How to Boost Your Borrowing Power & Qualify for a Bigger Home Loan

If you're planning to buy a home, your borrowing power plays a big role in how much a lender will approve for your mortgage. But did you know there are simple ways to increase the amount you can borrow without drastically changing your lifestyle? 

Growing your borrowing power starts with smart money habits and understanding what lenders value most.

In this guide, we’ll break down: 

✔ How lenders assess home loan applications 

✔ Easy ways to boost borrowing power before applying for a loan 

✔ How to reduce your expenses without feeling restricted 

Want to estimate your loan amount? Use our Borrowing Power Calculator to see what you could qualify for. 

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What affects your borrowing power? 

Lenders use a borrowing capacity formula to decide how much they’ll lend you. They assess: 

1. Income & Job Stability  

✔ Salary, wages, bonuses, and overtime 

✔ Rental income (for investment properties) 

✔ Self-employment income (for business owners) 

✔ Government benefits (where applicable) 

💡 Tip: If a pay rise isn’t likely, check if overtime, shift work, or bonuses can be counted in your income calculation. 

2. Living Expenses & Bank Statements  

Lenders review:

 ✔ Everyday spending – groceries, utilities, fuel 

✔ Subscriptions – Netflix, gym memberships, Buy Now, Pay Later (BNPL) 

✔ Financial commitments – insurance, childcare costs 

💡 Practical strategy: Avoid major purchases (e.g., new car, luxury items) before applying. Lenders check your bank statements for the last 3-6 months, so start adjusting your spending now.  

3. Existing Loans, Credit Cards & BNPL

 

Your credit score and debts directly impact borrowing power. Lenders check: 

✔ Credit card limits (even if you don’t use them)

✔ Personal loans, car loans, and BNPL services 

✔ Any late or missed payments 

💡 Quick win: Lower your credit card limit before applying—lenders assume you could max it out at any time. 

Real people, real results – we’re with you every step of the way to help you secure your first home loan.

How to increase borrowing power without major lifestyle changes 

1. Practical ways to save more without feeling restricted  

You don’t need to live on noodles and coffee to save for a home deposit. Instead, focus on small but effective savings habits: 

✅ Use round-up savings accounts – Banks like Bank Australia and ING offer features that round up purchases to the nearest dollar and deposit the spare change into savings. 

✅ Cashback apps – Apps like Cashrewards and ShopBack give you cashback on purchases—redirect this into your savings. 

✅ Automate savings – Set up an automatic transfer to a separate savings account every payday. 

💡 Tip: Use the My Finance Agent App to set a savings goal and track progress. 

  

2. Reduce expenses without giving up everything  

Lenders assess your spending patterns before approving a loan. Small changes now can increase your borrowing power: 

✅ Switch utility providers – Compare rates on Energy Made Easy.

✅ Negotiate phone & internet bills – Call your provider and ask for a better deal. 

✅ Review direct debits – Cancel unused gym memberships, streaming services, or subscriptions. 

💡 Tip: These adjustments reduce your expenses without affecting your lifestyle, making you look more financially responsible to lenders. 

3. Reduce debt to increase loan eligibility  

Lenders check your Debt-to-Income (DTI) ratio, which is the percentage of your income that goes toward paying debts.  Paying off even small debts can improve borrowing capacity: 

✅ Pay off Buy Now, Pay Later (BNPL) services – Even if you pay on time, they reduce your borrowing power. Read more here  

✅ Lower your credit card limit – A $10,000 limit can reduce borrowing power by $40,000. 

✅ Consider debt consolidation – If you have multiple small loans, consolidating them could lower your repayments. 

💡 Use our Loan Repayment Calculator to estimate savings on interest. 

4. Get a Family Guarantor to avoid LMI & borrow more  

If you don’t have a 20% deposit, a family pledge loan can help you borrow more without paying Lenders Mortgage Insurance (LMI). LMI is the fee you to the lender, which protects the lender in case if you cannot make repayments on your loan.  

💡 Example: 

• If your parents own a home, they can offer their home as security. 

• This means you don’t need as big a deposit, and your borrowing power increases. 

✅ This is a great option for first-home buyers with family support. 

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How Small Adjustments Can Make a Big Difference 

Improving your borrowing power doesn’t require extreme sacrifices. By lowering expenses, improving your credit score, and making small savings adjustments, you can increase your loan amount and secure better home loan approval terms. Contact us for a tailored advice.

Call us at (02) 6332-2600 or request a call back