earned.
There are plenty of other income types – a family assistance payment for example – but I am focussing on incomes that have the most potential to be boosted.
Employment type matters
Are you just starting out or looking to change jobs? If increasing your borrowing power is important to you then consider the type of role you take on.
A self-employed role means it could take two-years to prove your income. A permanent employee might only need one day.
The more secure a lender considers your employment-type, the more it can increase borrowing power.
Here is a table of income and employment types I have from most-to-least reliable for boosting borrowing power – represented on a scale of “bank love”.
Change jobs
Find where the money is.
Progress your career with employer-supported training and investigate how extra qualifications could help increase your income level.
A popular tactic of increasing borrowing power I see is when people take on a FIFO (Fly in-Fly out) employment role. Australia has many of these employment opportunities given the established mining industry. There are lifestyle adjustments to be made but financially it can stack up in terms of borrowing power.
And regarding working away – careful you don’t get stuck working away. Unless that is part of the plan.
Making major changes that affect lifestyle but increase income could be considered a sacrifice. But I analysed loads of borrowers who have paid off their home loan. None of them considered a major job change or relocation a sacrifice – more an opportunity.
Time for inspiration?
You can read more about people who have paid off their home loan using different strategies here.
Consider who does the work (for spousal couples)
If you are in a relationship, consider who does the extra work to boost your household income.
Australia uses a progressive tax system, which can give some couples an opportunity to increase borrowing power more – depending who earns the money.
In my mortgage broking experience, I have seen how a partner on a lower income earning an extra $10,000 can increase a couples borrowing power more than if the higher income earner did the same. That is because there is likely to be more take-home pay for the lower income earner – a lower tax bracket can mean more dollars make their way to the household.
This is another good one to run by your tax professional for advice.
Income – AUD beats foreign currency
Globalisation and work from home trends see many Australians living in Australia earning a foreign income.
I write about which foreign currency incomes are treated well by lenders. Borrowing power depends on the currency received and often is scaled back when it comes time for a home loan assessment.
The gold standard to increase borrowing power is earning Australian dollars, in Australia and this reflected in an employment contract.
Rentvest – Buy an investment property first
Did you know that even potential rental income from an investment property can be used in a home loan application to increase borrowing power?
This is another way of boosting your borrowing power by increasing your income – this time it is a rental income.
Rentvesting is a popular strategy used by people happy where with their lifestyle and location – but cannot buy because of high property prices.
Put simply – It is buying an investment property to get a foothold in the property market, while you rent elsewhere, live at home, work abroad – you name it.
This option has significant tax implications and can also affect eligibility for various first home owner grants so be sure to get professional tax advice.
Bigger deposit or ask for a Guarantee
As your deposit increases in size, obstacles to a home loan approval reduce.
Big deposits reduce lender risk and so can improve borrowing power. A 20% deposit has long been considered an ideal amount for a home loan application in Australia.
But as you will likely be aware, saving takes time and property values don’t wait for anyone.
A guarantor home loan is an option to get around having a small deposit – but at the same time reducing the lender risk. So, a guarantor home loan can increase borrowing capacity if it enables a borrower to access a lower interest rate.
I should temper expectations here: Remember, when family provides a guarantee to help you buy a property you are using their equity – not their income. So, any increased borrowing power will be marginal.
Pay off other debt commitments
Paying off anything requiring an ongoing monthly payment will increase borrowing capacity. Here are a few:
- Personal loans
- Car loans
- Interest free purchases
- Leases – including novated leases
- Student debt – HECS/HELP
These have ongoing commitments that can be a drain on your monthly income – so getting rid of them can increase your borrowing power.
It might impact your savings though….
See a finance professional to help work through these because you might need to weigh up interest rates, penalties and tax implications.
A HECS payout success story!
I worked with a borrower who decided to pay off their HECS debt to increase borrowing power. They had done everything possible but was still not able to buy “the property” they really wanted.
