Borrowing Power Calculator
Get an estimate of how much you could borrow for a home, based on your income, living expenses and existing debts, and see why a lender’s figure is usually lower than the repayment you think you can afford.
Want a more accurate result?
Calculator results are estimates only. A personalised review can check your figures against how different lenders actually assess income, expenses and debts.No fee from us for arranging your finance. No obligation. Takes 2 minutes
What this calculator works out
Borrowing power is not the loan you can afford to repay today. It is the loan a lender is prepared to approve after testing your budget at a higher rate than the one you will pay. This calculator gives you an estimate of that number.
An estimated maximum loan
The largest loan your income could support after living expenses and existing commitments, tested at a rate above today’s rate.
The repayment at that loan size
What the loan would cost each month at the rate you enter, so you can see how much headroom the lender’s test builds in.
What moves the number
How income, expenses, other debts and card limits push your borrowing power up or down, so you know which levers are worth pulling before you apply.
How lenders work it out
Step 1. Work out what is left over each month
A lender starts with your income, takes off your living expenses and the repayments on any debts you already have, and looks at what remains.
Monthly surplus = net income − living expenses − existing debt repayments
Under ASIC’s responsible lending obligations, lenders and brokers must make reasonable inquiries about your financial situation, take reasonable steps to verify it, and assess whether a loan would be unsuitable for you. ASIC’s guidance also says expense benchmarks are not a substitute for inquiries about your actual spending.
Step 2. Test that surplus at a higher rate
Lenders do not assess you at the rate on the loan. They add a buffer, so the loan still works if rates rise.
Assessment rate = loan interest rate + serviceability buffer
APRA confirmed on 28 May 2026 that the mortgage serviceability buffer for the banks it regulates remains at 3 percentage points. So a loan at 6.00 per cent is assessed as if the rate were at least 9.00 per cent. Individual lenders can apply their own floors and methods on top of this.
Step 3. Turn the surplus into a loan amount
Maximum loan = S × (1 − (1 + i)−n) ÷ i
S is the monthly surplus available for the new loan, i is the assessment rate divided by 12 and n is the number of monthly repayments. This is the standard repayment formula run backwards: instead of asking what a loan costs, it asks what loan a given repayment can support at the assessment rate.
What the formula cannot see
Each lender treats income types, expenses and debts in its own way. Overtime, bonuses, rental income and self-employed income may be counted in part or not at all. That is why two lenders can give the same household very different answers.
A worked example, start to finish
The figures below are illustrative and are not a rate offer, a quote, or a prediction. A household has $3,500 a month left after living expenses and existing debts, as a lender would assess them. The loan rate is an assumed 6.00 per cent p.a., the term is 30 years with principal and interest repayments, and the lender applies the 3 percentage point buffer.
If the lender used the actual rate
$3,500 a month at 6.00 per cent over 30 years supports about $583,771
Using the assessment rate
$3,500 a month at 9.00 per cent over 30 years supports about $434,987
The gap
About $148,784 less borrowing power because of the buffer
$3,500 a month at 6.00 per cent over 30 years supports about $583,771
Using the assessment rate
$3,500 a month at 9.00 per cent over 30 years supports about $434,987
The gap
About $148,784 less borrowing power because of the buffer
At the real rate of 6.00 per cent, the repayment on a $434,987 loan is about $2,608 a month. That leaves roughly $892 a month of headroom inside the $3,500, which is exactly what the buffer is designed to create.
Small changes, same household
Loan rate 6.50 per cent, assessed at 9.50 per cent: about $416,243
25 year term instead of 30, assessed at 9.00 per cent: about $417,066
Surplus reduced by $300 a month, assessed at 9.00 per cent: about $397,702, around $37,285 less
Loan rate 6.50 per cent, assessed at 9.50 per cent: about $416,243
25 year term instead of 30, assessed at 9.00 per cent: about $417,066
Surplus reduced by $300 a month, assessed at 9.00 per cent: about $397,702, around $37,285 less
Every $100 a month in commitments costs you thousands in borrowing power
In the example, each $100 a month taken out of the surplus reduces borrowing power by roughly $12,400 at a 9.00 per cent assessment rate. That is why a car loan, a buy now pay later plan or an unused card limit can matter far more than it seems.
The same works in reverse. Clearing a small debt, cancelling a card you do not use or reducing a limit before you apply can lift your borrowing power by more than the balance you paid off. Check with a broker which changes are worth making before you apply, and in what order.
What lenders look at
These are the inputs that move a lender’s assessment the most. The calculator uses your answers, but lenders will verify each one.
