“How much can I borrow?” is usually the first question every first home buyer asks. It makes sense — before you can start looking at properties, you need to know what’s realistically within reach. But the honest answer is that borrowing capacity isn’t a single number. It changes depending on which lender you approach, how you structure your finances, and how your application is presented.
This is where working with an experienced mortgage broker makes a real difference. Albert Waldron, Director and Finance Strategist at Awesome Lending Solutions in North Strathfield, Sydney, has helped first home buyers across Australia understand exactly what they can borrow — and just as importantly, what they should borrow — since founding the business in 2010. With more than 1,000 loans settled and access to over 60 lenders through AFG aggregation, Albert doesn’t just run a number through a calculator. He builds a lending strategy around each client’s real financial situation and long-term goals.
Why Borrowing Capacity Isn’t a Fixed Number
Many first home buyers assume every bank will offer them roughly the same loan amount. In reality, borrowing capacity can vary by tens of thousands of dollars from one lender to the next. This is because each lender uses its own formula to assess income, expenses, debts and living costs, and each applies its own risk appetite to different borrower profiles.
A bank can only tell you what its own products allow. A broker like Albert can compare dozens of lenders side by side and identify which ones are likely to assess your situation most favourably. That single difference can be the gap between qualifying for the home you actually want and settling for something smaller than you need.
What Lenders Actually Look At
While every lender’s formula is slightly different, most borrowing capacity assessments come down to a similar set of factors:
Income. Lenders look at your base salary, plus any consistent overtime, bonuses or additional income. Casual or self-employed income is usually assessed more conservatively, often using an average over one or two years.
Living expenses. Under responsible lending obligations, lenders must factor in your actual cost of living, not just an estimate. This includes groceries, insurance, transport, subscriptions and general spending. The more accurately and cleanly this is presented, the smoother your assessment tends to be.
Existing debts. Credit cards, car loans, personal loans and even Buy Now Pay Later accounts all reduce borrowing capacity, even if you don’t currently owe much on them. Lenders generally assess credit card limits at their full amount, not your outstanding balance, so an unused $15,000 limit can quietly shrink your borrowing power.
Interest rate buffers. Lenders don’t just test your ability to repay a loan at today’s rate. They add a buffer, typically around 3 percentage points, to make sure you could still manage repayments if rates rise. With the Reserve Bank of Australia’s cash rate sitting at 4.35 per cent as of mid-2026, this buffer remains an important part of every serviceability calculation, and it’s one of the main reasons a “back of envelope” estimate rarely matches what a lender will actually approve.
Deposit and Loan to Value Ratio (LVR). The size of your deposit affects not only how much you can borrow, but which lenders and loan products are available to you. A smaller deposit may mean Lenders Mortgage Insurance (LMI) applies, or that government schemes such as the First Home Guarantee become relevant.
Why “Maximum” Borrowing Capacity Isn’t Always the Right Target
One of the most important things Albert discusses with first home buyer clients isn’t how to borrow the maximum amount possible — it’s how to borrow the right amount for their circumstances. A lender might approve you for more than you’re comfortable repaying, especially once real-life costs like utilities, childcare or future family plans are factored in.
Albert’s approach is to build a lending strategy that looks beyond the initial approval. That means considering your job stability, upcoming life changes, how comfortable you’ll be with repayments if interest rates move, and how the loan fits into your broader financial picture. A loan that looks fine on paper today can become a source of stress a year down the track if it wasn’t matched to your real capacity, not just your maximum capacity.
How a Broker Improves Your Chances
Working with a mortgage broker rather than approaching a single bank directly offers several practical advantages for first home buyers:
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- Wider lender access. Instead of being limited to one bank’s product range, a broker can compare dozens of lenders and match you to ones more likely to approve your application.
- Application structuring. How you present your income, expenses and debts can materially change your assessed borrowing capacity. A broker knows how to structure this correctly and can help pay down high-limit credit cards or consolidate debts before applying, when appropriate.
- Fewer credit enquiries. Multiple loan applications submitted directly to different banks can affect your credit file. A broker narrows this down to the lenders genuinely worth applying with.
- Guidance through settlement. From pre-approval through to settlement day, a broker manages the process and keeps you informed, reducing the stress that often comes with a first property purchase.
Getting Started the Right Way
Before you start inspecting properties, it’s worth taking stock of a few things: your current budget and spending habits, the size of your deposit, your credit history, and your longer-term goals, such as whether you plan to start a family, change careers, or eventually turn the property into an investment.
Seeking advice early, before you’re emotionally attached to a particular property, gives you time to understand what’s realistically achievable and to address anything that might be holding your borrowing capacity back. Simple steps like closing unused credit cards, reducing Buy Now Pay Later usage, or waiting a few months to build a stronger savings history can genuinely change your outcome.
Talk to Awesome Lending Solutions
Understanding how much you can borrow is the first real step in your home buying journey, and it’s a step worth getting right. Albert Waldron and the team at Awesome Lending Solutions specialise in helping first home buyers across Australia build a clear, personalised lending strategy, comparing 60+ lenders to find the right fit for your situation rather than the first offer that comes along.
If you’re ready to find out what you can genuinely afford, and how to structure your finances to strengthen your application, get in touch to book a chat with Albert. A well-planned approach can save you time, reduce stress, and improve your chances of securing a loan that fits your life, not just your budget.
This article is general information only and does not take into account your personal financial situation. Speak with a qualified mortgage broker for advice tailored to your circumstances.