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How to Increase Your Borrowing Capacity in Australia (2026): The 5 Levers Most Brokers Miss

Mike Bell, Founder and Director of Build and Protect Financial Services

Mike Bell

May 8, 2026
Sydney commercial building exterior

On 6 May 2026 the Reserve Bank lifted the cash rate by 25 basis points to 4.35 per cent, and signalled a baseline assumption of 4.7 per cent by year-end. APRA’s 3 percentage-point serviceability buffer is unchanged. And as of 1 February 2026, banks can write no more than 20 per cent of their new mortgage volume to borrowers at six times income or higher — separately, for owner-occupiers and investors. If your bank has come back with a borrowing number that feels low for your income, it is no longer a fluke. It is the system.

Most brokers will reach for the same three levers everyone reaches for: cut the credit-card limit, clear the HECS, kill the BNPL accounts. Those levers do work. They are also the levers that any high-income professional has either already pulled or could pull without picking up the phone.

The five levers below are different. They are the ones high-income Australian professionals — the people Build & Protect spends most of its time with — actually need to move. Most are not on the front page of the SERP. Some are not on broker websites at all. Read in order; the last one is the one that decides whether the rest hold up at the next rate move.

What no one else is saying

The fixation on “how big is my borrowing number” is the wrong frame.

The right frame is borrowing-capacity durability — how stable that number is across the next two to three rate moves and the next two APRA macroprudential adjustments. A serviceability number that survives a 4.7 per cent cash rate, a 3 percentage-point buffer, and a tighter DTI bucket is worth significantly more than a higher number that does not.

The five levers below are scored on durability first, headline number second. That is the order most other broker content gets backwards.

Lever 1 — Choose the lender by your income shape, not by the rate

If you earn a base salary plus a bonus, commission, RSUs, dividends, distributions from a trust, or rental income, the difference between “approved at $1.6m” and “approved at $2.1m” rarely comes from your rate. It comes from how the lender shades your income.

Income shading is the discount a lender applies to non-base income to account for variability. Every APRA-regulated lender applies the same 3 per cent serviceability buffer above the actual interest rate. They do not, however, apply the same shading to your bonus, your commission, or your rental income. The variation across the market is large enough to be the single biggest lever on a high-income file.

Where the shading sits in 2026

Indicative ranges based on lender policy summaries circulating among broker channels in early 2026 (lender policies change without public notice and apply file-by-file):

  • Base salary: usually 100 per cent — no shading.
  • Overtime, allowances, shift loadings: typically shaded to 80 per cent for stable industries (nursing, emergency services, mining), and 50–80 per cent in less stable industries. Some lenders require a two-year history; others accept twelve months.
  • Annual bonus: most majors take 80 per cent of a 12-month average; a handful of second-tier lenders take 100 per cent for borrowers in finance, professional services, and tech roles with a documented two-year track record. The same applicant on the same income can move $150,000–$300,000 of borrowing capacity by lender choice alone.
  • Commission income: 60–80 per cent across major lenders; some second-tier lenders accept 100 per cent for genuine PAYG sales roles with a two-year history.
  • Dividend / trust distribution income: most majors decline to use it without a two-year average and accountant verification; specialist lenders will use it at 80 per cent.
  • Rental income: 70–80 per cent gross is the long-standing norm; a handful of lenders use 80 per cent of net market rent, which can be more or less generous depending on the property’s expense profile.
  • Foreign currency income: heavily shaded — commonly 60–80 per cent of gross, sometimes lower for less common currencies.

How to actually use this lever

Before you submit anywhere, your file should have a one-page “income shape” summary — base, variable, rental, distributions, and the time-on-each. Map that shape to a shortlist of three lenders whose policy treats your strongest income lines most generously. The wrong lender choice is the most expensive avoidable mistake on a high-income file. There is no public matrix for this; it is a relationship and case-history call. [INTERNAL LINK: Borrowing Power Engineering pillar page]

Lever 2 — Sequence around the new APRA DTI cap

From 1 February 2026, every authorised deposit-taking institution in Australia is required to keep new lending at debt-to-income (DTI) of six or more to no more than 20 per cent of new mortgage volume — measured separately for owner-occupier and investor lending, and assessed quarterly. Bridging loans for owner-occupiers and loans for new-build dwellings are exempt.

APRA has stated that, at the system level, the limit is not currently binding. That is a different statement from “the limit will not bind your application.” If you are a Sydney-based dual-income household earning $400,000 with two existing investment properties, you are firmly in the cohort the cap is designed to slow.

What it actually changes

It changes the order of operations. Three things now matter that did not, twelve months ago:

  1. Where in the quarter you submit. A bank that has already filled most of its high-DTI bucket for the quarter will tighten its credit decisions on borderline files. The same file that gets a yes on day 14 of the quarter can get a no on day 78.
  2. Which entity inside the lending group you submit to. Some banking groups operate multiple licensed lenders. Each licence has its own DTI bucket. A skilled broker will know which bucket has room and which is closing.
  3. How the file is presented. Files at exactly DTI 6 are exposed; files clearly above can drop to DTI 5.9 with a structural change (lifting savings to offset, splitting a facility, recasting a personal loan). The point of doing the work pre-submission is to push the file out of the constrained bucket entirely.

