When applying for a home loan, most people focus on income, savings, and property prices — but one thing that often catches borrowers off guard is how credit cards affect your borrowing power.
Even if you don’t owe anything on your credit card, the limit itself can impact how much you’re able to borrow. But there’s some good news: a new change in bank policy could make things a little easier for responsible cardholders.
Let’s break it down.
Why Credit Cards Affect Your Borrowing Power
When a bank assesses your home loan application, they look at your total financial commitments — not just what you currently owe, but what you could owe.
That means if you have a $10,000 credit card limit, most banks will assume you might use it in full at any time and will include a portion of that limit as an ongoing expense.
Typically, they use a percentage (for example, 3% of the limit) as a monthly repayment obligation when calculating your affordability.
Example:
If you have a $10,000 credit card limit, the bank may assume you’re paying $300 per month towards that card, even if your current balance is $0.
That $300 counts as an expense and can reduce how much you’re able to borrow for a home loan.
The New Policy Update
Recently, one of the banks introduced a new policy change that gives some flexibility for borrowers who manage their credit cards responsibly.
If you’ve been repaying your credit card in full for the last three months, meaning your closing balance each month has been $0, the bank can now exclude that credit card from your debt assessment.
In other words, if your statements show consistent full repayments over the last 90 days, the credit card may no longer count against your borrowing power.
This can make a noticeable difference, especially for clients with high credit card limits or multiple cards.
Why This Matters
For many borrowers, credit cards have been a silent killer of borrowing capacity. You might have perfect credit, steady income, and no debt — but if you hold a few unused cards with high limits, your borrowing amount can drop by tens of thousands of dollars.
This new approach gives creditworthy borrowers a fairer assessment — recognising that not all credit cards are used like revolving debt. If you pay your balance off in full every month, you’re effectively managing your credit, not relying on it.
What You Can Do
Here are a few smart steps if you’re planning to apply for a home loan soon:
- Check your credit card limits – If you’re not using the full limit, consider lowering it.
- Pay off your cards in full – Keep your balance at $0 for at least three months before applying.
- Avoid new credit applications – Even a store card or “buy now, pay later” account can reduce borrowing capacity.
- Keep records handy – Provide bank or credit card statements showing full repayments for the last three months if you want your adviser to present this exception.
- Get pre-assessed early – A mortgage adviser can model how your credit cards affect your borrowing and recommend adjustments before you apply.
The Bottom Line
Yes — credit cards usually affect how much you can borrow, even when they’re unused. But with this new policy, responsible repayment behaviour can now work in your favour.
If you’ve been paying your card in full each month, you might be eligible to have it excluded from your debt calculations — potentially boosting your borrowing power and bringing you closer to your home ownership goals.
Need Help?
At Mortgage Sense, we can review your current credit cards, run a borrowing capacity check, and let you know exactly how to structure your finances for the best result before applying.
If you’d like to see how much you could borrow under this updated rule, get in touch today — we’ll take care of the details for you.
