How Much Can I Borrow in 2026? Why Your Borrowing Power Has Quietly Shrunk

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It’s the first question almost everyone asks, and the online calculators give you a number that is often wildly wrong — usually too high, occasionally too low. Here’s how lenders actually work it out, and why the answer in July 2026 is smaller than it was in January.

The buffer nobody talks about

Australian lenders don’t assess you at the interest rate you’ll pay. Under APRA’s guidance they assess you at your rate plus three percentage points.

So if you’re offered 6.5%, the bank tests whether you could still make repayments at 9.5%. You’ll never pay 9.5% — but you have to prove you could.

That buffer hasn’t moved. What has moved is the rate underneath it. With the cash rate up from 3.60% to 4.35% this year, the assessment rate has climbed with it. The practical result is that this year’s tightening has removed roughly $36,000 of borrowing capacity from an average single earner and about $72,000 from a couple — with no change to their income, savings or spending.

If you got a pre-approval in the first half of the year and haven’t used it, assume it’s stale.

The seven things dragging your number down

1. Credit card limits — not balances. A $15,000 limit you never touch is assessed as though it’s maxed out and you’re making minimum repayments. Cancelling an unused card can add tens of thousands to your capacity. This is the single easiest win most people have.

2. Buy now, pay later. Afterpay, Zip and the rest show up in your bank statements and lenders look at them. Regular BNPL use is read as a sign you’re using credit to manage everyday cash flow. Clear them and stop using them for at least three months before you apply.

3. HELP/HECS debt. Your compulsory repayment is a real deduction from assessable income. On a decent salary it can meaningfully reduce what you can borrow. It is sometimes worth paying it out before applying — sometimes not. It depends on the size of the debt and your income. Run the numbers before you decide.

4. Your actual living expenses. Lenders apply a benchmark (the Household Expenditure Measure), but they’ll use your declared expenses if they’re higher — and they will read three months of your bank statements to check. Understating them doesn’t work and puts your credibility with the lender at risk.

5. Dependants. Each child materially increases the assumed expense floor.

6. Car and personal loans. Assessed at the full repayment, and they hit hard.

7. Income type. Overtime, bonuses, commission and casual income are often only partially counted — sometimes 80%, sometimes not at all, depending on the lender and how long you’ve been earning it. Self-employed? Different lenders read your financials very differently.

The part the calculators can’t tell you

Every lender calculates this differently. The same borrower, same documents, same day, can get borrowing capacity assessments that differ by $100,000 or more between lenders — because they use different assessment rates, different expense benchmarks, and treat variable income differently.

That variation is precisely why a broker with access to 40+ lenders is worth more in a tightening market than in a loose one. When capacity is tight, finding the lender whose calculator is friendliest to your income shape is the whole ball game.

What to do before you apply

Cancel or reduce unused credit card limits

Stop using BNPL, and clear it

Clean up three months of bank statements — no gambling transactions, no dishonours, no obvious cash-flow stress

Pay out small personal or car loans if you can

Don’t apply for anything else on credit; every enquiry shows on your file

Get an actual assessment, not a calculator estimate

Frequently asked questions

Are online borrowing calculators accurate? They’re a starting point, and that’s all. They don’t know your lender, your income structure, your expense profile, or which of the 40+ lenders would view you most favourably. Treat the number as a rough range, not a promise.

Does a pre-approval guarantee I can borrow that much? No. Pre-approvals are conditional, usually expire in 90 days, and can be reassessed if rates move or your circumstances change. In a rising-rate market they go stale fast.

Will paying off my HECS debt increase my borrowing power? Often, yes — but it isn’t automatic, and using savings to clear it also reduces your deposit. It’s a trade-off worth modelling properly rather than guessing at.

Want your real number, not a calculator’s guess? We’ll assess you against 40+ lenders and tell you which one gives you the most room — and what to fix first.

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