Cross-checking your DTI

Total household debt (existing mortgages, personal loans, credit-card limits, BNPL, HECS treatment varies — see Lever 3) divided by gross household income. If you are above six, you are in the constrained bucket. Above 7.5, you are in the bucket that even non-bank lenders will look at carefully. The number is recoverable, but the work has to be done before submission, not during.

Lever 3 — Re-run your HECS maths after the 2025 reforms

Almost every borrowing-capacity calculator built before 1 July 2025 is wrong on HECS. Two things changed.

First, on 1 June 2025, every existing HELP / HECS / VET-Student-Loan / Australian Apprenticeship Support Loan balance was reduced by 20 per cent before that year’s indexation was applied. For someone with a $50,000 HECS balance pre-reform, $10,000 was wiped before indexation. For a $100,000 balance, $20,000.

Second, from the 2025–26 income year, the compulsory repayment threshold lifted to $67,000, and the repayment is calculated on a marginal basis — only on the portion of income above the threshold — using the published rates schedule. The flat-rate-on-total-income calculation that older spreadsheets still use overstates the repayment for most borrowers and therefore understates borrowing capacity.

Why that matters in 2026

APRA has clarified that the HELP repayment, when included, must be assessed on its actual obligation — not a worst-case estimate. Lenders that have updated their assessment engines now take the lower marginal-rate repayment. Lenders that have not are quietly costing their applicants tens of thousands in borrowing capacity. There is also lender variation on whether HECS repayments are excluded entirely when the borrower is within twelve months of paying off the balance. For a high-income professional with a small remaining balance, that exclusion can swing assessed serviceability materially.

The check you can do today

Pull your most recent HECS balance from myGov. Run the post-1-July-2025 marginal calculation against your gross taxable income. Compare to the figure your bank used in the assessment you have on file. If the bank used a higher figure, that is a lever — either by going back to that lender with corrected numbers, or by moving to one that already has the updated logic in its calculator.

Lever 4 — Use the exception-to-policy lane (and bring an accountant)

Inside APRA’s prudential framework, there is a legitimate, regulator-acknowledged path for loans that do not strictly meet the standard policy criteria. APRA refers to it as an “exception to policy.” Historically, exceptions have made up between 2 and 3 per cent of total housing lending — a small share, but a real one.

APRA wrote to banks again in 2024 reinforcing that exceptions must be “prudent, limited and clearly justified.” That language is sometimes interpreted at the front line as “don’t bother.” That is not what it says. It says: exceptions must be properly justified and properly documented.

Which files actually qualify

Files where the standard policy understates a real economic position. Common shapes: a self-employed borrower with two strong years and a depressed third year; a salaried borrower whose calculator-assessed living expenses are higher than their genuine HEM-style spending; a professional with non-standard income mix (carried interest, deferred bonus, retention grants) where the policy calculator applies the wrong shade.

In every case, the difference between an exception that gets through and one that does not is the file. A clean accountant-prepared income reconciliation, a 12-month bank-statement-derived expenses summary that holds up under scrutiny, a coherent narrative of why the standard policy understates the borrower’s real position. This is where the holistic stack matters: a borrower whose accountant, financial planner, and broker present a single coherent file is treated differently from one who arrives lender-shopped and stitched together.

The exception lane is not a loophole. It is a regulator-acknowledged process. It is also one of the most under-deployed levers on the menu, because it requires preparation work that most transactional lenders and brokers will not do for free. [INTERNAL LINK: About — how Build & Protect works with accountants]

Lever 5 — Restructure the existing stack before chasing more capacity

The single biggest borrowing-capacity drain on most high-income investor files is not the next loan. It is the way the existing loans are arranged. Cross-collateralised facilities; multiple loans concentrated at one lender; investment-purpose debt mis-tagged as owner-occupier (or vice versa); offset accounts sitting against the wrong loan; interest-only periods rolling onto principal-and-interest at the worst possible serviceability moment. Each one quietly compresses the next number.

What a re-stacking exercise actually involves

A genuine borrowing-capacity audit will, before recommending any new lending, look at five things in the existing structure:

  1. Which loans are cross-collateralised, and what each property would do to standalone servicing if separated.
  2. How concentrated the existing facilities are at one lender, and where the next $1m of new lending hits a bank’s internal exposure cap.
  3. Whether the loan purpose is correctly tagged for tax, and whether any deductibility is being lost or capped because of structure decisions made years ago.
  4. Where offset cash is sitting, and whether the interest-saving and serviceability benefit of moving it would change which lender gives the highest assessed capacity.
  5. When existing IO terms expire, whether there is a refinance window before the rolling P&I impact hits next assessment.

Most of these are not new lending. They are re-stacking work. Done well, they often add more borrowing capacity than any of the first four levers — and the gain compounds across every subsequent purchase. [INTERNAL LINK: Cross-collateralisation explainer]

Why your accountant, planner and solicitor matter more in 2026 than in 2024

Borrowing capacity is the visible part of the iceberg. The part that decides whether the next acquisition compounds, stalls, or unwinds three years from now is the work that sits with the rest of the professional stack.

