How Lenders Really Decide What You Can Afford

If you're a property investor, you’ve probably asked yourself:

How much can I actually borrow?

It’s a fair question, and a surprisingly tricky one. Because lenders don’t just look at your deposit or how many properties you own. They look at something called serviceability, i.e. your ability to afford the loan repayments after factoring in your income, debt, expenses, and financial reliability.

In simple terms? Borrowing power means how confident a bank is that you can repay what you owe, with breathing room.

But here's the thing. Even if you’re sitting on a mountain of equity, a lender could still say no if your income or expenses don’t meet their criteria. A millionaire on paper could be rejected for a $600K loan if the numbers don’t line up.

That’s where many investors get stuck and not because they lack assets, but because they haven’t structured their income or expenses in a way lenders actually recognise.

What Is Borrowing Power, Really?

Borrowing power, or serviceability, is all about cash flow. Lenders want to know:

• How much money do you earn?

• How stable is that income?

• What debts do you already have?

• What does it cost you to live?

Then they stress test your finances by asking, "If interest rates rise, can you still comfortably make repayments?". If your surplus income looks solid, you’re good. If not, it’s back to the drawing board, even if your financial situation feels fine to you.

It’s a balance. And it changes depending on the lender, the market, and which country you’re borrowing in.

Same Game, Different Rules

In Australia, lenders often cap your total borrowings at 6 to 7 times your annual income. That means if you earn $100K a year, most banks won’t let you go beyond $600K to $700K in total debt, no matter how much property you already own.

In the U.S., lenders focus on your Debt-to-Income (DTI) ratio. They want your total monthly debts to stay under 43 to 45 percent of your income. Less than 36 percent is even better.

Both approaches aim to protect you and the bank. But they each come with quirks, from Australia’s HEM benchmark for living costs to the U.S.’s heavy emphasis on credit scores. In both countries, your borrowing power can swing massively based on how your income, expenses, and liabilities are presented.

How SmartPay™ Helps You Borrow More (Safely)

That’s where SmartPay™ comes in. Think of it as a strategic tune-up for your finances before approaching any lender. SmartPay helps you:

1. Restructure Your Income

Not all income is treated equally. Regular salary? Great. Bonuses or commissions? Maybe — if they’re stable and documented. Rental income? Usually shaded down.

SmartPay™ helps make your income work harder by:

• Ensuring the right income sources are counted

• Presenting business, freelance or variable income in a lender-friendly format

• Timing applications to capture peak income periods

2. Present Your Application Like a Pro

Lenders don’t just want data. They want confidence. SmartPay™ helps package your application to show lenders:

• You’re stable, responsible, and financially organised

• You have surplus cash even after all expenses

• You’ve planned for interest rate rises and unexpected costs

Why Borrowing Power Matters (Even If You’re Not Buying Today)

Even if you’re not actively shopping for your next property, knowing your borrowing ceiling helps you plan better:

Can you refinance for a better rate?

Can you access equity for a renovation or business?

If the right opportunity shows up, can you move fast?

The lending landscape is always shifting. What was possible six months ago may not be today. But SmartPay™ helps you stay one step ahead.

Ready to See What You Could Really Borrow?