How Having Kids Changes Your Borrowing Capacity
Having children can affect how much you can borrow when buying or refinancing, even if your income hasn’t changed.
Lenders take your family situation into account when assessing your borrowing capacity. Understanding how they assess your income and expenses can help you make informed decisions about your home loan.
Living Expenses
Lenders take living costs into account, often using a HEM (Household Expenditure Measure) average based on your total combined income. Kids bring extra expenses like childcare, schooling, healthcare, and day-to-day costs. Even small increases in monthly spending can reduce the amount you’re approved to borrow.
Income Changes
If one parent takes parental leave, reduces hours, or moves to part-time work, your combined household income may temporarily drop. This can affect your maximum borrowing capacity, although some lenders have a return-to-work policy that allow you to include your full income once supporting documents are provided.
Future Planning
Some lenders consider foreseeable changes in your expenses, like childcare or school fees, when assessing your borrowing capacity. Planning ahead can prevent surprises and give you more confidence when applying.
Different Lenders
Not all lenders assess families the same way. Some are more flexible with dependents and household expenses, which can make a difference to how much you can borrow.
Even with children, there are ways to maximise your borrowing capacity:
Review your household budget and reduce unnecessary expenses
Compare different lenders and loan structures
Consider timing your application around parental leave or income changes
Speak with a Complete Home Loans mortgage broker who understands family borrowing situations and can review specific lender policies that may apply to you.
Having children doesn’t mean you have to put your buying or refinancing plans on hold. With careful planning and the right lender there are plenty of options available.
If you want to see how your current situation could affect your borrowing capacity, click here to explore your options and talk about your home loan today.
