Home lending in Australia is all set for some big changes from February 1 2026. These changes will most likely affect how much you can borrow.
Here is all that you need to know –
- New loan-to-income limits start February 1.
- How the 20% lending cap might change your budget.
- Why non-bank lenders could become your best option.
- What to do before the rules kick in.
Now let’s break it down to understand it better.
What is the new lending rule?
From February 1, 2026, Australian banks and credit unions are not supposed to give more than 20% of their new home loans to those Australians who are borrowing six times their income or more.
What does this lending rule mean for you?
If you earn $100,000 a year, six times your income is $600,000. This will be a threshold for lenders, and they will be pickier above that.
Who has to follow these rules?
The new borrowing limits apply to ADIs, which means –
- Big four banks (CBA, Westpac, NAB, ANZ)
- Regional banks and credit unions
What is the important bit?
Non-bank lenders (mortgage companies that do not take deposits) have not been covered by the same rules, meaning they might still offer higher borrowing capacity.
Who will be affected the most?
- First-home buyers with small deposits
- Investors with multiple loans
- Borrowers with high existing debt
- Single – income households
- Anyone relying on high borrowing capacity to purchase
5 Ways the New Lending Rule Will Affect You
1. If you need to borrow 6x your income or more than that, you will be affected the most.
Are you earning $80,000 and need $500,000? Probably fine. However, if you are earning $120,000 and need $900,000, then lenders might have to tighten up. They will now ask for a bigger deposit amount.
2. Every lender will handle a case differently.
Comparing lenders will now matter more than ever, because one bank might tighten a lot, whereas another might barely change.
3. A bigger deposit will give you more options.
Planning to borrow 7x of your income? Be ready to increase your deposit amount, and your loan will drop drastically. More lenders will now be ready to help.
4. Your documented income will matter more now.
Getting rental income or overtime? Or any side hustle? Make sure the income is properly documented in your home loan application. This can make a real difference.
5. Advice from a professional broker will be crucial.
With every lender responding to your case differently, having a specialist broker who knows which lender suits you best is crucial.
That’s where VOXFIN plays a critical role. We know how to match lenders to your unique situation and thereby save you time, money, and stress.
Who Should Pay Closest Attention to this Change?
Buyers in expensive markets
Especially Melbourne and Sydney buyers are more likely to hit these loan-to-income limits.
First home buyers with smaller deposits
If you are planning a 5% or 10% deposit, your borrowing power might shrink at some lenders.
Property investors
If you plan to add it to your portfolio, the new caps could make it trickier at traditional banks.
Self-employed workers
The other meaning of variable income is that lenders will now be even more careful about your borrowing capacity.
What You Should Do Right Now?
Know your borrowing capacity clearly!
First understand the new lending rules and find out exactly where you stand under the same.
Review your deposit amount.
Check whether you can increase your deposit. Even modest increases can keep more lenders available and get you better interest rates.
Sort the paperwork.
No matter whether PAYG or self-employed, get your income documentation organised now – payslips, tax returns, bank statements.
Consider non-bank lenders as well.
Non-bank lenders often have great rates and more flexibility. They are not subject to the same caps.
Lock in pre-approval (only if you are ready).
If you are planning to buy in the next few months, getting pre-approval before February 1 might protect you from immediate tightening.
How VOXFIN Helps You Navigate the Changes?
- We have experienced mortgage brokers to help you every step of the way.
- We track which lenders are tightening and which are not.
- We help you present your income in the best light. We structure your application right.
- We have strong non-bank lender relationships that deliver competitive solutions.
Wonder What Else is Happening?
Property prices are still climbing.
Despite higher interest rates, home values kept rising throughout 2025. Low stock and strong demand mean prices are not dropping anytime soon.
Interest rates are staying put.
The RBA held the cash rate at 3.60% in December 2025, so do not expect any cuts in early 2026.
The competition is fierce!
Fewer listings mean more buyers chasing properties. Having your pre-approval sorted will be the key to win competition and move ahead faster.
Planning a purchase or refinance in 2026 would be great, but the first step is to clearly understand your borrowing capacity under the new lending rules.
Are you ready to check where you stand? With VOXFIN, it takes hardly 15 minutes!
Know how much you can borrow, which lenders will suit your scenario, will your action make more sense if you act before or after February 1, and more.
Speak with VOXFIN’s experts today!
Call: 03 7065 2000 | Visit: www.voxfin.com.au
