How much can you actually borrow?

Ask three lenders how much you can borrow and you'll often get three very different answers — sometimes more than $200,000 apart on the same income. That's not a mistake. It's because every lender runs your numbers through its own assessment model, and the slick calculator on a bank's homepage only shows you the rosiest version of one of them.

If you're planning a purchase, understanding how borrowing power is really calculated matters far more than any single headline figure.

What lenders actually assess

Borrowing power comes down to surplus — the income left after a lender's assumptions about your living costs and existing commitments. The key inputs are your assessable income (discounted for variable income like bonuses, commissions or rent), your living expenses, your other debts, and an assessment rate.

Two of those quietly do most of the damage to the number people expect.

The HEM benchmark

Lenders don't just take your word on living costs. They compare what you declare against the Household Expenditure Measure (HEM) — a benchmark of typical spending scaled to your income and household — and use the higher of the two. Declare unrealistically low expenses and they'll override you with HEM; earn a high income and HEM scales up, quietly trimming your capacity. It's the single biggest reason a real assessment lands below an online estimate.

The assessment-rate buffer

Lenders don't test whether you can afford today's rate — they test you against a higher one, typically around three percentage points above the actual rate, to make sure you can cope if rates rise. So even at a 6% loan you might be assessed near 9%. That buffer compresses borrowing power for everyone, and it's why your capacity falls when rates climb even if your income hasn't changed.

The levers that actually move the number

The good news: borrowing power is far from fixed. The fastest wins are usually reducing or closing credit-card limits (lenders count the full limit, not the balance, at roughly 3.8% a month), clearing small personal loans and buy-now-pay-later facilities, and tidying up discretionary spending in the months before you apply. Choosing the right lender matters just as much — some treat overtime, rental income or self-employed earnings far more generously than others.

This is exactly where a broker earns their keep: not by finding a magic number, but by matching your profile to the lender whose model reads it most favourably.