Does a bigger deposit increase my borrowing power?

Generally no. Borrowing capacity is worked out from income and outgoings. A bigger deposit raises the price you can pay, not the loan the bank will give you.

If I can borrow $600k and have $30k saved, what can I buy?

Around $630k before costs. Save another $10k and it becomes $640k. The loan stays at $600k either way.

When does extra deposit actually help?

When you're paying lenders mortgage insurance. Dropping into a lower LVR band can cut the LMI premium, improve the rate, and at some lenders lift the maximum loan.

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If I have a bigger deposit, does that change how much the bank will lend me?

Bayley Clarke · Mortgage broker on the road · Last checked 3 September 2026 · 3 min read

The short answer

Generally, no. The size of your deposit moves the needle on your purchase price, not on how much the bank will let you borrow. Borrowing capacity comes from your income and your outgoings.

If the bank says $600k maximum and you've got $30k saved, you're shopping at $630k. Save another $10k and the bank still won't lend more than $600k. You're just shopping at $640k. Where extra deposit can move the needle is if you're paying lenders mortgage insurance.

The ninety second version. The rest of this page is the detail underneath it.

Deposit and borrowing capacity are two different tests

The deposit is a box. Once you've ticked it, say with a 5% deposit that makes you eligible for the first home guarantee scheme, the bank moves on and figures out how much you can borrow based on your income and your outgoings. That's an income versus outgoings equation, and there's no line in it for how much cash you've got sitting in the bank.

Any amount above the deposit you needed is just going to move the needle on what the purchase price will look like. It stacks on top of the loan. It doesn't lift the loan.

The worked numbers

Say the bank's told you, or your broker's told you, that you can borrow a maximum of $600,000, and you've got $30,000 saved for your deposit. Your purchase price is $630,000.

Now you save another $10,000. The bank's not going to give you any more than the original $600,000. They're just going to let you buy property at $640,000, not $630,000. Same loan, bigger house. So sometimes the amount you deposit doesn't change your end borrowing capacity at all.

Where a bigger deposit does help

If you are paying lenders mortgage insurance, having a little bit extra as a deposit can move the needle on how much LMI you pay, what your rates look like, and ultimately how much you can borrow as well.

That's because the bank prices and caps the loan by LVR tier. Getting from 92% to 90%, or from 88% to 85%, can drop you into a cheaper band, and at some lenders the LMI premium gets added on top of the loan while at others it has to fit inside the cap, which changes the maximum you can actually take. So it's worth a conversation to see what those worlds look like.

The honest bit: saving harder isn't always the lever

People sometimes delay buying to save another $20k thinking it'll unlock a bigger loan. Often it just unlocks a slightly bigger price while the market moves further than the $20k did.

If the ceiling is the problem, the levers are income, debts and which lender assesses you, not the deposit. I'll tell you straight which one you're actually up against.

Want to know which lever actually moves your number?

A 30 minute call. We run your borrowing capacity, look at your deposit against the LVR bands, and I tell you whether saving more or something else is what gets you there.

Book a 30 minute call Call 0437 189 939

No cost to you, ever. The bank pays me when a loan settles. · How I get paid

Next question

Should I pay my debts off or keep the money for my deposit?

The other side of the same coin: what to do with the cash you've got.