5 Ways to Increase Your Borrowing Capacity

Borrowing capacity is simply how much a lender is willing to let you borrow based on their policy, your income, expenses and existing debts.

Lenders also test whether you could still afford the loan if interest rates were higher. In 2026, that means a home loan rate of around 6% to 6.5% may be assessed closer to 9% to 9.5%. That is why many buyers are finding that borrowing capacity in Australia in 2026 is lower than they expected.

The good news is that there are a few practical, no-cost ways to increase borrowing capacity before you apply.

Key Takeaways

There are several ways to increase borrowing power, namely:

• Closing a $10,000 credit card limit: Opens up to $50-$60K more borrowing power
• Cancelling BNPL accounts: Removes a common reason for outright decline
• Extending your loan term from 25 to 30 years: Extends capacity to 10%-15% more
• Choosing the right lender: $50,000 to $100,000+ variation between lenders for the same borrower

How Do Lenders Calculate Borrowing Capacity?

Knowing how to increase borrowing capacity starts with understanding how it is calculated. Lenders take your gross income from every source (salary, overtime, bonuses, rental, self-employment). They then subtract living expenses assessed against the Household Expenditure Measure (HEM) or your living expenses and existing debts, including credit cards at their full limits, personal loans, car loans, HECS, and BNPL. Each dependent increases your assessed costs and reduces your surplus.

Then comes APRA’s 3% serviceability buffer: if your actual rate is 6.25%, you are tested as though it were 9.25%, regardless of which bank you use. In short, net surplus income, after expenses and debts at that buffered rate, sets your maximum monthly repayment, and that sets your borrowing capacity.

Run your own numbers through our borrowing power calculator before you dive into the strategies below.

Ways To Increase Borrowing Capacity

1. Consolidate unsecured debts into your mortgage

Unsecured debts (credit cards or personal loans) require repayment within a short period, which forces you to reduce your debts quickly. The result is high monthly bills.

When a lender performs their servicing calculations, these debts will weigh heavily against you because they limit the amount of available funds that could be used to make payments on the proposed mortgage.

One possible solution to this dilemma is to combine your unsecured debt with your mortgage so that it won’t be reflected as a financial commitment (automatically increasing your serviceability).

Be advised, however, that should you do this, you will pay more in interest than if you had simply paid off your debt.

2. Reduce excess credit, especially credit cards

Did you know that for every $1000 limit you have on a credit card, your serviceability is reduced by $30.00 per month? So, for example, if you have a credit card with a $10,000 limit, the bank will reduce your unallocated funds by $300 per month!

Even if you have a zero balance on your $10,000 limit credit card most banks will count that $10,000 as a liability.

You can immediately increase your serviceability by closing all of your credit card accounts except for one. If you cannot close them all at once, then work on paying off those with balances until you’re left with a single credit card that suits your needs.

3. Keep your financial records updated

Perhaps the best way to borrow more for a home loan is to ensure your financial records are complete, current, and easy for a lender to verify. Lenders can only assess income they can actually see on paper. If it isn’t documented, it doesn’t count.

• Provide the most up-to-date information possible on your income levels to your lender.
• Complete your tax returns on time.
• Provide information on your entire income, rather than your last two payslips, as this short timeframe may not paint an accurate picture of your capacity to repay.

For example, if your base salary is low, but your employer gives you huge bonuses, this fact needs to be shared with your lender. Your lender also has an option to obtain a Payment Summary from the ATO to calculate your income for their purposes.

4. Select the right loan product

This is where a mortgage broker can be worth their weight in gold.

Each bank and lender has their own criteria and guidelines; therefore, it’s important to choose the right loan for your needs.

Different loan features can reduce or increase your borrowing capacity. Items like lines of credit, P&I or Interest Only loans, and discounts will impact the amount you’re able to borrow.

5. Choose your lenders carefully

Each lender has different rules for how they treat income. Some may disregard certain types, such as government benefits, while others accept them.

Remember that the more income your lender is willing to accept, the greater your serviceability.

Furthermore, lenders have varying servicing policies, so some are more generous than others when it comes to borrowing capacity. Some lenders do not fall under the supervision of APRA’s 3% buffer requirements, and con offer larger borrowing capacity for the same situation.

Also, note that if you have more than one home loan with the one lender, they are likely to ‘sensitise’ the interest across all those loans, which will reduce your borrowing capacity. If on the other hand, you spread them around, you may stretch this borrowing capacity, especially if you know which lenders to use first (the less servicing-friendly ones) and which to use for later. 

6. Save…and then save some more!

This is one of my favourite strategies because it’s easy to implement and requires nothing more than your effort. Save at least three to six months for the deposit on your loan or if you’re using equity, build up as much as possible before getting your loan.

Finally, careful planning and determination to pay down your debts (both secured and unsecured) is a foolproof way to increase your serviceability with little to no risk to your financial freedom.

What Not to Do Before Applying

A few habits can undo everything above. The three to six months before you apply matter just as much as the strategies themselves.

• Do not take on new debt. A car loan, furniture finance, or even a “buy now, pay nothing for 12 months” deal all count. New debt adds a new monthly commitment right when a lender is trying to work out how much surplus you actually have.
• Do not change jobs unless unavoidable. Lenders want to see stable, ongoing employment. A new job, even a better-paid one, can mean starting again on probation, and some lenders will not count that income until you have cleared it.
• Avoid large, unexplained cash deposits. If a lump sum lands in your account with no clear paper trail, expect to be asked where it came from. Gifts, sale proceeds and bonuses are all fine, but you will need to prove it.
• Avoid applying to several lenders at once. Every application shows up as a credit inquiry on your file. Multiple enquiries in a short window can make you look like you’re struggling to get approved, even if that’s not the case. A broker can help you apply to the right lender once, instead of shopping it around yourself.
• Do not open a new BNPL account. Even a small one. Since BNPL is now regulated as credit and shows up on your file, a new account, however minor, adds another liability right before your application is assessed.

Boost Your Borrowing Power & Get a Free Assessment Today

Go Mortgage compares more than 60 lenders and their serviceability calculators, so a free assessment shows your real maximum across the market, not just one bank’s view. We’ve spent 21+ years helping Gold Coast buyers get the most from their borrowing power. 

Call 1300 855 244 to book a free assessment.

FAQs in Increasing Borrowing Capacity