If you are planning to buy property in Australia in 2026, whether you are living locally or overseas, understanding your borrowing power is critical. It is the first step in any successful property strategy because it determines how much you can borrow from a lender.

But here is the catch: borrowing power is not just about your income. It is shaped by a mix of factors including expenses, interest rates, and lender policies. And if you are an Australian expat, the rules get even more complex with income shading, currency risk, and varying acceptance of income types.

In this guide, we will break down exactly how borrowing power is calculated in 2026, highlight what has changed, and share real examples so you can see how it works in practice.

What Is Borrowing Power?

Borrowing power is the maximum amount a lender will allow you to borrow for a home loan. It is based on your ability to service the loan after accounting for your income, expenses, and a stress tested interest rate.

For expats, borrowing power can be significantly different from what you expect because lenders apply additional risk measures to overseas income and currencies.

Key Factors That Influence Borrowing Power in 2026

Here are the major components lenders consider:

Expat Specific Considerations

• Income Shading: Many lenders will discount offshore income by twenty to forty percent to account for currency and employment risk.
• Currency Risk: Safer currencies like USD, SGD, and GBP are treated more favourably than volatile currencies.
• Income Types: Not all lenders accept bonuses, allowances, or self employed income from overseas.

How Lenders Calculate Borrowing Power

The basic formula looks like this:

 Net Income minus Living Expenses minus Existing Liabilities minus Stress Tested Loan Repayments equals Surplus

That surplus determines how much you can borrow. Lenders use serviceability calculators and apply a stress test, usually adding three percent to the actual interest rate to ensure you can handle future rate rises.

For expats, lenders also apply:

• Income shading which reduces usable income
• Currency conversion at conservative rates
• Restrictions on certain income types

Real Examples

Example 1: Single Professional in Sydney

This borrower benefits from stable income and minimal liabilities, but higher interest rates in 2026 reduce borrowing power compared to previous years.

Example 2: Expat Couple in Singapore

Why the difference? Despite high income, the couple’s borrowing power is reduced by income shading and conservative currency conversion. However, choosing a lender that accepts bonuses and allowances helped boost their capacity.

Tips to Boost Your Borrowing Power

• Pay down credit cards and personal loans.
• Reduce discretionary spending.
• Improve your credit score.
• For expats:
  • Choose lenders that accept your income type.
  • Use currencies treated favourably.
  • Work with a broker who understands expat lending policies.

Conclusion

Borrowing power in 2026 is shaped by more than just your salary. Interest rates, expenses, and lender rules all play a role, and for expats, income shading and currency treatment can make a big difference.

If you want to know your exact borrowing power and how to maximise it, book a complimentary borrowing power assessment with Ally Home Loans today.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.