Income
Base salary is the simplest income to assess. Overtime, bonuses, commissions, rental and self-employed income may be averaged, discounted or require a longer history. Lenders vary.
Living expenses
Lenders ask about your actual spending and compare it with benchmarks. Under ASIC guidance, a benchmark is not a replacement for inquiries about your real expenses.
Existing debts
Car loans, personal loans, HECS or HELP, buy now pay later and other home loans can all reduce the surplus available for a new loan.
Credit card limits
A card you pay off each month still has a limit, and a lender may treat that limit as debt you could draw on. Ask how your limits will be assessed.
Dependants
Children and other dependants generally raise the living expense figure a lender will use.
Debt to income
APRA allows banks to write up to 20 per cent of new loans at a debt to income ratio of six times or more. Total debt at or above six times gross income can face extra scrutiny.
The debt to income limit is a portfolio limit on each bank, not a cap on an individual borrower. APRA applies it to owner-occupier and investor lending separately, and exempts some loans, such as those for new dwellings. It can still affect how readily a lender approves a high ratio loan.
What the calculator does not show you
A borrowing power estimate is a starting point. A lender’s formal assessment includes checks this calculator cannot run.
Your credit history
Repayment history, defaults and recent credit enquiries on your credit report can affect whether and how much a lender will lend.
Deposit and LVR
Borrowing power is about repayments. How much you can actually buy also depends on your deposit, costs such as stamp duty, and whether lenders mortgage insurance applies.
Lender policy differences
Each lender has its own view of income types, expense floors and assessment rates. The same household can get noticeably different answers from different lenders.
Borrowing power is a ceiling, not a target
Being approved for a loan does not make it comfortable. Test the repayment against your own budget at a higher rate before you commit.
Real example: the same household, two different borrowing assessments
A Loanity client example. Details are generalised and the story is shared with the client’s consent.
A first home buyer couple with one dependent child and a small deposit. A first assessment from another broker came back short of the amount they needed, and they were close to giving up.
What lenders weighed against them
A small deposit for the price, the living costs of a family, and existing debts across several accounts.
What changed
Loanity brokers Kourosh and Kia worked from the couple’s documented living costs, reviewed every account and limit, and compared lender policies before choosing one that suited the profile.
Result
A borrowing capacity $70,000 higher than the first assessment.
Important information: this is one client’s experience. Results depend on each person’s circumstances and a lender’s credit assessment, and are not typical. General information only, not financial or credit advice.
A first home buyer couple with one dependent child and a small deposit. A first assessment from another broker came back short of the amount they needed, and they were close to giving up.
What lenders weighed against them
A small deposit for the price, the living costs of a family, and existing debts across several accounts.
What changed
Loanity brokers Kourosh and Kia worked from the couple’s documented living costs, reviewed every account and limit, and compared lender policies before choosing one that suited the profile.
Result
A borrowing capacity $70,000 higher than the first assessment.
Important information: this is one client’s experience. Results depend on each person’s circumstances and a lender’s credit assessment, and are not typical. General information only, not financial or credit advice.
A calculator turns the numbers you type into one figure. A lender turns your documented position into its own figure, using its own rules, and lenders weigh living costs and existing debts differently. Treat the result above as a starting point, not a verdict. If you are buying a first home, our buy a home page covers what happens next.
Before you rely on your borrowing power figure
Get your numbers ready
A lender will ask for evidence of everything you enter. Pulling it together first makes the estimate more accurate and the application faster.
If your estimate is lower than you hoped, the fastest wins are usually reducing card limits, clearing small debts and tightening spending for a few months before you apply.
Borrowing power is not the same as repayments
This page estimates how much a lender may lend. To see what a particular loan amount would cost each month, use the loan repayment calculator instead.
Related tools on this site: loan repayment calculator for the repayment on a chosen loan, stamp duty calculator, property buying cost calculator and budget planner. If you are buying your first place, see first home buyer loans, or read about buying a home with a broker.
Not sure what your expenses really are? Start with the budget planner.
Not sure what your expenses really are? Start with the budget planner.
Sources
Australian Prudential Regulation Authority: APRA maintains current macroprudential policy settings, 28 May 2026, confirming the 3 percentage point serviceability buffer and the debt to income lending limit, and Activating debt-to-income limits as a macroprudential policy tool.
ASIC: Responsible lending and Regulatory Guide 209 Credit licensing: Responsible lending conduct.
ASIC Moneysmart: Choosing a home loan.
