By Chris Hutton — Owner/Broker, Chris Hutton Home Loans
Many Australians are surprised when two people earning the same salary receive completely different borrowing capacity results. In 2026, this is normal — and it’s driven by how lenders interpret income, expenses, debts and risk under APRA’s serviceability rules.
Borrowing power is not a fixed number. It is a lender‑specific calculation, and even small differences in policy can shift borrowing capacity by tens of thousands of dollars (LenderBridge 2026) .
What Borrowing Power Actually Measures
Borrowing power is the maximum loan size a lender believes you can safely repay without hardship. Every lender uses its own model, but the core formula is the same:
Borrowing power = the loan size your surplus income can service at the lender’s assessment rate (Borrowing Power Australia 2026 Guide) .
This assessment rate is not the rate you pay — it is the actual rate + APRA’s mandatory 3% buffer (APRA 2026) .
- Lenders Treat Income Differently
Even with identical salaries, borrowers rarely have identical income profiles — and lenders rarely treat income the same way.
Base salary
Usually counted at 100%.
Overtime, bonuses, commissions
Lenders “shade” variable income to 50–80%, unless it is highly consistent (LenderBridge 2026) .
Some lenders accept 100% of overtime for essential‑services workers (Eternity Group 2026) .
Rental income
Typically assessed at 70–80% to allow for vacancies and costs (LenderBridge 2026) .
Self‑employed income
Often assessed using the lower of the last two years or an average (LenderBridge 2026) .
Result: Two borrowers earning the same gross salary can have borrowing capacities that differ by $40,000–$100,000, purely due to income treatment.
- Living Expenses Are Not the Same Across Lenders
Lenders must assess living expenses using the higher of your declared spending or the HEM benchmark (APRA 2026) .
But lenders use:
- different internal benchmarks
- different expense categories
- different scaling for dependants and lifestyle
This means two borrowers with identical incomes — or two lenders assessing the same borrower — can produce very different borrowing outcomes.
- Existing Debts Are Treated Differently
Credit cards, personal loans, car loans, HECS/HELP and Buy Now Pay Later all reduce borrowing power.
APRA’s guidance example assesses credit cards at 3% of the limit per month, not the balance (APRA 2026) .
Some lenders use:
- actual repayments
- higher assumed repayments
- full credit limits
- additional buffers
Even a $15,000 credit card limit can reduce borrowing power by $30,000–$50,000 depending on the lender.
- The Serviceability Buffer Changes Everything
APRA requires lenders to assess loans at 3 percentage points above the actual rate (APRA 2026) .
With variable rates around 6%, most borrowers are assessed at 9%+ (Borrowing Power Australia 2026 Guide) .
This buffer is the single biggest reason borrowing power feels lower than expected.
- Debt‑to‑Income (DTI) Limits Vary Between Lenders
Since February 2026, APRA requires banks to limit the proportion of new lending written at DTI ≥ 6 (Nest Capital Finance 2026) .
This is a portfolio cap, not a ban — but it means:
- some lenders become stricter
- high‑DTI loans become harder to place
- borrowers near DTI 6 may get different answers from different lenders (MFA 2026)
Two borrowers with identical incomes may fall inside or outside a lender’s DTI appetite, producing different borrowing results.
- Policy Differences Compound — Creating Large Gaps
When you combine:
- income shading
- expense benchmarks
- debt treatment
- buffers
- DTI caps
…it’s common to see $100,000+ differences between lenders (LenderBridge 2026) .
This is why online calculators — which use simplified assumptions — often mislead borrowers.
Real‑World Example
Two borrowers each earn $90,000:
- Borrower A: stable overtime, low expenses, no debts
- Borrower B: variable bonus income, higher expenses, $15,000 credit card limit
Even with identical salaries, Borrower A may qualify for $40,000–$100,000 more, depending on lender policy (Borrowing Power Australia 2026 Guide) .
How to Maximise Your Borrowing Power
- Choose the right lender for your income type
Essential‑services workers, contractors, casuals, self‑employed borrowers and investors all benefit from lenders whose policies favour their income structure.
- Reduce or close unused credit limits
Unused limits still count against you (APRA 2026) .
- Review your living expenses
Some expenses can be legitimately reduced or clarified.
- Run your scenario across multiple lenders
The only accurate way to know your true borrowing capacity is to compare lenders — something brokers do every day.
References
APRA serviceability buffer and lender assessment rules (Eternity Group, 2026) — Clear explanation of APRA’s 3% buffer, income shading and expense benchmarks. https:
APRA to limit high debt-to-income home loans to constrain riskier lending https:
How Lenders Calculate Borrowing Power in Australia (LenderBridge, 2026) — Income shading, rental income treatment, buffers and lender differences. https:
MFAA — Responsible lending, serviceability and borrowing power https:
APRA’s cap on high DTI home loans aimed at lowering future risk https:
Chris Hutton Home Loans — Borrowing Power & Lending Insights https: