How much can I borrow as a first home buyer
"How much can I borrow?" It's usually the very first question on any aspiring homeowner's mind, and understandably so, as it’s also often the first hurdle to get over in buying a home.
Here's the thing though, there's no magic calculator that spits out a perfect number. Borrowing power is shaped by a whole mix of factors, and every lender weighs them up in their own way.
The upside? Once you understand what's being assessed, there are genuine steps you can take to strengthen your position and boost what you're able to borrow.
At the end of the day, a lender wants to answer one question: can you afford this loan comfortably, not just today but down the track too? Here's what goes into that decision.
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Income
Your wages or salary form the foundation, but lenders will often also factor in things like:
- Commission and bonus payments
- Income from rental properties
- Self employed earnings
- Government support payments
- Any side income or additional work
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Everyday spending
It's not just about what comes in, it's what goes out too. Things like streaming subscriptions, eating out, childcare costs, insurance premiums, and general lifestyle spending all get factored in. It's amazing just how quickly small recurring costs add up, particularly those forgotten subscriptions ticking away in the background.
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Current debts
Personal loans, car finance, credit cards, and Buy Now Pay Later accounts can all chip away at your borrowing capacity. One thing that catches people out is that even though a credit card sitting at zero balance is often assessed against its full limit, not what's owing.
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Deposit size
A bigger deposit generally works in your favour, opening doors to better rates and more competitive lending options. That being said, 20% isn't always the magic number, as certain new build properties or schemes such as the First Home Loan can allow for a lower deposit. It’s worth asking us if this could apply to you.
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Rates and regulation
Banks stress test your ability to repay your loan in case interest rates climb in future. Add to that regulatory tools like Debt to Income (DTI) restrictions, and you can see why two people on similar salaries might walk away with very different lending outcomes. Getting advice specific to your circumstances really does matter here.
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Practical ways to boost what you can borrow
Good news… small, deliberate changes ahead of applying for your home loan can really shift your position more than you'd expect. Things like…
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Tackle existing debt first
Chipping away at personal loans, lowering your credit card limits, or clearing off any Buy Now Pay Later debt is a great place to start, and it can make a real difference to your outcome.
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Keep your accounts tidy
Banks want to see steady, predictable account behaviour. Steer clear of gambling transactions, missed payments, and frequent overdrafts wherever you can. Even a few months of clean history goes a long way.
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Take a look at your discretionary spending
No need to cut out all the fun stuff, but trimming back non essential spending in the lead up to applying can genuinely help your case.
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Grow your deposit
Whether that's saving a bit harder, picking up a side hustle, or looking into your KiwiSaver options, every bit toward your deposit strengthens your application.
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The Bank of Mum & Dad
For a lot of first home buyers, family support plays a bigger role than people expect. A gifted deposit from parents, or family members chipping in, can be the difference between waiting a few more years and getting into your first home now. Lenders generally want this documented properly, so if mum and dad are helping out, we can guide you through what's needed (like a gifting letter) to make sure it's all above board and doesn't hold up your application.
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Family Guarantees
Another option some families consider is a guarantor arrangement, where a parent or family member uses equity in their own property to help boost the deposit, rather than gifting cash outright. It can be a great way to get into the market sooner, but it's a big commitment for the guarantor too, so it's worth having a proper conversation with us about how it works, the legal aspect, and whether it's the right fit for your situation.
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Talk to us sooner rather than later
This is where having a mortgage adviser in your corner really pays off. Reach out early and we can help get your finances into good shape well before you apply, guide you on which debts to prioritise paying down, help build a savings plan for your deposit, and match you with a lender whose criteria actually fits your situation.
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How the Loan Market Dunedin team can help
We can walk you through:
- A realistic picture of what you might be able to borrow
- Lenders who are likely to say yes to your particular situation
- Practical steps to strengthen your application (before you apply!)
- Ways to maximise your overall borrowing power
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Your borrowing power isn't just a simple sum of income minus expenses, it's your entire financial picture working together. The sooner you get clarity on where you stand, the sooner you can build a solid plan and move forward with confidence.
Planning to buy in Dunedin in 2026 or 2027? There's no better time to start the conversation. Get in touch with the Loan Market Dunedin team today and let's map out your options together.
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