About the figures on this page. Every loan amount and repayment on this page was calculated directly from the formulas shown above, using a monthly surplus, a 30 year principal and interest term unless stated and an assumed interest rate plus a 3 percentage point buffer. The rates used are illustrative and are not an offer. Real lender assessments use their own expense measures and policies.
General information only. Nothing on this page takes your objectives, financial situation or needs into account, and it is not a statement that any lender will approve a loan of any amount. Loanity is a credit representative and can provide credit assistance once we understand your circumstances.
Australian Prudential Regulation Authority: APRA maintains current macroprudential policy settings, 28 May 2026, confirming the 3 percentage point serviceability buffer and the debt to income lending limit, and Activating debt-to-income limits as a macroprudential policy tool.
ASIC: Responsible lending and Regulatory Guide 209 Credit licensing: Responsible lending conduct.
ASIC Moneysmart: Choosing a home loan.
About the figures on this page. Every loan amount and repayment on this page was calculated directly from the formulas shown above, using a monthly surplus, a 30 year principal and interest term unless stated and an assumed interest rate plus a 3 percentage point buffer. The rates used are illustrative and are not an offer. Real lender assessments use their own expense measures and policies.
General information only. Nothing on this page takes your objectives, financial situation or needs into account, and it is not a statement that any lender will approve a loan of any amount. Loanity is a credit representative and can provide credit assistance once we understand your circumstances.
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STILL GOT QUESTIONS?
Borrowing power questions, answered
How is borrowing power calculated in Australia?
Lenders take your income, subtract living expenses and existing debt repayments, and test the remaining surplus at an assessment rate above the loan rate. APRA’s serviceability buffer for banks is currently 3 percentage points. The surplus is then converted into a maximum loan using the standard repayment formula at that higher rate.
How much can I borrow on my salary?
It depends on more than salary. Expenses, dependants, other debts, card limits and the lender’s assessment rate all change the answer. Use the calculator above for an estimate, then have a broker check it against lender policies.
What is the serviceability buffer?
It is the margin a lender adds to the loan rate when checking whether you can afford the repayments. APRA confirmed on 28 May 2026 that the buffer for the banks it regulates remains at 3 percentage points, so a 6.00 per cent loan is assessed at 9.00 per cent or higher.
Why is my borrowing power lower than I expected?
Usually because of the assessment rate, expenses above your estimate, or existing commitments. In the example on this page, the buffer alone reduces borrowing power by about $148,784 compared with assessing at the actual rate.
Do credit card limits reduce my borrowing power?
They can. A lender may treat the limit as debt you could use, even if you pay the card off each month. Reducing or closing cards you do not need before applying may help. Ask your broker how a particular lender treats limits.
How can I increase my borrowing power?
Reduce or clear existing debts, lower unused card limits, keep spending steady for a few months before you apply, and make sure all eligible income is documented. A longer loan term can also lift the figure, although it increases the total interest you pay.
What is the debt to income limit?
APRA allows banks to write up to 20 per cent of their new owner-occupied and investment loans at a debt to income ratio of six times or more. It is a limit on each bank’s lending, not on individual borrowers, but a very high ratio can make approval harder.
Is borrowing power the same as how much I should borrow?
No. Borrowing power is the most a lender may lend. What you should borrow depends on your budget, your plans and how comfortable you would be if rates rose. Many people choose to borrow less than their maximum.
Does a pre-approval guarantee my borrowing power?
No. A pre-approval is generally conditional. The lender will reassess your finances, the property and its own policy before formal approval, and the amount can change.
Do you charge a fee to work out my borrowing power?
We do not charge you a fee for arranging your finance. Brokers are generally paid a commission by the lender when a loan settles. If any fee from us would ever apply to your situation, you would be told in writing before you proceeded.
Important information about this calculator
This calculator gives an estimate of borrowing capacity using the income, expenses, debts, interest rate and loan term you enter, and an assumed assessment buffer. It does not replicate any particular lender’s serviceability model, expense measures, treatment of different income types, credit history checks or loan to value limits.
Interest rates, lender policies and regulatory settings change over time. Loanity does not guarantee that any loan will be approved or that you will be able to borrow the estimated amount. The results are general information only and are not financial advice.
This calculator gives an estimate of borrowing capacity using the income, expenses, debts, interest rate and loan term you enter, and an assumed assessment buffer. It does not replicate any particular lender’s serviceability model, expense measures, treatment of different income types, credit history checks or loan to value limits.
Interest rates, lender policies and regulatory settings change over time. Loanity does not guarantee that any loan will be approved or that you will be able to borrow the estimated amount. The results are general information only and are not financial advice.