How to Increase Your Borrowing Power as a First-Time Buyer

Buying your first home is exciting and stressful at the same time. One of the biggest hurdles is borrowing power - the amount a lender is willing to loan you. Knowing what lenders look at and taking a few practical steps can lift your borrowing capacity so you can shop with confidence. Below I explain the key things lenders consider and the most effective moves first-time buyers can make to increase the amount they can borrow.

What lenders actually calculate and why it matters

Lenders assess income, tax, living expenses, existing debts and a buffer to work out serviceability. That monthly surplus is what determines how big a mortgage you can afford. Different lenders use slightly different formulas and buffers, so shopping around matters.

Check and tidy your credit history

A clean credit record makes a real difference. Pay off or reduce credit cards, fix any defaults, and avoid applying for new credit in the months before you apply. Lenders look at recent enquiries and ongoing account limits as potential future commitments, so trimming these down improves how calculators treat your profile.

Reduce monthly commitments and show low living expenses

Lenders estimate your living costs conservatively. Lowering non-essential spending, cancelling unused subscriptions and paying down personal loans will increase the surplus lenders see. Consolidating high-interest debts into a cheaper home loan or personal loan can also lower your monthly payments and lift borrowing capacity.

Boost or stabilise your income where you can

Full-time permanent income is weighted more favourably than casual or commission-only earnings. If you have regular overtime or bonuses, check whether a lender will consider 100 per cent of that income or only a portion. Where possible, provide evidence of consistent additional income for at least 12 months to strengthen serviceability.

Consider loan term and repayment structure

Longer loan terms reduce the monthly repayment figure used in serviceability tests, which can increase the amount you are approved for. That does not mean it’s always the cheapest option long term, but it is a practical lever when your goal is to increase borrowing power.

Understand lower deposit options and the trade-offs

Government support such as the expanded 5 per cent deposit scheme can reduce the time it takes to save a deposit and remove lender’s mortgage insurance for eligible buyers. But a higher loan-to-value ratio means bigger repayments and less buffer against rate rises. Make sure you run realistic repayment scenarios at higher interest rates before committing.

Use family help carefully: guarantors and family pledges

A guarantor or a family equity pledge can increase your effective borrowing power because the lender can use the guarantor’s security instead of requiring a large deposit. Lenders still assess your income and expenses, and guarantor arrangements carry legal and financial risks for the family member involved, so get clear legal advice and understand the lender’s specific rules.

Pick the right lender and be strategic about timing

Lenders treat certain incomes, employment types and expenses differently. Some will accept more of your overtime or bonuses, others will apply higher living cost estimates. That’s where comparing lenders and timing an application after you’ve paid down debt or received a pay increase can increase the amount you qualify for.

Conclusion

Increasing your borrowing power isn’t about magic tricks, it’s about improving the numbers lenders use: increase verified income, reduce debts and ongoing commitments, tidy your credit, pick the right loan structure and know the trade-offs of low deposit schemes or guarantors. Run realistic stress tests using a higher interest rate so you understand repayments if rates rise. Do those things and you’ll give yourself the best chance of borrowing more without over-stretching your budget.

Get In Touch

Your home loan journey doesn’t have to be overwhelming.

Whether you’re ready to take the next step or just exploring your options, let’s have a chat.