Why Two People With the Same Income Can Have a $200,000 Difference in Borrowing Power
Most buyers assume borrowing power is determined mainly by income.
In reality, lenders look at your full financial picture — including your expenses, household structure, and ongoing commitments — to assess how much you can safely afford to repay.
This is why two people with identical incomes can have very different borrowing capacity.
Your Household Structure Plays a Major Role
Whether you are single, married, or have children significantly affects borrowing power.
Dependants increase living expenses in the lender’s assessment.
For example, a borrower with two children will typically have lower borrowing capacity than someone earning the same income with no dependents.
This isn’t about income — it’s about available cash flow.
Private School Fees Are Treated as Ongoing Financial Commitments
Private school tuition fees can be substantial.
Lenders treat these as fixed, ongoing expenses — similar to loan repayments.
Higher education costs reduce the income available to service a mortgage, which can lower borrowing capacity.
Insurance and Regular Expenses Also Matter
Insurance premiums — including health insurance, car insurance, and income protection — are essential financial safeguards.
However, lenders include these in your living expenses.
Higher ongoing costs reduce the amount of income available for loan repayments.
Credit Card Limits Can Reduce Borrowing Power — Even Without Debt
Many borrowers are surprised to learn that lenders assess credit card limits, not just outstanding balances.
Even if you pay your card off in full each month, a higher credit limit can reduce your borrowing capacity.
This is because lenders factor in potential repayment obligations.
Different Lenders Can Produce Different Outcomes
Each lender uses its own assessment model.
As a result, borrowing capacity can vary significantly between lenders — even for the same borrower.
Choosing the right lender and loan structure can make a meaningful difference to your purchasing options.
Final Thought
Borrowing power is not determined by income alone.
It is influenced by your expenses, household structure, financial commitments, and the lender you choose.
Understanding your true borrowing capacity early can help you make more informed and confident property decisions.
Learn More
To learn more about how borrowing power is assessed, or to explore your own borrowing capacity, you can access additional information and request a personalised assessment via the link below.