Paying of the HECS debt increased their borrowing power and made the property purchase possible at the $1.4million mark.
That was 2021. So with the property value fast-approaching value of $2million – I guess you could say that decision paid off!
Close or reduce credit cards
Having no credit card limit will help maximise your borrowing power, but if you need a credit card then reducing limits where possible will help.
Credit score
Credit scoring is getting more sophisticated and informative for lenders.
In practice – I am seeing it used here and there. More a measure to stack up to if a borrower wants to access a special offer like a lenders mortgage insurance waiver.
But I see the day coming where a good credit score might mean an increase in borrowing power for the borrower – it is all about risk. The less risk a borrower poses, the more a lender could be willing to offer.
Renegotiate or refinance existing debts
If paying off existing commitments is not an option, then consider a refinance. This might enable lower monthly commitments which can increase borrowing power.
There will likely be fees and new interest rates to consider. All this needs to be stacked up against the opportunity you are creating for yourself.
Principal and interest repayments preferred
As a licensed credit professional, I have seen lending rules change to the point their design is to encourage Australian borrowers to pay of their home loans.
Principal and interest repayments are key to paying off a home loan.
So, it makes sense that if you choose a principal and interest home loan, it can increase borrowing power compared with an interest only alternative.
Reduce your living expenses
As numbers go, living expenses can be a big one. So, it deserves some attention.
Have you ever sat down to consider what you really need to spend each month to maintain a reasonable lifestyle?
Can you pull back on expenses if it means you could buy a property?
Understanding your living expenses is a key part of any home loan approval process.
If the amount is reasonable and not overstated, it can increase borrowing power.
If you just guessed, and you overstate your living expenses in a home loan application, it could do the opposite.
So, meet with a broker early in your property journey to learn about living expenses.
Salary sacrifice and other payments
Do you make payments direct from your pay like co-contributions to shares or an extra superannuation contribution?
If these are voluntary and you are willing to stop them to help with home loan repayments, then this frees up regular cash to increase your borrowing power.
There are other forms of salary sacrifice that enjoys favourable tax treatment. Aligning with a lender who understands the tax benefits (as many ignore them) can also increase your borrowing power.
How bad do you want it?
Increasing borrowing power can often come down to one question:
How bad do you want it?
Do you sell your car and pay off the debt and get something cheaper?
Do you go and work away?
Do you live in a share house or move back with Mum and Dad to save?
You get the idea. If it were easy you would have done it already!
It is often a balance between lifestyle vs homeownership.
I will leave it with you.
Alternatives to increasing borrowing power
Here are some alternatives I have seen to increasing borrowing power are below.
Buy with someone else
Buying property with someone else is a way of combining finances to improve your borrowing capacity.
Whether you consider it a compromise or opportunity comes down to you.
Adjust expectations
Recalibrating your needs and wants – it can be a useful exercise that reframes and resets you. It can be energising.
Are your looking for a starter home or forever home?
There is nothing wrong with starting small.
Key considerations
The aim of my article is for you to understand borrowing power but don’t get laser-focussed on borrowing your maximum just because you can. You are the one who needs to pay this home loan back.
From a finance broking perspective. I see successful borrowers are those who prepare for bumps in the road. Life happens and you need some wriggle room – holidays, health, kids, partners.
Most of our list covers significant changes that can have tax, financial and lifestyle implications.
I always recommend seeing a finance professional to get advice before making any changes.
Final word
Increasing your borrowing power in 2025 is not easy. But for many, not impossible either.
Explore options to boost your income, reduce expenses and make some lifestyle changes. Set goals and most of all get a mortgage broker on your side.
I am started mortgage broking in 2008 and have seen many buyers take time to understand borrowing capacity –a thorough and often tough conversation.
But they went way and came back with increased borrowing capacity – and purchased the property they wanted.
I introduce licensed brokers to help buyers increase their borrowing capacity.
