Small changes before you apply can increase your borrowing capacity by tens of thousands. Here is what actually works.
Your borrowing capacity is not fixed. The figure a lender will approve depends on multiple variables — many of which you can improve before you apply. Here are the most effective strategies.
1. Reduce Credit Card Limits
This is often the single most impactful change you can make quickly. Lenders assess credit card limits — not balances — as a committed expense. A $20,000 limit is counted as a $20,000 debt regardless of whether you owe $0 or $20,000.
Reducing your credit card limit by $10,000 can increase your borrowing capacity by $40,000–$60,000 in some lending models. Closing cards you do not use is even better.
2. Pay Off Personal Loans and Car Finance
Every existing loan reduces your serviceability. Paying off — not just down — a personal loan or car loan removes that committed repayment from your assessment entirely.
If you are 6 months away from applying, direct extra savings toward clearing high-balance loans rather than accumulating cash in a savings account.
3. Close Buy-Now-Pay-Later Accounts
BNPL facilities (Afterpay, Zip, Humm, etc.) are counted by most lenders as a monthly repayment commitment, typically estimated at 5% of the facility limit per month. Close any unused accounts before applying.
4. Avoid New Debt in the Lead-Up
Every new credit application creates a credit enquiry and a new commitment. Avoid taking on any new finance — car loans, credit cards, personal loans — in the 3–6 months before applying for a home loan.
5. Maintain a Clean Savings History
Lenders want to see genuine savings — not a lump sum recently deposited. Regular, consistent deposits over 3–6 months demonstrate financial discipline and strengthen your application.
6. If Self-Employed: Optimise Your Tax Return Timing
If you are self-employed, your taxable income drives your assessed income. Ensure your most recent tax return is lodged and reflects your actual income. If your income has grown significantly, your most recent year's return carries more weight. In some cases, lodging sooner rather than later improves your position for an application.
7. Compare Lenders — Policies Vary Significantly
Borrowing capacity varies by lender — sometimes by $100,000 or more on the same application — because each lender applies different income shading, HEM benchmarks, and debt assessment policies.
A broker compares actual capacity across 40+ lenders to find the most generous fit for your profile. This matters most for self-employed borrowers, those with rental income, and those with complex employment structures.
Use our borrowing capacity calculator to start, then contact Sam for a full cross-lender comparison.
Frequently Asked Questions
How much can I increase my borrowing capacity?
It depends on your starting position. Reducing a $20,000 credit card limit and paying off a $15,000 car loan could increase capacity by $80,000–$150,000 with some lenders. The gains are real and often significant.
Does my HECS debt reduce my borrowing capacity?
Yes — HECS/HELP repayments are included in lenders' serviceability assessments. The higher your income, the larger the compulsory repayment percentage, and the more it reduces your assessed borrowing capacity.
Last reviewed 27 July 2026 by Sam Elvitigala, MFAA Accredited Mortgage Broker. General information only — not personal financial or credit advice.