Determining borrowing capacity is a personal process involving lenders assessing income, expenses, and deposit size. As of December 2025, lenders also factor in interest rate forecasts and responsible lending obligations when calculating how much a buyer can realistically borrow.
Currently in Melbourne, and particularly within the Eastern Suburbs that Fletchers specialises in, the median dwelling value is around $823,495. Lenders typically apply a stress test, adding a percentage (currently around 3%) to the advertised interest rate to ensure borrowers can manage repayments if rates rise. This impacts the maximum loan amount. We’re observing that buyers in 2026 are prioritising properties that require minimal immediate expenditure, meaning renovation potential is favoured over needing extensive work. This can influence the type of property – and therefore price point – a buyer targets. A typical deposit remains around 20%, though options exist for lower deposits with Lender’s Mortgage Insurance. The sales process, from initial campaign to settlement, generally takes 2-3 months, and buyers will need to have pre-approval in place to compete effectively, especially in popular areas like Balwyn and Doncaster. Fletchers’ experience shows that well-presented properties with strong appeal attract more buyers, potentially increasing the final sale price and therefore the loan amount needed.
Understanding your borrowing capacity is the first step for any prospective buyer in Melbourne in 2026, and it’s closely linked to current market conditions and individual financial circumstances.