The borrowing reality check: your capacity is not set in stone

Here is the straightforward truth. Most people think their borrowing capacity is a fixed number. They treat it like a blood type or a height measurement. They assume that if one lender says no or caps them at a certain amount then that is the final verdict.

It is not.

If you ask three different lenders how much you can borrow you will likely get three very different answers. The difference between them can sometimes be tens or even hundreds of thousands of dollars. If you are trying to figure out your budget for a property you need to understand why these numbers move so much.

Not all income looks the same

You know what you earn but lenders view your payslip through a risk filter.

Base salary: Lenders love this. It is stable and predictable.

Overtime, bonuses, and commissions: This is where it gets tricky. One lender might accept 100% of your overtime if you can prove it is consistent. Another might only use 80% of it. They might use none at all if you have not been in the job long enough.

Contract or casual work: Similar to overtime, lenders may only use 80%, require a minimum time in the role such as six months, or calculate the income at anywhere from 40 to 52 weeks as they factor in holiday and sick leave.

The impact: If you earn $200,000 base plus $40,000 bonus, lender A might assess you on $240,000 income. Lender B might assess you on $232,000. That seemingly small gap changes the maximum loan size significantly.

The silent killers of borrowing capacity

Your borrowing power is not just about what comes in. It is about what you are already committed to.

Credit cards: You might pay your card off in full every month but the lender does not look at your balance. They look at your limit. A $10,000 credit card limit tells the lender you could go $10,000 into debt tomorrow. This reduces your borrowing power significantly. It often drops by between $3,000 and $5,000 for every $1,000 of limit.

HECS and HELP debt: Even though this is usually interest free it reduces your monthly take home pay. That reduction lowers your surplus cash which lowers the loan amount you can service.

Other loans and leases: Each carries its own term, rate, and repayments which will impact your borrowing capacity in different ways.

The stress test

When a lender looks at your application they are not just checking if you can afford the loan at today's interest rate. They have to check if you could afford it if rates went up by roughly 3%. This is called the Serviceability Assessment Buffer. It is a safety net. Different lenders have different appetites for risk. Some have policy exceptions that allow them to look at your application more favourably.

A note on living expenses

This is the number one thing people stress about. Will my Uber Eats habit or my holiday last year ruin my chances?

Generally the answer is no. While lenders do use benchmarks based on your income to estimate what a household should spend, they also understand the difference between committed expenses and discretionary expenses.

If you spent $10,000 on a European holiday last year, the lender understands that was a lifestyle choice. Now that you are buying a home you likely will not be taking that same trip next year because your cash is now committed to your mortgage. Because you can turn off discretionary spending, it does not necessarily drag down your borrowing capacity.

Calculators give you generic answers based on generic inputs. They do not know your story. They do not know your specific income structure or your future spending plans. We do not look for the easiest loan. We look for the right strategy for your situation.