Whether you’re eyeing your first home, upgrading your car, or seeking a business boost, one question looms large: How much can I actually borrow? In 2025, as the Australian lending landscape evolves with new regulations and economic shifts, understanding the ins and outs of maximum loan amounts is crucial for smart borrowing.

How Lenders Calculate Your Maximum Loan Amount

Lenders don’t pluck a number from thin air. Your maximum loan amount is the product of careful calculations, shaped by regulatory rules and your unique financial story. In 2025, the Australian Prudential Regulation Authority (APRA) continues to set strict lending standards, especially for home loans. Banks and lenders assess:

Income: Salaries, bonuses, rental income, and other earnings, minus taxes and obligations.
Expenses: Living costs, debts, childcare, insurance, and discretionary spending.
Debts: Credit cards, car loans, personal loans, buy-now-pay-later balances.
Interest rate buffers: In 2025, most lenders still stress test your application at rates 3% above the current product rate, a buffer required by APRA to ensure you can handle rate rises.

For home loans, the typical debt-to-income (DTI) ratio cap remains around 6, meaning your total debts shouldn’t exceed six times your gross annual income. If you earn $100,000, your maximum borrowing (across all debts) is likely capped at $600,000. However, some lenders may offer flexibility, especially for high-net-worth borrowers or those with strong asset positions.

2025 Policy Updates and Market Trends

This year, several key changes and trends are affecting how much Australians can borrow:

Serviceability Buffer Maintained: APRA announced in late 2024 that the 3% buffer will remain, despite lobbying from the property sector for a reduction to boost borrowing power.
Living Expense Scrutiny: The use of Open Banking data is now widespread, allowing lenders to access real-time transaction history for more accurate expense analysis.
First Home Buyer Incentives: The expanded First Home Guarantee allows some buyers to borrow up to 95% LVR with lower deposit requirements, but maximum loan caps still apply based on income and property location.
Credit Reporting Changes: Comprehensive Credit Reporting (CCR) is now universal, so lenders see your full payment history across all credit products, impacting your assessed risk and, potentially, your maximum loan.

For example, a young couple in Sydney earning $150,000 combined, with $20,000 in savings and no other debts, could be eligible for a home loan of up to $900,000 (based on a DTI ratio of 6). However, if their living expenses are high or they have existing credit card balances, their maximum loan drops quickly.

Tips to Maximise Your Borrowing Power

Want to stretch your maximum loan amount? Here’s how Australians are navigating lender rules in 2025:

Reduce Existing Debts: Every dollar of personal loan or credit card debt chips away at your borrowing ceiling. Pay down balances before applying.
Document All Income: Include overtime, bonuses, rental returns, and even regular child support—if it’s consistent and verifiable, it counts.
Scrutinise Living Expenses: Review your spending for the last three months. Reducing discretionary spending can make a big difference when lenders review your bank statements.
Consider Joint Applications: Combining incomes with a partner or family member can increase your total borrowing power, though both applicants are equally responsible for repayments.
Shop Around: Different lenders use different assessment models—especially non-bank lenders who may be more flexible on DTI or serviceability if you have a strong credit profile.

In the car loan space, maximum loan amounts in 2025 are more closely tied to the vehicle’s value and your income, with most lenders offering up to $100,000 for new cars, subject to serviceability and credit checks.

Conclusion: Borrow Smarter, Not Harder

While it’s tempting to stretch for the highest possible loan, smart borrowers look beyond the headline number. Factor in future rate rises, lifestyle changes, and the true cost of servicing your debt. With tighter lending standards and enhanced data sharing in 2025, preparation is everything—know your numbers, clean up your finances, and you’ll be in a strong position to secure the loan you need.