How Much Can I Borrow

How Much Can I Borrow

Hey there first home buyers, if you are asking, “How much can I borrow for a house purchase?” then you have come to the right place! If terms like “borrowing power” and “credit score” make you feel a little overwhelmed, we get it. First-time home buyers can’t be expected to know everything about how to buy a home or get a home loan with no experience. In this blog, we’ve outlined what borrowing power is, along with some other first home buyer basics.

After reading, you’ll likely have more questions…and that’s ok! You can book a chat with one of our expert brokers and we’ll guide you through the process from start to settlement.

 How Much Can I Borrow?

As new home loan commitments rise again this year, first-time home buyers are seeing a lot of competition in the housing market. Understanding your borrowing power is crucial so you can make confident offers and secure a property. The good news is, knowing “how much can I borrow for a home loan?” doesn’t have to be complicated.

How Is Borrowing Power Calculated?

Lenders use a number of factors to determine how much money they will lend you for a home loan. These factors include:

  • Income: All income of loan applicants is factored into the final calculation.
  • Expenses: These include household living costs, debts (including credit cards and student loans) and any other financial commitments. The lower your expenses, the higher your potential borrowing power.
  • Savings: A healthy deposit saved in a bank account shows you’re responsible with money and reduces the amount you need to borrow.
  • Credit history: A good or excellent credit score shows lenders you can manage debt responsibly.

Let’s Get Calculating!

While nothing beats talking to a mortgage professional, an online borrowing calculator is a great start to give you an idea of your borrowing power. These calculators typically ask for your income, expenses and desired loan term. Based on this info, they provide an estimated borrowing limit.

First home buyers often ask how much can I borrow

Home Loan Basics

Saving up: Aim for a 20% deposit, and if you have less, Lenders Mortgage Insurance is available.

First Home Buyer Grant: People buying their first home in Queensland can access a government grant.

Extra costs: Some extra costs that can’t be rolled into your loan can include stamp duty, legal and conveyancing fees and building and pest inspections. You’ll also have council rates, utilities and home insurance costs as part of your ongoing home ownership costs.

Loan options: Many different loan types are available including fixed vs variable interest rate loans and different loan features (like offset accounts).

Pre-approval: Lender pre-approval shows sellers you’re a serious contender and streamlines the offer process.

Getting help: A mortgage broker can help you compare lenders and find the right loan deal for your situation.

Next Steps

Now that you understand how a lender will calculate your borrowing power and some home loan basics, it’s time to connect with an expert mortgage broker. We can assess your individual circumstances, provide personalised borrowing power calculations and guide you through the home loan process.