The accountant decides which entity is the right buyer, whether the structure is a personal name, family discretionary trust, or company; whether negative gearing is preserved or compromised; and how the income flows back to support the next file. The financial planner stress-tests cashflow, insurance, and the durability of the household’s earning capacity through the next ten years — not just the next twelve months. The solicitor protects the asset base from contract-level risk on each purchase. A buyers agent finds the actual property.

None of those decisions sits inside a borrowing-capacity calculator. All of them shape the durability of the borrowing capacity over time. A coherent file, presented as one, is treated differently to a file that arrives lender-shopped. [INTERNAL LINK: Strategy Call booking page]

Frequently asked questions

How quickly can borrowing capacity actually be increased?

It depends on the lever. Reducing or closing a credit-card limit shows up the day after the limit reduction lands on your credit file. A lender change can be implemented inside 14–28 days. A structural re-stacking exercise — uncrossing collateral, redistributing offset, refinancing across multiple lenders — usually runs 60–120 days. The exception-to-policy lane needs roughly 4–8 weeks of file preparation before submission.

Does APRA’s 3 per cent serviceability buffer ever get reduced?

Not currently. APRA reaffirmed the 3 percentage-point buffer in its November 2024 macroprudential update, and again in its November 2025 review. It is reviewed against system stability and household resilience, not the cash-rate cycle. Lenders are required to apply it on top of the actual interest rate when assessing serviceability.

What is the new APRA DTI rule and when did it start?

From 1 February 2026, every authorised deposit-taking institution in Australia is required to keep new mortgage lending at debt-to-income of six or higher to no more than 20 per cent of new volume — measured separately for owner-occupier and investor lending, and assessed quarterly. Bridging loans for owner-occupiers and loans for new-build dwellings are exempt. Lending currently sits below the 20 per cent ceiling at the system level, but the limit binds on individual files where the bank’s quarterly bucket is full.

How much does HECS actually reduce borrowing capacity in 2026?

Less than it did in 2024. Two reforms changed the maths: a 20 per cent balance reduction applied on 1 June 2025, and a marginal-rate repayment calculation applied from the 2025–26 income year. The exact impact depends on income and remaining balance — but for a high-income professional with a five-figure HECS balance, the change typically restores tens of thousands of dollars of assessed borrowing capacity compared to the pre-reform position.

Can a non-bank lender lend more than a major bank?

Sometimes. Non-bank lenders are still APRA-supervised in most cases, still apply the serviceability buffer, and still run real credit assessments. Where they can sometimes lend more is on income shading (different policies for variable income), DTI tolerance (different bucket), or property type (specialist policies). They are an option to consider once the major-bank assessment is on the table — not a default.

Is it better to fix or float to maximise borrowing capacity?

Borrowing-capacity assessment uses the actual rate plus the buffer, not the fixed-rate special. Fixing does not directly lift assessed capacity. What it can do is stabilise cashflow during a higher-rate period, which protects the durability of the file across the next assessment. The right answer depends on the household’s cashflow position, the rate-cycle view, and the next acquisition timing. This is general information only — speak with your broker and accountant before deciding.

Should I close my credit cards before applying?

Closing or reducing the limit, not zeroing the balance, is what moves the lender’s serviceability calculation. Lenders typically assess 3.0–3.8 per cent of the credit-card limit per month as an assumed repayment, regardless of the actual balance. A $20,000 unused card costs $600–$760 a month in assessed servicing. If you do not need the limit, reducing it before assessment is one of the simplest levers available.

How is rental income from existing investment properties treated?

Most lenders take 70–80 per cent of gross rental income to account for vacancy, agent fees, and ongoing expenses. A property with $500/week rent ($26,000 a year) typically contributes $18,200–$20,800 to assessed income. A small minority of lenders use net rent calculations that can be more or less generous depending on the expense profile of the property. Lender choice matters here too.

Where to from here

If your bank’s borrowing-capacity number feels lower than your income should support, it almost certainly is — and the reason is not always obvious from the outside. The five levers above will move the number on most high-income files. The order matters; so does the file presentation; so does the relationships with the right lenders, accountants, and planners.

Build & Protect’s Property Wealth Acceleration Blueprint starts with a borrowing-capacity audit before any new lending is considered. The audit covers all five levers, in order, against the current APRA settings and your actual income shape. We work alongside your accountant, planner, and solicitor — not in spite of them.

If that sounds useful, the next step is a Strategy Call. There is no advice given on the call; it is a 30-minute audit conversation about your file, your portfolio plan, and which of the five levers is most relevant to you right now.

 

Sources

Every fact-claim above is sourced to a Tier 1 or Tier 2 publisher. URLs accessed 8 May 2026.

 

Build & Protect Financial Services · ACL #385130 · This article is general information only and does not constitute personal financial or credit advice. Speak with a licensed credit professional, your accountant, and where relevant your financial planner and solicitor about your specific circumstances before acting. Statistics and regulatory positions cited are accurate to 8 May 2026 and are subject to change.

 

 

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