How Much Can I Borrow (And How to Increase It)

One of the first questions people ask when starting their home ownership journey is “how much can I actually borrow?”.

While it would be nice if there were a simple calculator that gave the perfect answer, borrowing power depends on a range of factors and every lender assesses loan applications slightly differently.

The good news is there are often ways to improve your position and potentially increase what you can borrow. 

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What determines your borrowing power?

When a lender assesses your application, they are looking at one main thing: can you comfortably afford the loan both now and in the future? To work this out, banks look at a range of factors including the following.

Your income

Your salary or wages are obviously important, but lenders may also consider:

• Bonuses and commissions
• Rental income
• Self-employed income
• Government payments
• Secondary income streams, side hustles, etc 

Your expenses

Lenders do not just look at what you earn, they also assess what you spend. Everyday expenses like subscriptions, dining out, childcare, insurance, and lifestyle spending all impact your borrowing capacity. Even small recurring expenses can add up and multiple subscriptions are a big one here, especially those ones we often forget about.

Existing debt

Car loans, credit cards, personal loans, and Buy Now Pay Later services can also reduce the amount you are able to borrow. Even if a credit card has a zero balance, lenders often assess it based on the full available limit. 

Your deposit

Generally, a larger deposit improves your borrowing position and often gives you access to competitive lending options or interest rates. Depending on the property type and your situation, you may not always need a 20% deposit. This is particularly true for some new builds or specific lending schemes like the First Home Loan scheme (ask us if this applies to you).

Interest rates and lending rules

Lenders also test whether you could still afford repayments if interest rates rise in the future. On top of that, lending regulations like Debt to Income (DTI) ratios can impact how much certain borrowers are able to access. This is why two people earning similar incomes can sometimes receive different lending outcomes. It is always a good idea to consider getting custom advice tailored to your individual situation.

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How to increase your borrowing power?

The good news is there are often simple ways to strengthen your position before applying. Here are a few things you can do. 

Reduce existing debt

This is a helpful first step. You could pay down personal loans, reduce credit card limits, or clear your Buy Now Pay Later balance. This can make a noticeable difference. 

Clean up your accounts

Lenders love consistency. It is a good idea to avoid gambling transactions, missed payments, and unnecessary overdrafts where possible. A few months of clean account conduct can go a long way. 

Review your spending

You do not need to stop enjoying life altogether, but tightening up discretionary spending can help improve your position. 

Increase your deposit

Saving a little more, starting a side hustle, or exploring KiwiSaver options can all help strengthen your application. 

Get advice early

This is one of the biggest advantages of working with a mortgage adviser. Getting in touch early means we can help you get your accounts in suitable shape. We can advise you on which debts to pay off first and guide you through saving for a deposit. We can also help you choose the right lender with criteria that suits your situation to help your application run smoothly.

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Our mortgage advisers at Loan Market Agile can also help you understand:

• What you may be able to borrow
• Which lenders may suit your situation - and will say YES!
• How to improve your position before applying
• What steps could help maximise your borrowing power

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The takeaway

What you can borrow is not as simple as your income versus expenses; it is the whole financial picture. The earlier you understand where you stand, the easier it becomes to make a plan and move forward with confidence.

If you are thinking about buying in 2026 or 2027, now is the right time to start the conversation with our mortgage team in either Christchurch, Timaru or Wanaka.

Get in touch with the Loan Market Agile team today and let us help you understand your options.

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