Two kids can knock roughly $100,000 off what a lender will let you borrow. Same job. Same payslips. The only thing that changed is a number in the household section of the application form.
The drop is real, but it is not fixed: the amount each dependant subtracts from your home loan borrowing power varies between lenders by tens of thousands of dollars, and choosing the lender that benchmarks your family fairly is the cheapest extra capacity a parent can find.
The 2026 backdrop sharpens the point. The RBA hiked in February, March and May, held the cash rate at 4.35% in June, and meets again on Tuesday 11 August 2026. Rising rates thin out the crowd at open homes, which favours prepared buyers, but they also mean APRA's 3% serviceability buffer now tests most families at close to 9%. At an assessment rate that high, small differences in assessed expenses become large differences in what you can borrow.
Why does one more dependant cost $50,000 in borrowing power?
Lenders don't ask your kids for receipts. They benchmark you. Most start with the Household Expenditure Measure (HEM), a benchmark published by the Melbourne Institute that scales with income, location and household size, then apply the higher of HEM or your declared spending. Add a dependant and the benchmark steps up, typically by a few hundred dollars a month, whether your actual costs moved or not.
That step matters because of the multiplier. Under APRA's buffer, a lender tests repayments at your actual rate plus 3 percentage points. Assume an illustrative 6.00% variable rate (not a quoted offer, as at July 2026): the assessment runs near 9%, where roughly $400 a month of extra assessed expenses erases about $50,000 of loan.
| Household (illustrative) | Extra assessed expenses | Approximate capacity impact |
|---|---|---|
| Couple, no dependants | Baseline | Baseline |
| One dependant | +$400/month | About $50,000 less |
| Two dependants | +$800/month | About $100,000 less |
| Three dependants | +$1,200/month | About $150,000 less |
Illustrative figures only; benchmarks differ by lender, income and postcode. The full mechanics, including how declared spending can override the benchmark, are in our guide to how banks calculate your borrowing capacity, and the buffer gets its own explainer in the 3% serviceability buffer. Dependants are one quiet subtraction among several; HECS debt is another.
What counts as a dependant, and do you declare one on the way?
A dependant is anyone who relies on you financially: children under 18 at home, and often adult children or relatives you support. Shared custody usually still counts, though some lenders scale the expense load by nights per week. Paying child support? That's a liability on top. Child support you receive can sometimes be counted as income, if it is registered with Services Australia and has a consistent payment history.
The question expecting parents ask in a lowered voice: does a pregnancy belong on the form? Application declarations ask about foreseeable changes to your financial position, and a due date is precisely what that question is written to capture. We've seen a parental leave letter sitting among payslip documents surface an undeclared change mid-assessment, and the weeks of delay cost far more than the honest answer would have.
A dependant is not a red flag on your file. It is one line in an expenses table, and lenders price that line differently, sometimes by six figures.
Does parental leave or Family Tax Benefit change the numbers?
Both can, and this is where lender choice does the heavy lifting. Some lenders assess the application on reduced parental leave income for its full duration. Others accept the full return-to-work salary with an employer letter confirming the role and return date, sometimes alongside savings to cover the gap. Same family, same facts, materially different capacity. Family Tax Benefit splits the market the same way: some lenders count Part A and Part B as income while children are under a set age, while others exclude government payments altogether.
The chain runs through refinancing too. A new baby is a change in circumstances, and changed circumstances are one of the three reasons a new lender declines a refinance, alongside LVR and the buffer. Your current lender is not stopping you from leaving; the barrier is passing the next lender's assessment with a bigger household on the form. The fix mirrors the buyer's playbook: pick the lender whose policy reads your family most fairly, and time the move before leave begins or after the return to work is documented.
Bec and Josh: one baby, two very different answers
Bec, 33, teaches at a primary school in Baldivis, south of Perth, on $92,000. Josh is a diesel fitter on $110,000. One toddler, a second due in November, and a bank calculator that just cut their number.
At their bank: assessed as a family of four on Bec's reduced parental leave income, with living expenses benchmarked around $5,400 a month, they are offered roughly $610,000.
Through Wity: the Wity Borrowing Power Assessment models the same facts across 45+ lenders, not one bank's calculator. One lender accepts Bec's documented return-to-work salary and benchmarks a comparable family nearer $4,800 a month. The $600 expense gap alone is worth roughly $75,000 at a 9% assessment rate; add the income treatment and their capacity models around $745,000.
Difference: about $135,000 more borrowing power, from the same payslips and the same kids.
Based on typical scenarios. Individual outcomes vary.
What should growing families do this month?
Nothing here asks you to spend less on your children. It asks you to choose a lender that measures your household fairly, and to get the modelling done before the 11 August RBA decision moves the calculators again. Buying with a partner? Our guide to buying a home as a couple covers how two incomes and shared expenses are read together, and first-timers can start with the first home buyer guide for 2026.
Want to see what your household can support? Start the Wity questionnaire →. Free, no credit check, two minutes.