How to Increase Your Borrowing Capacity in 2026: What Actually Moves the Number

The changes that move the number most

1. Close the credit cards you do not use

This is the one that surprises people. A lender does not care what you owe on a card. It assesses the limit, as though you had spent every dollar of it, and counts a monthly repayment against you of around 3% of that limit. A $15,000 limit you never touch is treated like a $450-a-month commitment, which at today’s assessment rate is tens of thousands of dollars off what you can borrow. Reduce the limit or close the card, and do it before you apply, because the lender reads the limit on the day it assesses the file.

2. Clear the small debts

A $20,000 car loan at $500 a month costs you far more in borrowing power than the balance suggests, because the lender treats that $500 as money you cannot put towards a mortgage. If you have the savings to pay it out and still keep your deposit intact, the sum usually favours paying it out. Buy-now-pay-later accounts count too, even with a zero balance, and lenders can see them on your statements.

3. Deal with the HELP debt

A HELP repayment comes out of your pay before you see it, and lenders deduct it from your income. Since 2025 lenders have been able to disregard a HELP debt that will be paid off within the next twelve months, so if yours is close to finished, say so and show the balance. If it is not close, it stays in the calculation and there is little to be done about it beyond knowing the effect.

4. Fix the statements three months out

Lenders read three months of transactions and compare your actual spending to their benchmark. If your spending is higher, they use your figure. Regular gambling transactions, frequent overdrawn days, a dozen subscriptions and daily food delivery all get counted. Three clean months before you apply is the cheapest improvement on this list.

5. Pick the lender that reads your income kindly

This is the part most people never see. One lender counts 80% of your overtime, another counts all of it if you have two years of history. One accepts a year of self-employed tax returns, another wants two. One deducts the full credit card limit, another lets you nominate a card to close at settlement. On the same file, the highest and lowest offers from a lender panel are commonly $100,000 or more apart, and the only way to find the top of that range is to test the scenario across the panel before applying. That is what a mortgage broker does, and it is the reason four out of five new home loans in Australia now go through one.

“The first thing I do on a new file is pull the credit card limits and the car loan, because those two are usually worth more than everything else on the list combined. I have had clients add $80,000 to their borrowing power in a fortnight by closing two cards they had forgotten about. Nobody had ever told them the limit was the problem, not the balance.”

Emmanuel Guignard

Director and Principal Mortgage Broker, Loanscope

The changes that help, but less than you would think

Earning more. Obviously it helps, but a $10,000 pay rise adds far less than $10,000 a year to your serviceable income once tax and the assessment rate are applied. It is also the slowest lever. Ask for it anyway.

A longer loan term. A 30-year term is standard. Stretching to a longer one lowers the monthly repayment and lifts the figure slightly, at the cost of years of extra interest. Most first home buyers are better off keeping 30 years and cutting a debt instead.

A bigger deposit. It does not change how much the lender thinks you can repay, but it lowers the loan you need, removes lenders mortgage insurance at 20%, and opens up the sharpest rates. If you are under 20%, the 5% deposit scheme does the same job on the insurance without the extra years of saving.

A basic loan. A loan with no offset account and no package fee is sometimes assessed a little more generously because the ongoing fees are lower. The difference is small, and giving up an offset to get it is usually the wrong trade.

Borrowing with someone else

Two incomes on one application is the single biggest jump available, and it comes with the biggest obligation: each borrower is liable for the whole loan, not half of it. If one stops paying, the other pays.

A guarantor is different. A parent offers part of their own home as extra security, which removes the insurance premium and can lift the amount, but their income is not counted and their property is on the line. Both arrangements deserve independent legal advice before anyone signs.

What not to do in the three months before you apply

• Do not open a new card, a new buy-now-pay-later account or a new car loan
• Do not change jobs if you can avoid it; most lenders want you past probation
• Do not apply to several lenders at once, because every application leaves an enquiry on your credit file
• Do not move large sums between accounts without a paper trail, and do not let a gifted deposit land unexplained

What to do next

Run your own figures through the borrowing power calculator, then read our guide to home loan pre-approval, because the assessed figure from a lender is the only one that counts at an auction. If you want the scenario tested across a lender panel, our ranked broker lists for Sydney and Melbourne are a place to start, and the best home loans for first home buyers guide covers what to look for once you know your ceiling.