Unlock the secrets to calculating borrowing capacity

Your borrowing capacity is the dollar amount a lender will let you borrow based on your income, expenses, debts, and deposit.

If you're a bricklayer working on subcontractor ABNs, hourly rates, or a mix of employment income and side work, the way lenders calculate what you can borrow becomes harder to predict. Most calculators online assume a single salary with PAYG tax. They don't reflect how construction income gets assessed when it moves between employers, includes allowances, or gets reported through a business structure. Knowing how the calculation actually works means you can shape the outcome before you apply.

How lenders calculate what you can borrow

Lenders take your net income after tax, subtract your monthly expenses and debts, then multiply what's left by a serviceability buffer to estimate how much you can repay. That repayment figure gets reversed into a loan amount based on current variable rates plus a buffer, usually around 3%.

Consider a bricklayer earning $95,000 annually as a sole trader. After deductions, their taxable income might be $80,000. The lender applies a loading to account for irregular income, then deducts living expenses based on the Household Expenditure Measure, plus any car loans, credit card limits, and existing debt. If monthly repayments come out at $2,800 after those deductions, the lender runs that through a calculator at a buffered rate of around 6% to 7%. That might return a borrowing capacity around $500,000, depending on the deposit and loan to value ratio. Add a working partner or trim $15,000 in credit card limits, and that figure could shift by $80,000 or more. Understanding borrowing capacity means you can test scenarios before applying rather than guessing after a rejection.

What counts as income when you're a bricklayer

Lenders assess bricklayer income differently depending on how it's structured. PAYG income through a labour hire firm or builder shows up on a payment summary and gets accepted at face value if you've held the role for at least three months. Income as a sole trader requires tax returns, often two years' worth, and the lender averages the declared profit after deductions like vehicle costs, tools, and insurance.

If you invoice through an ABN and your accountant writes off $20,000 in work vehicle expenses, that reduces your taxable income and your borrowing capacity. Some lenders will add back depreciation on tools and equipment because it's a paper expense, not a cash outflow. Others won't. A bricklayer showing $70,000 on their tax return after deductions might borrow less than one showing $85,000 with fewer write-offs, even if they both took home the same cash. Allowances like travel, site, or tool payments usually get included if they've been consistent for at least 12 months and appear on your payslips. Overtime and weekend penalty rates get treated the same way. Inconsistent casual shifts or short-term contracts get heavily discounted or ignored. For self-employed income structures, self-employed loans for tradies explains how that assessment works in detail.

Why your expenses matter more than you think

Your living expenses reduce your borrowing capacity dollar for dollar. Lenders use the Household Expenditure Measure as a minimum floor, but if your actual spending is higher, they'll use the higher figure.

A bricklayer with a $600 monthly car loan, a $10,000 credit card limit, and $1,200 in childcare costs will see those amounts subtracted from net income before the lender calculates serviceability. The credit card limit matters even if the balance is zero, because lenders assume you could max it out tomorrow. Closing that card or reducing the limit from $10,000 to $2,000 could lift your borrowing capacity by $40,000 to $50,000. Afterpay and other buy now pay later accounts get treated as ongoing debts if you've used them in the last 90 days. Declared living costs that seem too low compared to the lender's benchmark also get adjusted upward. If you're paying rent, that gets added. If you own a property and plan to keep it, the lender includes rental income but also applies a haircut and adds maintenance and management costs. Cutting discretionary debt before you apply has more impact than a slight pay rise.

How deposit size changes the calculation

A larger deposit doesn't increase how much you can borrow based on income, but it does increase how much you can borrow overall by reducing the loan to value ratio and removing the cost of Lenders Mortgage Insurance.

If your income supports a loan amount of $480,000 but you only have a 10% deposit on a $550,000 purchase, you'll need to borrow $495,000. That loan amount exceeds your capacity. Lift the deposit to 15% or 20%, and the required loan amount drops below what you can service. The reverse also applies. A 5% deposit on the same property means paying LMI, which gets capitalised into the loan and pushes the amount higher. Some lenders offering LMI waivers for tradies based on occupation can remove that cost entirely if you're borrowing above 80%, which keeps the loan amount within serviceability limits without needing a bigger deposit.

What you can do to improve your capacity before applying

Pay down credit cards and personal loans, close unused accounts, and make sure your tax returns reflect consistent income. If you're switching from PAYG to a subcontractor model or vice versa, wait until you have at least one full financial year in the new structure before applying.

If your most recent tax return shows a dip because you took time off for an injury or switched employers mid-year, some lenders will accept a letter from your current employer confirming ongoing work and rates. Others won't budge without two years of returns. Timing matters. Applying three months into a new contract with no prior history in that structure almost always results in a lower assessed income or a decline. Waiting another nine months and lodging a full return gives you a much stronger position. If you're carrying a car loan with 18 months left, paying it out before you apply removes that monthly commitment and can lift your capacity by $60,000 or more depending on the repayment size. For bricklayers considering how their trade affects the application, home loans for bricklayers covers lender policies and income treatment in more depth.

When a split loan structure helps you borrow more

Some lenders assess interest-only repayments at a lower serviceability test than principal and interest, which can increase your maximum borrowing capacity on paper. A split loan lets you take part of the borrowing on an interest-only basis for a set period while paying down the rest as principal and interest.

This approach works if your income is strong but irregular, or if you're planning to use offset funds to manage the loan rather than fixed repayments. It's not a trick to borrow more than you can afford. It's a structure that reflects how you'll actually manage the debt. Not every lender offers the same serviceability treatment for interest-only lending, and some won't offer it at all on owner-occupied purchases unless you're borrowing below 80%. If your capacity sits just under what you need and your deposit and income are solid, exploring whether a lender will assess part of the loan as interest-only can close the gap without stretching your actual repayment ability.

Applying for pre-approval with accurate numbers

Pre-approval tells you what you can borrow before you start looking at properties. It's not a guarantee, but it locks in your capacity based on the income, expenses, and debts you've declared at that point.

If those numbers change between pre-approval and formal application, the lender reassesses. Taking on a new car loan, missing a credit card payment, or having a quiet month that drops your invoiced income below what you declared can all affect the outcome. Accurate documentation upfront means fewer surprises later. Gather your last two years of tax returns, notices of assessment, recent payslips if you're PAYG, and bank statements showing regular income deposits. If your accountant has lodged your return but the ATO hasn't issued the notice of assessment yet, some lenders will accept the lodgement receipt and accountant's letter. Others won't process the application until the notice comes through. Knowing what each lender needs before you apply avoids delays. Getting loan pre-approval walks through the documentation and timeline so you know what to expect.

Call one of our team or book an appointment at a time that works for you. We'll run your numbers through multiple lender policies, show you where your capacity sits, and identify what you can change to push it higher before you put in a formal application.

Frequently Asked Questions