If you’ve been scrolling through Domain or REA lately, you already know Sydney property doesn’t come cheap. Whether you’re eyeing a two-bedder in Marrickville or a family home in the Hills District, the first real question isn’t “which suburb?” — it’s “how much will the bank actually lend me?”
The honest answer: it depends on a lot more than your salary. Here’s what lenders are actually assessing in 2026, and how to put yourself in the strongest possible position.
What Lenders Look At (Beyond Your Income)
Most people assume borrowing capacity is a simple multiple of income. It’s not. Banks run a detailed serviceability assessment that factors in:
- Your gross income — salary, bonuses, rental income, business income, and even some government payments can count.
- Your existing debts — credit cards (even ones you pay off monthly), HECS/HELP debt, car loans, personal loans, and existing mortgages all reduce what you can borrow.
- Your living expenses — lenders use the higher of your declared expenses or the Household Expenditure Measure (HEM) benchmark for your household size and location.
- Your loan term and type — principal and interest vs interest-only, 25 years vs 30 years, fixed vs variable.
- The serviceability buffer — APRA currently requires lenders to test your ability to repay at your actual interest rate plus 3%. If you’re borrowing at 6.2%, the bank stress-tests you at 9.2%. That buffer bites hard.
The Sydney Premium
Sydney borrowers face a specific challenge: high purchase prices mean bigger loans, but your income doesn’t automatically scale to match the market. A $1.4 million home in Baulkham Hills or a $1.2 million townhouse in Epping requires a very different financial picture than the same property in Adelaide or Brisbane.
That said, Sydney salaries tend to be higher, and lenders do factor in realistic living costs by postcode. The HEM benchmark in Sydney is higher than regional areas, which can actually work slightly in your favour — your declared expenses are less likely to be artificially inflated above the benchmark.
What the Numbers Might Look Like in 2026
To give you a rough idea (not a quote — speak to a broker for your actual number):
- A single borrower on $120,000 gross income, minimal debts, and standard living expenses might qualify for somewhere between $550,000 and $700,000 depending on the lender and loan structure.
- A couple earning a combined $180,000, one car loan, and a $10,000 credit card limit might be looking at $800,000 to $1,050,000 — again, lender-dependent.
The spread between lenders is real. Some banks assess credit card limits at 3% per month; others at 3.8%. Some shade certain income types differently. That variance can mean a difference of $80,000 to $150,000 in your maximum borrowing capacity — which in Sydney, is the difference between bidding at auction and watching from the footpath.
Practical Ways to Increase Your Borrowing Power
Cancel unused credit cards. If you have a $15,000 limit you barely touch, it still counts as a liability. Cancelling it before applying can meaningfully lift your capacity.
Pay down personal loans and car finance. Every dollar of monthly commitment reduces what the bank thinks you can afford on a mortgage.
Get your HECS debt in perspective. HECS repayments are taken from your income by the ATO before lenders see your take-home pay. A $60,000 HECS balance can reduce borrowing capacity by $30,000–$50,000 depending on repayment tier.
Clean up your credit file. One or two defaults — even small ones, even old ones — can still show up and trigger a lower credit tier with some lenders. Check your Equifax and Illion reports before you apply.
Consider your loan structure. Interest-only periods, longer loan terms, and split loans all affect how lenders calculate your repayments. A good broker can model these scenarios for you.
Don’t apply to multiple lenders at once. Every credit application leaves a footprint. Multiple applications in a short window signal financial stress to lenders. Use a broker who can identify the right lender first.
The Spring Market Is Coming
Historically, Sydney’s property market picks up from September onwards. Vendors who’ve been sitting on the fence through winter list their homes, auctions ramp up, and competition for good stock intensifies. Getting your pre-approval sorted now — before the spring rush — means you can bid with confidence and not lose properties because your finance wasn’t ready.
Pre-approval isn’t a guarantee, but it’s a genuine signal to vendors and agents that you’re a serious buyer. In a competitive market, that matters.
Talk to a Loan Connect Broker
At Loan Connect, we work with a panel of 40+ lenders — the majors, the regionals, and the non-banks — which means we’re not limited to what one bank will do. We run your numbers across multiple lenders to find the structure that gives you the strongest borrowing position, not just the first approval.
If you’re trying to figure out what you can borrow, or you’ve been knocked back elsewhere and want a second opinion, reach out for a free, no-obligation chat. There’s no cost to speak to us, and no credit footprint until you formally apply.
Call us or use the contact form on our website — we’re based in Sydney and we know this market.
