How Credit Card Limits Affect Borrowing Power (Even With $0 Balance)

Lenders count your credit card limit, not your balance. Even if you pay the card off in full every month, a lender assumes you could use the whole limit and counts a monthly repayment on it — commonly around 3% to 3.8% of the limit. That assumed repayment reduces the amount left over to service a home loan.

Model it: enter your total card limits in the Borrowing Power Calculator (it uses 3.8% by default; you can change it under Advanced settings).

How much a card limit costs in borrowing power

MoneyWiseCalc model, 6.45% interest assessed at 9.45%, 30 years, benchmark living expenses, 3.8% of the limit counted per month:

Total card limits	Monthly commitment counted	Single, $90,000 income	Couple, $195,000 combined
$0	$0	$313,000	$679,000
$5,000	$190	$290,000	$656,000
$10,000	$380	$268,000	$633,000
$20,000	$760	$222,000	$588,000

In this model, every $1,000 of credit limit reduces borrowing power by roughly $4,500 — so a $10,000 limit you never use costs around $45,000 of borrowing. Lenders using 3% of the limit would count less; the direction is the same.

What to do before applying

1. Close cards you don't use, and get written confirmation the account is closed.
2. Reduce limits on cards you keep to what you actually spend in a month.
3. Count every limit, including store cards and buy now, pay later accounts — lenders may ask about all of them.
4. Do it before the application, not after: lenders assess the limits on your credit report and statements at the time.

Frequently asked questions

Do lenders look at the credit card balance or the limit?

The limit. Most lenders count a monthly commitment of about 3% to 3.8% of the total limit, even if the balance is $0.

How much does a $10,000 credit card limit reduce borrowing power?

In our model, by about $45,000 for a single applicant on $90,000 or a couple on $195,000 (2026–27 settings). Lenders' figures vary.

Should I close my credit card before applying for a home loan?

If you don't need it, closing it (or cutting the limit) before you apply usually increases your borrowing capacity. Keep one card if you need it, with a lower limit.

Related

• Borrowing power: how much can I borrow?
• Does HECS/HELP reduce borrowing power?
• DTI explained

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Important: General information only, not credit advice. Lenders' serviceability models differ; your actual borrowing capacity is set by the lender.