8 ways to increase your
home loan borrowing power
home loan borrowing power
Last updated: 06 October 2025 | Estimated read time: 5 Minutes
Your borrowing power, also known as borrowing capacity, is one of the first things to consider when buying a home, refinancing or investing in property. The higher your borrowing power, the more options you may have.
While every lender calculates borrowing capacity a little differently, most will look at your:
- Income
- Expenses
- Debts
- Credit history
- Deposit size
If your borrowing power isn’t quite where you’d like it to be, here are eight practical ways to help improve it.
1. Know your credit score
Your credit score reflects your financial history, including any missed payments or defaults. A lower score may affect your ability to borrow, but some non-bank lenders (like Pepper Money) take a more flexible, personalised approach.
You can check your credit score for free every three months through Illion, Experian or Equifax.
2. Increase your income
Your income plays a major role in determining how much you can borrow. You might consider:
- Negotiating a raise or promotion
- Taking on extra hours or a second job
- Including all eligible income sources in your application.
At Pepper Money, we consider a range of income types, including rental income, child support, and Centrelink payments.
3. Reduce your expenses
4. Reduce your debts
Your debt-to-income ratio (DTI) compares your total debts to your gross annual income. A lower DTI generally means higher borrowing capacity.
To reduce your DTI:
- Pay off existing debts
- Lower your credit card limits
- Consider refinancing to a lower interest rate
5. Reduce your excess credit limits
Lenders assess credit cards as if they’re fully used, even if you haven’t spent the full amount. If you have unused or high-limit cards, consider reducing the limits or closing them.
Managing your credit cards responsibly can also show lenders that you’re in control of your finances.
6. Save more money for your deposit
A larger deposit can:
- Lower your loan-to-value ratio (LVR)
- Help you avoid Lenders Mortgage Insurance (LMI)
- Potentially unlock better interest rates
If you already own property, you may be able to use your equity to reduce your LVR. Some lenders also accept guarantors to help secure your loan.
Tip: Saving consistently over time shows financial discipline, which may positively impact your borrowing capacity. Here are some tips that may help you save for your home deposit.
7. Choose a longer mortgage term
Opting for a longer mortgage term can reduce your monthly repayments, which may increase your borrowing power. Just keep in mind that a longer term means paying more interest over time.
Use our home loan repayment calculator to see how different terms affect your repayments.
8. Choose the right home loan product
Different lenders, and even different products within the same lender, assess borrowing capacity in different ways.
At Pepper Money, we offer options for:
- Borrowers with lower credit scores
- Self-employed applicants
- Those needing flexible income verification
Not everyone’s financial journey looks the same, and that’s okay. We’re here to help you find a way forward.
Ready to explore your options?
Contributor | Barry Saoud, General Manager, Mortgages and Commercial Lending
Barry joined Pepper Money in July 2021 as General Manager, Mortgages and Commercial Lending. He is responsible for the strategic direction and operating performance across product, credit, and settlements for mortgages, commercial loans, personal loans, and direct sales. Read more.
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It can be confusing! If you don’t know your LMI from your LVR check out our Resources Hub, it’s full of helpful information.
Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
All applications for credit are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply.
The results of the borrowing power calculator are based on information you have provided and is to be used as a guide only. The output of the calculator is subject to the assumptions provided in the calculator (see 'about this calculator') and are subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated borrowing power is based on the assumption that interest rates remain constant for the chosen loan term. Your borrowing power amount will be different if a full application is submitted and we complete responsible lending assessment. The results in the calculator do not take into account loan setup or establishment fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widgetworks.
Pepper Money Personal Loans is a brand of Pepper Money Limited. Credit is provided by Now Finance Group Pty Ltd, Australian Credit Licence Number 425142 as agent for NF Finco 2 Pty Limited ACN 164 213 030. Personal information for Pepper Money Personal Loans is collected, used and disclosed in accordance with Pepper’s Privacy Policy & the credit provider’s Privacy Policy.
Pepper Money Limited ABN 55 094 317 665; AFSL and Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.
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