How Much Can I Borrow for a Home Loan?

When you're looking to buy a home, one key question you'll ask is, "how much can I borrow?" This is known as your borrowing capacity, and it varies greatly depending on which lender you choose. Every lender assesses your ability to borrow differently, based on factors like your income, expenses, debts, and overall financial situation.

Lenders typically review your regular income, savings, living expenses, and existing debts. However, what many people don't realise is that lenders treat income types differently. For example, overtime, commissions, and bonuses might be fully considered by one lender, while another might only count a portion, or perhaps not consider them at all. This can significantly impact your borrowing power.

Interest rates also play a major role. Lower interest rates mean lower repayments, which can increase your borrowing capacity. Conversely, higher rates could reduce how much you're able to borrow.

Your credit history is another important factor. Good credit suggests to lenders that you're reliable, potentially increasing your borrowing capacity. Poor credit, on the other hand, could limit your borrowing options.

Because lenders evaluate your finances in different ways, speaking with a mortgage broker can greatly benefit you. Brokers understand how different lenders assess income, like overtime and bonuses, and can match you with a lender that will best recognise your income type. Working with a mortgage broker can help maximise your borrowing potential and improve your chances of securing the loan amount you need. I have seen the differences in borrowing capacity from upwards of $100,000 from lender to lender. A mortgage broker will ensure all options are covered.

Ready to find out how much you could potentially borrow? Book a free consultation with our mortgage brokers today and take a confident step towards homeownership!