“How much can I borrow?” is usually one of the first questions people ask when they start thinking about buying a home.
It is also one of the most important questions to get right.
In a market like Perth, where property prices have moved quickly and competition can still be intense, understanding your borrowing capacity before you start making offers can save you time, stress and disappointment.
But borrowing capacity is not just a simple income multiple. Lenders look at your full financial picture, including your income, expenses, debts, deposit, dependants, credit history and the interest rate buffer they use to assess whether the loan is affordable.
That means two people earning the same income can have very different borrowing outcomes.
Why borrowing capacity matters in Perth right now
Perth buyers have been dealing with a fast-moving property market, higher interest rates and changing government support settings.
The Reserve Bank of Australia’s cash rate target is currently 4.35%, effective 6 May 2026.
Higher interest rates matter because they affect repayments and lender assessment rates. Even if you feel comfortable with a certain repayment, the lender still needs to assess your loan under its own serviceability rules.
At the same time, WA first home buyers have recently received some positive news, with increased stamp duty exemption and concession thresholds announced on 7 May 2026. Eligible first home buyers may now pay no duty on new or established homes up to $600,000, with concessional rates up to $800,000.
This may help some buyers reduce upfront costs, but it does not automatically increase how much a lender will approve.
That is why getting your borrowing capacity checked properly is so important.
What do lenders look at when calculating borrowing capacity?
Lenders assess a range of factors before deciding how much you may be able to borrow.
These usually include:
- your income
- your employment type
- your living expenses
- your existing debts
- credit cards and buy-now-pay-later limits
- dependants
- your deposit
- your savings history
- the property type and location
- your credit history
- the proposed loan structure
- current interest rates and assessment buffers
A common surprise for borrowers is that lenders may include credit card limits in their assessment even if the card is paid off every month.
For example, a credit card with a $10,000 limit may reduce your borrowing capacity because the lender considers the possibility that you could use that limit in the future.
This is why a borrowing capacity review is often about more than simply entering your income into an online calculator.
Online calculators can be useful, but they are not the full answer
Online borrowing calculators can give you a rough starting point.
However, they do not always account for the full detail of lender policy, assessment rates, income shading, property type, genuine savings, credit conduct or scheme eligibility.
They also do not help you understand which lenders may be more suitable for your specific situation.
This matters because one lender might assess your income or expenses differently from another.
For example, borrowing capacity can vary depending on whether you are:
- PAYG employed
- self-employed
- receiving bonuses or overtime
- working casually or part-time
- returning from parental leave
- carrying HECS/HELP debt
- buying with a partner
- receiving rental income
- using a guarantor
- applying under a government scheme
The right lender for one borrower may not be the right lender for another.
How much deposit do I need?
The deposit you need depends on your situation and the type of purchase.
Many buyers still aim for a 20% deposit to avoid Lenders Mortgage Insurance, but some eligible buyers may be able to buy with a smaller deposit.
The Australian Government 5% Deposit Scheme supports eligible home buyers to purchase sooner with a lower deposit. First home buyers may be able to purchase with a minimum 5% deposit, and eligible single parents or legal guardians may be able to purchase with a minimum 2% deposit.
Housing Australia provides a guarantee to participating lenders, which can allow eligible buyers to avoid Lenders Mortgage Insurance.
However, a lower deposit is not always the right strategy for everyone.
You still need to consider:
- your repayment comfort
- your emergency buffer
- your purchase costs
- valuation risk
- lender policy
- scheme eligibility
- property price caps
- future rate changes
The question is not only “Can I buy?” but “Can I buy in a way that still feels manageable after settlement?”
What can reduce borrowing capacity?
Borrowing capacity can be reduced by several factors, including:
- high living expenses
- personal loans
- car loans
- credit card limits
- HECS/HELP debt
- buy-now-pay-later accounts
- dependants
- inconsistent income
- recent job changes
- poor credit conduct
- higher interest rates
- short loan terms
- lender policy changes
Sometimes small changes can make a meaningful difference.
For example, reducing unused credit card limits, paying out a small personal loan, or restructuring existing debt may improve the position for some borrowers.
But it is important not to make changes blindly. Speak with a broker before closing accounts or moving money around, because the timing and evidence can matter.
What should you prepare before speaking to a mortgage broker?
To get a clearer idea of your borrowing capacity, it helps to have the following ready:
- recent payslips
- details of any bonuses, overtime or allowances
- bank statements
- savings history
- current loan statements
- credit card limits
- personal loan or car loan details
- HECS/HELP debt details
- estimated living expenses
- details of any dependants
- your target purchase price or suburb
- whether you are a first home buyer, upgrader, investor or refinancer
You do not need to have everything perfect before reaching out. A good broker can help you understand what is missing and what needs to happen next.
Borrowing capacity is not the same as your comfort zone
This is one of the most important points.
The maximum amount a lender may approve is not always the amount you should borrow.
At Base Home Loans, we believe the best loan structure is one that aligns with your lifestyle, budget and longer-term goals.
That means looking at:
- what repayment feels comfortable
- how much buffer you want after settlement
- whether you want to pay the loan off faster
- whether you plan to start a family
- whether you may move, renovate or invest later
- how exposed you are to rate changes
- whether the loan structure gives you flexibility
The goal is not just to get a loan approved.
The goal is to build a home loan strategy that helps you stay in your own lane, feel less reactive to rate rises and media noise, and focus on the bigger picture.
Next steps
If you are wondering how much you can borrow in Perth, the best place to start is with a clear borrowing capacity review.
This can help you understand your price range, deposit requirements, lender options, government scheme eligibility and repayment comfort before you make an offer.
In a competitive market, that clarity can make a real difference.
At Base Home Loans, we help Perth buyers understand their numbers properly, compare lender options and move forward with a strategy that suits their budget and lifestyle.
Want to know how much you may be able to borrow?
Book a mortgage strategy call with Base Home Loans today.
FAQs
How do banks calculate borrowing capacity?
Banks calculate borrowing capacity by assessing your income, expenses, debts, dependants, deposit, credit history and proposed loan structure. They also assess whether you could afford the loan under their interest rate assessment rules.
Does a higher deposit increase borrowing capacity?
A higher deposit can improve your overall application and reduce risk, but borrowing capacity is mainly driven by your ability to service the loan. Income, expenses and debts are usually key factors.
Can I borrow more with a mortgage broker?
A mortgage broker cannot change your income or expenses, but they can compare lenders and help identify which lender policies may suit your situation. Different lenders can assess income, debts and expenses differently.
Should I use an online borrowing calculator?
Online calculators can be useful as a rough guide, but they do not replace a full borrowing capacity assessment. They may not account for detailed lender policy, scheme eligibility or your complete financial position.
How soon should I check my borrowing capacity before buying?
Ideally, check your borrowing capacity before you start seriously inspecting homes or making offers. This helps you understand your price range and move more confidently when the right property appears.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute financial or professional advice. While we strive to provide accurate and up-to-date information, mortgage laws and regulations can change, and individual circumstances may vary. We recommend consulting with a qualified financial advisor or mortgage broker to assess your specific situation and needs. Base Home Loans is not responsible for any actions taken based on the content of this blog. Always conduct your own research and consider seeking professional advice before making financial decisions.
