Your borrowing capacity is the maximum amount a lender will allow you to borrow to purchase property. As of December 2025, it’s a crucial factor for potential buyers in Melbourne, and understanding it helps sellers realistically assess the market and price their property accordingly.
Currently in Melbourne, lenders assess borrowing capacity based on several key factors. Income is paramount, with lenders scrutinising salary, employment stability, and any additional income sources. However, expenses are equally important. This includes existing debts like car loans or credit cards, as well as living costs. Lenders are also factoring in higher interest rate buffers, reflecting the economic climate in 2026. In the Melbourne Eastern Suburbs, where median dwelling values are around $823,495, a smaller deposit may mean a lower borrowing capacity. Furthermore, lenders are increasingly considering future affordability, factoring in potential interest rate rises. The strength of the buyer pool – and therefore the likely sale price – is something Fletchers agents monitor closely during a campaign, as this impacts what buyers can realistically borrow. Preparing your property for sale – through styling (typically $2,000-$8,000) and presentation – can influence the final price and, indirectly, the borrowing capacity of potential purchasers.
Ultimately, a buyer’s borrowing capacity dictates their price range, influencing demand and the overall sales process in Melbourne.