Simple hacks to maximise your borrowing capacity

How Lenders Assess Specialist Income

Lenders calculate your borrowing capacity by taking your verified income, subtracting your existing commitments and living expenses, then applying a serviceability buffer. For prosthodontists, the challenge is that your income mix of private billings, public sessions, teaching fees, and potentially practice ownership distributions doesn't fit neatly into standard payslip-based assessments.

Consider a prosthodontist working three days privately, one public session, and supervising registrars. Total income might be $280,000, but one lender might only recognise the public salary component of $95,000 as stable income, while another will assess the full private billings using tax returns and bank statements. That difference can shift your borrowing capacity by $300,000 or more.

The serviceability buffer requires lenders to test whether you can still afford repayments if your variable rate increased by 3.0 percentage points. At current variable rates, that means being assessed at around 9% even if your actual rate is closer to 6%. This buffer is set by APRA and applies to all ADIs, though non-ADI lenders have more flexibility in how they apply it.

Document Private Income Using Tax Returns and BAS Statements

If a substantial portion of your income comes from private practice, whether as a principal or associate, you'll need to document it properly. Most lenders require two years of tax returns showing consistent or growing income. Some specialist lender panels will accept one year of tax returns if you've been in the same role for at least 12 months and can provide BAS statements showing quarterly billings.

For recently qualified prosthodontists who have moved from registrar income to specialist private income, this is where home loans for prosthodontists become profession-specific. A lender familiar with specialist training pathways will understand that your current private income of $250,000 is more stable than a registrar salary of $140,000, even though the registrar income appears on a payslip. A mainstream lender might disregard the private income entirely until you have two full tax years.

How Practice Ownership Affects Your Borrowing Calculation

If you own a share in a prosthodontic practice, lenders treat your income differently depending on the structure. Sole traders and partners in a partnership have their full share of profit assessed as personal income. Directors of a company taking a mix of salary and dividends will have both components assessed, but some lenders apply a discount to dividend income or require the company to have been profitable for two consecutive years.

In a scenario where you're a 40% shareholder in a specialist practice generating $800,000 in annual profit, your assessable income should be around $320,000 plus any salary drawn. Some lenders will instead assess only the salary component and ignore distributions, cutting your borrowing capacity substantially. Choosing a lender that correctly assesses practice income is one of the most direct ways to increase what you can borrow without changing your actual financial position.

Debt-to-Income Limits and How They Apply to High Earners

From 1 February 2026, ADIs are limited in how much they can lend to borrowers with a total debt-to-income ratio of six times or greater. Each lender can approve up to 20% of new owner-occupier loans and 20% of new investor loans above this threshold each quarter.

For a prosthodontist earning $300,000, a DTI of six equates to total borrowing of $1,800,000. If you're applying for a loan amount that would push you over that ratio, your application will compete for a limited allocation. Some lenders fill their quota early in the quarter; others manage it more evenly. Non-ADI lenders are not subject to this cap and may offer more flexibility for high-income borrowers seeking larger loan amounts, though their rates are sometimes higher.

Adjusting Your Debt Position Before Applying

Your existing debts reduce your borrowing capacity dollar-for-dollar in most serviceability calculations. A $30,000 car loan with $800 monthly repayments might reduce your borrowing capacity by $150,000 to $180,000 depending on the lender's assessment rate.

If you're planning to apply for a home loan in the next three to six months, paying down or closing credit cards, personal loans, and car loans will have a measurable impact. Even an unused credit card with a $20,000 limit is assessed as though you're making monthly repayments on the full balance. Closing the card or reducing the limit to $5,000 can free up $80,000 to $100,000 in borrowing capacity.

Some prosthodontists also carry HECS-HELP debt from undergraduate and postgraduate training. Lenders assess this as a percentage of your income once you exceed the compulsory repayment threshold, typically 1% to 2% of your gross income depending on the debt size. A $90,000 HECS debt on a $280,000 income costs around $2,300 annually in repayments, which reduces borrowing capacity by roughly $40,000 to $50,000. Paying it down accelerates your capacity, though it's rarely the highest priority compared to clearing higher-interest debt.

When a Split Loan Structure Supports Serviceability

A split loan structure, where part of your loan is fixed and part is variable, doesn't directly increase how much you can borrow. Lenders still assess your capacity at the higher of the actual rate plus buffer or a floor rate, whichever is greater. However, fixing a portion of your loan at a lower rate can reduce your actual repayments, freeing up cash flow for other commitments or future borrowing.

For prosthodontists planning to upgrade or purchase an investment property within two to three years, keeping a variable portion with an offset account allows you to park surplus income and reduce interest while retaining full access to those funds. This can support your deposit for the next purchase without locking cash into a fixed loan where early repayment may trigger break costs.

Using Rental Income from Investment Property

If you already own an investment property, lenders will include a portion of the rental income in your serviceability assessment. Most lenders apply a 80% shading to gross rent to account for vacancies, maintenance, and management costs. A property renting for $600 per week generates $31,200 annually, of which $24,960 is assessable.

If the investment loan is interest-only, the rental income often exceeds the interest cost, adding to your borrowing capacity. If the loan is on principal and interest, the rental income may not cover the full repayment, which reduces your capacity for additional borrowing. Switching an existing investment loan to interest-only before applying for a new owner-occupied loan can improve your serviceability position, provided the lender permits it and the LVR supports the change.

How Pre-Approval Locks In Your Capacity

Once you have loan pre-approval, your borrowing capacity is locked in for the validity period, typically three to six months. If your income changes during that period, for instance if you reduce your public sessions or take parental leave, the lender will reassess your position at formal application.

Pre-approval also confirms which income components the lender will accept, which matters when your income structure is varied. If you're switching from a salaried registrar role to private specialist income, obtaining pre-approval before you finish the salaried role gives you certainty about whether the lender will assess your new income using an employment contract and recent payslips, or whether they'll require a full financial year of tax returns.

Call one of our team or book an appointment at a time that works for you. We'll review your income structure, identify which lenders assess your earnings most favourably, and calculate your maximum borrowing capacity across multiple scenarios so you can move forward with confidence.

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