You can do everything right – earn a great income, save consistently, and handle all your debts – only to apply for a home loan and get approved for $100,000 less than anticipated.

It happens because the way you think about your debts isn’t always the way a bank looks at them.

A credit card with nothing owing on it? You might not consider that a debt. A car loan you’ve never missed a repayment on? No problem. And HECS? For a lot of people, it comes out of their pay before they even see the money.

But all three can affect how much a bank is prepared to lend you.

Credit cards are probably one of the biggest surprises.

If you have a credit card with a $10,000 limit and a zero balance, lenders generally don’t just look at the fact you owe nothing today. They consider the available limit when assessing your commitments.

You might have kept cards sitting around for years “just in case” or raised your limits to earn frequent flyer points, but if you’re preparing to buy a home and don’t need the extra credit, it may be worth reducing the limit or closing the card altogether.

Car and personal loans are a little more obvious, but people often underestimate how much difference they can make.

You may be comfortably managing a car repayment of a few hundred dollars a fortnight without thinking twice about it, but the bank sees money that can’t go towards servicing your new home loan.

Think of your income as a pizza with eight slices. Before the lender even gets to your proposed mortgage, slices are already disappearing to your credit card commitments, car loan, personal loan and living expenses.

Whatever is left is what the lender has to work with.

That’s why financing a new car just before or during the home-buying process can be particularly painful. A new car is exciting, but if buying a home is the priority, financing a new car right before applying for a home loan can significantly reduce your available funds for home loan repayments.

Then there’s HECS. It is easy to forget because repayments are generally taken directly from your pay. But when a lender assesses your income and commitments, that debt can still affect how much income you have available to service a mortgage.

That doesn’t mean you need to panic and pay your HECS off before buying a home.

In fact, having HECS, a car loan, a personal loan or a credit card doesn’t automatically stop you buying property. Plenty of people buy homes while carrying other debts.

The question is whether those debts leave you enough borrowing capacity to buy the property you want.

Sometimes the answer is yes. Sometimes reducing a credit card limit or paying out another debt can improve the position. And sometimes it makes more sense to leave the debt alone and adjust the property budget instead.

That’s why one of the smartest things buyers can do is understand their borrowing capacity before they start house hunting seriously.

And if you’re planning another big financial decision at the same time, like buying a new car, starting a family, or taking on another loan, factor that in early too.

Finding out what the bank thinks you can afford isn’t nearly as exciting as scrolling through property listings.

But it’s much better to know before you fall in love with the house.

Rhienne Szabo is a mortgage and finance broker with Trilogy Funding. She works across all stages of the property journey, from first home buyers through to experienced investors, and has experience in more complex lending scenarios, including self-employed clients and SMSF structures.