What is Borrowing Power?
Your “borrowing power” refers to the amount of money a lender may be willing to lend you, based on your current income, expenses, debts, and financial obligations. It’s not a guarantee — but a helpful way to understand your lending capacity.
Why It Matters
Whether you’re planning to buy a home, refinance, or invest, knowing your borrowing power helps you:
- Set realistic property budgets
- Understand your repayment capacity
- Compare options more effectively
What Affects Your Borrowing Power?
While lenders have their own specific formulas, here are the most common factors that influence borrowing power:
- Income: Your salary, rental income, or business revenue
- Living Expenses: Household bills, groceries, insurance, etc.
- Debts: Credit cards, personal loans, car loans, BNPL obligations
- Number of Dependents: Children or others financially dependent on you
- Employment Type: Full-time, part-time, contractor, or self-employed
- Credit Score: A reflection of your repayment history and financial responsibility
Example: Two Households, Different Outcomes
Let’s say Household A and Household B both earn $120,000/year. Household A has no personal loans and minimal expenses. Household B has a car loan, credit cards, and three kids.
Even with the same income, Household A may have significantly more borrowing power — because they have fewer ongoing financial commitments.
How to Check Yours
While only a lender or broker can give you a formal assessment, there are many free calculators online to give you an estimate.
🧮 Try our Borrowing Power Calculator to explore your options in just a few minutes.
Borrowing Power Isn’t Static
It can change over time as your financial situation evolves. Paying off debt, increasing income, or reducing expenses can often improve your position.
Final Note
Understanding your borrowing power is one step closer to making informed financial choices — whether that’s buying a home, investing in property, or simply planning ahead.
Compliance Notice
This article is for general informational purposes only and does not constitute financial or credit advice. Always consult a licensed financial professional for tailored advice based on your circumstances.