How to Increase Your Home Loan Borrowing Power in Australia 2026

If you have already read our complete guide to borrowing power in Australia, you know the mechanics: lenders take your income, strip out tax, living expenses and existing debt commitments, then test what is left against an assessment rate that includes APRA's 3 percentage point serviceability buffer. This article is the tactical companion — what you can actually do about it, ordered roughly from quickest wins to bigger structural moves. Dollar figures below are indicative only and vary by lender, income and rates; run your own numbers in our borrowing power calculator.

1. Close or reduce credit card limits

This is the classic quick win. Most lenders assess credit cards at around 3.8% of the limit per month as a committed expense — roughly $380 a month on a $10,000 limit — whether you carry a balance or pay it off in full every cycle. That assessed commitment can strip roughly $35,000–$50,000 (~, lender-dependent) from your capacity for every $10,000 of limit. Closing cards you do not need, or asking the issuer to cut the limit, is cheap, fast and reversible after settlement.

2. Cut discretionary spending — starting three months out

Lenders read your bank statements, typically the last three months, and compare what they see against both your declared expenses and the HEM benchmark. If your statements show $1,200 a month of food delivery, subscriptions and buy-now-pay-later instalments, that is what gets assessed — not the leaner figure you wrote on the form. Because the review window is about three months, a disciplined 90-day spending reset before you apply genuinely changes the number the lender uses. Every $100 a month of assessed expenses you remove can add several thousand dollars of capacity.

3. Pay out a small HECS-HELP balance

Compulsory HECS-HELP repayments come straight off your assessed net income — at a $70,000 salary the repayment is several thousand dollars a year, which can cost you in the order of $30,000–$40,000 of capacity (~, lender-dependent). The lever only works when the balance is small: clearing a $3,000–$8,000 residual balance removes the entire repayment obligation for a modest outlay. Paying $20,000 off a $60,000 balance, by contrast, changes nothing — the compulsory repayment rate is based on income, not balance, so keep that cash as deposit instead.

4. Clean up your credit file

Under comprehensive credit reporting (CCR), lenders see your repayment history, active accounts and recent applications across Equifax, Experian and illion. Before applying: pull your free reports, dispute any errors, close dormant accounts, and stop making new credit enquiries — several applications in a short window reads as credit stress. A clean file will not add dollars to a serviceability formula directly, but a messy one can mean rate loadings, tighter policy or outright decline, all of which cost capacity.

5. Build a genuine savings history

Most lenders want to see at least 5% of the purchase price as "genuine savings" — money held or accumulated in your name for three-plus months, not a gift that landed last week. A consistent monthly savings pattern does double duty: it satisfies the genuine savings policy and it demonstrates surplus income, which supports the expense figure you have declared. Start the dedicated savings account early and automate the transfers.

6. Shop the assessment rate — fixed vs variable and lender policy

APRA requires lenders to assess you at the product interest rate plus a 3 percentage point buffer, but the product rate differs between lenders and between fixed and variable options. A lender whose rate is 0.4% lower assesses you 0.4% lower too, which can be worth $15,000–$25,000 (~) on a typical application. Some lenders also apply floor rates or treat existing debts differently, so identical applicants get materially different maximums at different banks. This is one area where a broker comparison costs nothing and can move the result.

7. Use a professional package or profession-specific policy

Doctors, dentists, lawyers, accountants and some other professions can access packages with waived LMI at up to 90–95% LVR, discounted rates, and in some cases more generous income shading (for example, higher recognition of overtime or private billings). If you are in an eligible profession, a specialist lender or broker can unlock capacity a standard application never sees. For everyone else, ordinary package discounts still lower the rate you are assessed at.

8. Take a longer loan term — with eyes open

A 30-year term spreads repayments thinner than a 25-year term, so the assessed repayment is lower and the maximum loan higher — often by a five-figure amount. The trade-off is real: you pay substantially more total interest, and lenders will scrutinise terms that run past your expected retirement age, sometimes requiring an exit strategy. Treat this as a structuring choice, not free money — and consider making extra repayments once you have settled.

9. Add a second applicant's income

Adding a partner or spouse as co-borrower is the single biggest structural lever: two incomes against one shared set of living expenses can lift capacity far more than proportionally. If part of your income is rental, note that lenders typically shade it to around 80% of gross rent to allow for vacancies and costs — so $500 a week of rent is assessed as roughly $400. Remember that co-borrowers are jointly and severally liable for the whole loan, and their debts and expenses come into the assessment too.

10. Guarantor support vs paying LMI

If deposit rather than income is the constraint, a family guarantee (a parent offering their property as partial security) can get you to an effective 80% LVR without years of extra saving and without paying LMI. Alternatively, paying LMI lets you buy at 85–95% LVR with a smaller deposit — it adds $10,000–$30,000+ to your costs but keeps the risk within your own household. Neither directly changes serviceability, but both change what you can buy with the capacity you have, and avoiding LMI keeps the loan amount (and assessed repayments) lower.

What doesn't work

• Hiding debts. Under comprehensive credit reporting, lenders see your credit cards, personal loans, BNPL accounts and repayment history regardless of what you declare. An undisclosed liability discovered at assessment is worse than the liability itself — it goes to your credibility.
• Inflating expected rent. Lenders use their own valuer's rental estimate and then shade it (typically to ~80%), so optimistic rent figures get replaced, not believed.
• Understating living expenses. If your declared figure is below what your statements show — or below HEM — the lender substitutes the higher number.
• Last-minute deposits. A lump sum that appears days before application does not satisfy genuine savings policy and invites questions about its source.

Frequently Asked Questions

How quickly does closing a credit card increase borrowing power?

Almost immediately once the closure is recorded on your credit file — usually within 30–60 days. Written confirmation from the issuer lets your broker evidence it sooner.

Should I pay off my HECS-HELP debt before applying?

Only if the balance is small enough to clear entirely. Removing the compulsory repayment lifts capacity; partially paying down a large balance changes nothing, because repayments are based on income, not balance. Keep the cash as deposit instead.

Do lenders really look at my spending on bank statements?

Yes — typically the last three months, cross-checked against your declared expenses and the HEM benchmark. Recurring discretionary spending, BNPL instalments and gambling transactions all get counted.

Does a longer loan term always increase borrowing power?

It lowers assessed repayments and therefore raises capacity, but at the cost of more lifetime interest, and lenders may limit terms based on your age and retirement plans.

Can choosing a fixed rate increase my borrowing power?

Marginally, sometimes. You are assessed at the product rate plus the 3 percentage point buffer, so a lower fixed rate can mean a lower assessment rate — unless the lender's floor rate applies.