05 Nov 2022

How Much Can I Borrow With a 10% Deposit?

Borrow With a 10% Deposit

The amount of funds an individual can borrow largely depends on their borrowing capacity. When a potential borrower applies for a home loan, the mortgage broker or lending specialist will perform in-depth checks into various financial elements to calculate their borrowing power and determine their overall risk factor, including the following examples:

  • The applicant’s credit score and financial history
  • The number of dependants an applicant is responsible for
  • The applicant’s salary and debt-to-income ratio
  • The applicant’s deposit percentage and monthly expenses
  • The loans principal amount, interest rate, fees, monthly repayments, and terms

Salary plays a large role in an applicant’s borrowing power. Generally, mortgage brokers and lending specialists recommend that a borrower only spend 30% of their monthly income on housing expenses which can significantly impact an applicant with a low salary’s borrowing power. 

An applicant with a 10% deposit will be classified as a high-risk borrower by brokers and lenders, which can result in a negatively impacted borrowing power. However, borrowing power can be improved if an applicant takes the following steps:

  • Boosting their credit score and improving their financial history
  • Saving for a larger deposit
  • Adding a guarantor to the home loan
  • Decreasing any high credit card limits
  • Closing any unnecessary credit cards
  • Making consistent debt repayments

If you are interested in learning more about the elements of a mortgage or are ready to apply for a home loan, reach out to the professional Mortgage House lending specialists for specialized mortgage and loan application assistance.

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