How Directors Can Structure Wages, Dividends and Super For Maximum Borrowing

If you’re a company director, structuring your wages, dividends and super correctly can significantly increase home loan borrowing power, often more than chasing a slightly lower interest rate. Lenders favour a higher, stable salary plus consistent dividends and clear company profits over lumpy drawings or once‑off payouts.

In practice, that means deliberately tuning your mix of PAYG wages, dividends and super 12–24 months before you apply. You’re trading a bit more tax and discipline for a much stronger full‑doc application and better product choice.

For directors, how you label income streams changes how banks see your borrowing power.

1. How banks look at director income (in plain English)

Most lenders don’t care what you call your pay — they care whether it looks like stable, taxable income backed by business performance.

For company directors, banks usually look at three layers:

1. Your personal PAYG wage (director’s salary).
2. Dividends and trust distributions.
3. The underlying company profit that’s available to you.

They generally want two years of financials, and will usually use the lower year or an average, with APRA’s 3%+ serviceability buffer applied to repayments.

Key income types and how they’re treated

(Policies vary by lender; this is indicative only.)

For a deeper overview of how structure and stability affect your numbers, see /insights/structure-business-salary-banks-lend-more.

2. Director wages vs dividends: what actually boosts capacity?

Why a higher, stable wage usually wins

Most banks start with your taxable salary. A higher, regular wage:

• Is easy to verify via payslips, PAYG summaries and your tax return.
• Signals that the business can comfortably support that level of pay.
• Is often used at 100% in servicing calculators.

If your current wage is artificially low for tax reasons, your borrowing capacity is almost certainly lower than it needs to be.

Where dividends fit in

Dividends can be powerful supporting income when they are:

• Paid at similar levels across 2+ years; and
• Clearly linked to sustainable profits, not one‑off events.

Lenders may average two years of dividends. A single spike (e.g. cleaning out retained earnings) is often excluded.

For a more detailed look at labels (wages, dividends, drawings), read /insights/director-loans-dividends-drawings-structuring-pay-home-loan.

Worked example: small change, big borrowing difference

Assume you currently:

• Pay yourself $80,000 salary.
• Take $40,000 dividends (lumpy).

Your broker might model instead:

• $120,000 salary, and
• $20,000 regular dividends.

Total pre‑tax income is the same ($160,000), but many lender calculators will show materially higher borrowing power under the second structure because:

• There’s more stable PAYG income.
• Dividends look recurring and modest.

You will likely pay more tax each year, but may gain hundreds of thousands in extra borrowing capacity and access to sharper full‑doc rates.