What lenders actually look at when they assess you

The question underneath every assessment

Strip away the paperwork and every lender is asking one thing: if we lend you this money, will you be able to repay it — including if things get harder?

Everything else is machinery for answering that.

Income: the part that varies most

This is where lenders differ most from each other, and where most of the six-figure gaps come from.

Base salary is treated most generously. It is contractual, predictable, and easy to verify.

Everything else is shaded — counted at less than face value, or not at all:

Income type	Typical treatment
Base salary	Counted in full
Overtime	Shaded; some lenders far more generously than others, particularly in industries where it is structural
Bonuses	Usually needs a two-year history, then shaded
Commission	Similar to bonuses; consistency matters more than size
Shift allowances and penalties	Varies enormously — this is where nurses, police and paramedics are most affected
Casual income	Usually needs six to twelve months’ history, then shaded
Rental income	Commonly counted at around 70–80% to allow for vacancy and costs
Self-employed	Assessed from financials, with add-backs that differ by lender
Government benefits	Some counted, some not, depending on type and permanence

This table is why a decline is not a verdict. If a large share of your income is overtime and allowances, the difference between the least and most accommodating lender can be enormous — often considerably more than any rate difference is worth.

Been declined, or told you cannot borrow enough? That was one lender’s policy, not a universal answer. Book a free chat and we will look at which lenders read your income differently.

Expenses: the benchmark floor

Lenders take the higher of what you declare and a minimum benchmark based on your household size and income.

Two consequences worth understanding:

Understating expenses does not work. If you declare $1,200 a month for a family of four, the benchmark overrides it. You gain nothing.

Understating expenses can actively hurt. Lenders read your bank statements. A declared figure that your transactions plainly contradict undermines your credibility across the whole application, including on things you have declared accurately.

Declare honestly. If your genuine expenses are high because of a specific and temporary circumstance, explain it — an explanation supported by evidence is generally accepted.

Existing commitments

Every ongoing obligation reduces capacity:

• Loan repayments — car, personal, other mortgages. Existing home loans are usually assessed at the buffered rate too, not the rate you actually pay
• Credit card limits, not balances. Most lenders assess a monthly repayment against the limit, commonly around 3.8% of it. A $20,000 limit you never touch is assessed as roughly $760 a month of commitment
• Buy-now-pay-later accounts — increasingly treated as ongoing commitments
• HECS or HELP — the compulsory repayment counts
• Child support and maintenance
• Novated leases

The credit card point is worth acting on. Reducing an unused limit is one of very few things that increases borrowing capacity immediately, without earning more or spending less.

The serviceability buffer

Here is the mechanism that surprises people most.

Lenders do not assess you at the rate you would pay. They assess you at that rate plus a buffer — three percentage points, for some years now. On a 6% loan, they test whether you could afford repayments at 9%.

This is deliberate and required. The point is that a rate rise should not put you in hardship.

It also means an online calculator that ignores the buffer will produce a figure well above anything a lender would approve. The borrowing power calculator on this site applies it, which is why the result is often lower than people expect — and why it is closer to reality.

Credit history

Lenders access your credit report with your consent. They look at:

• Repayment history — the last two years of whether you paid on time
• Credit enquiries — several applications in a short window looks like someone being repeatedly declined
• Defaults, judgments and bankruptcies
• Current and closed accounts

Repayment history carries more weight than most people assume. Consistent on-time payments on a modest income read better than a high income with missed payments.

If you have had a credit issue, say so upfront. It is on the file regardless, and an explanation given in advance is treated very differently from one discovered by the assessor.

The property itself

The loan is secured against it, so the property matters:

• Valuation — the lender lends against its valuation, not your contract price
• Property type — small apartments, serviced apartments, rural land and unusual construction all attract tighter policy
• Location — postcode restrictions are far less common than they used to be, but some lenders still apply them to high-density stock in specific areas

What this means practically

Before you apply anywhere:

1. Know your real income mix, including how much is base and how much is variable
2. Know your real expenses — pull three months of statements and look
3. Reduce or close unused credit card limits
4. Do not take on new debt
5. Check your own credit report

Then think about which lender, rather than which rate. If a large share of your income is overtime, allowances or self-employed earnings, the lender’s assessment policy is worth far more to you than a small rate difference.

That matching — situation to policy — is most of what a broker actually does. Rate shopping is the visible part; it is rarely the valuable part.