How Much Money Can I Borrow?

Whether you’re considering a mortgage or a personal loan, how much can you actually borrow? From buying a car to purchasing your first house, it’s normal to need a loan to afford some of life’s bigger purchases. Luckily, depending on your situation, there are a variety of ways to determine how much you can borrow.

Before you borrow any form of money, it’s important to understand the type of loan and how much you can afford. Unfortunately, lenders often allow borrowers to take on loans greater than they can actually afford, leading to a repayment cycle that’s hard to escape. Keep reading to answer the question of how much you can borrow once and for all.

Understanding Different Types of Loans

When thinking about how much money you can borrow, you’ll need to compare different loan types. Different loans have their own terms, rates, and borrower criteria. They’re adjusted to suit different situations, so you should know what’s right for you.

Some of the most common types of loans are:

  • Personal loans: A personal loan can be used to afford personal expenses, like a holiday or wedding. They can also be used to consolidate debt. For unsecured loans, you don’t need to put down collateral. A secured personal home, like a car loan, usually offers more flexibility since your asset is on the line.
  • Payday loans: Though found everywhere, be wary about payday loans and the payday lending cycle. These are short-term, high-cost loans that are usually due within a few weeks (or less). Though easier to get, they come with high fees.
  • Mortgage: A mortgage is a type of loan specifically for buying a home. Intended for either 15 or 30-year terms, this is a long-term loan that has strict qualification requirements.
  • Home equity loan: Lastly, a home equity loan is a secured loan with your home as the collateral. You can borrow an amount based on your home’s equity.


The type of loan you choose depends largely on your goals. If you’re trying to pay off your debt, you likely want a consolidation personal loan. Otherwise, if you’re buying a home, a mortgage is the right choice. How much you can borrow depends on a number of different factors, but it’s important to understand what you’re agreeing to.

How Are Loan Sizes Determined?

Next, how do lenders determine how much they’re willing to lend borrowers? As explained above, it depends on a variety of factors. There is no one-size-fits-all answer. Some lenders are willing to work with those who have financial troubles in their background, while others have strict requirements.

If you’re applying for a loan, the lender will look at the following:

  • Income: First, you’ll need to show proof of income. This is to prove that you have the funds to afford your debt repayment.
  • Debt: In most cases, especially for larger loans, you also need to share any existing debt to determine your debt-to-income ratio.
  • Credit score: Your credit rating is also a factor since it is a way to show your creditworthiness, or your likelihood of repaying the loan on time. While some lenders are specifically for those with poor credit scores, the better your score, the better your loan terms.
  • Cosigner: If you’re able to include a cosigner on your loan, you can typically borrow more since there is greater security for the lender.
  • Type of loan: Lastly, whether you choose a secured vs. unsecured loan also plays a factor. Because there is no collateral with an unsecured loan, they usually carry higher risks for the lender so they’re not likely to give larger loans.


With this in mind, how much can you afford? While you might qualify for a larger loan, that doesn’t mean you should take on a debt of this size. While you can use a loan calculator or a mortgage calculator, it’s best to look at your repayment plan.

To start, consider how much debt you already pay, along with your monthly expenses. Calculate all of that and determine how much of your income remains each month. Can you afford the monthly repayment for your loan with this number in mind? If not, you need to adjust the amount or terms of your loan.

Don’t Take on More Debt Than You Can Afford

Ultimately, it’s all about making sure you take on a reasonable amount of debt for your budget. While it might be tempting to take on a larger loan, especially if you qualify, always pay close attention to your payback plan. If it doesn’t fit in your budget, you could find yourself struggling to make ends meet.

When in doubt, talk to a professional. A loan is a big financial commitment. If you’re wondering how much you can borrow, talk to the professionals at Debt Busters on 1300 368 322. We’ll work with you to determine how much you can afford based on your unique situation. Whether you want to afford a home or pay off your debt, there’s a solution for you.

Speak to us today

Debt Busters is an Australian owned business which was founded in 2005 - since then we have been able to help thousands regain financial control.

Debt Busters prides itself on providing a dedicated Client Service Manager to work closer with you and provide a higher level of customised service about your situation.