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How much home loan can I borrow in Australia?

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Q: What are the factors to know how much can I borrow for a home loan?


  1. Credit Score

One of the most critical factors in determining how much home loan you can borrow is your credit score. Your credit score is a numerical representation of your creditworthiness, ranging from 0-1200. The higher your score, the better your chances of securing a home loan with more favorable terms, including a lower interest rate and higher borrowing capacity.

  1. Income and Expenses

Your income and expenses are other essential factors that lenders consider when determining how much home loan you can borrow. Your income shows your ability to repay the loan, while your expenses demonstrate your financial commitments. The lender will calculate your debt-to-income (DTI) ratio, which measures your monthly debt payments against your gross monthly income. A low DTI ratio means that you have more disposable income and can afford to take on more debt, increasing your borrowing capacity.

  1. Deposit

The amount of deposit you have saved also plays a crucial role in determining how much home loan you can borrow. In Australia, lenders usually require a minimum deposit of 5% of the property’s purchase price. However, the more deposit you have saved, the less you need to borrow, and the higher your borrowing capacity.

  1. Property Value

The value of the property you want to purchase also impacts how much home loan you can borrow. Lenders usually assess the property’s value and use it as security for the loan. If the property’s value is high, you may be able to borrow more than if the property is worth less.

  1. Lender Requirements

Each lender has its requirements for home loan applications. Some lenders may have stricter policies than others, limiting your borrowing capacity. It’s essential to research and compare different lenders to find one that suits your financial circumstances.

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