Borrowing Power Calculator
Estimate how much you can borrow based on your income, expenses and existing debts.
| Max Property Price (20% deposit) | — |
| Monthly Repayment | — |
| Assessment Rate Used | — |
| Deposit Required (20%) | — |
How Borrowing Power is Calculated
Your borrowing power is the maximum amount a lender will advance for a home loan. Australian banks use a multi-factor assessment that looks at your income, expenses, existing debts, and applies regulatory buffers.
The Serviceability Buffer
Since 2021, APRA requires all Australian lenders to assess borrowers at their actual rate plus 3%. So if current rates are 6.5%, lenders test whether you can afford repayments at 9.5%. This single factor has the biggest impact on borrowing capacity and explains why borrowing power has reduced significantly in recent years.
Income Assessment
Lenders assess different income types differently. Base salary is typically included at 100%, while overtime and bonuses may be included at 50–80% depending on how consistent they are. Rental income is typically included at 70–80% (to account for vacancies and expenses). Self-employed income is usually assessed on two years' tax returns.
Household Expenditure Measure (HEM)
If your declared living expenses are lower than the HEM benchmark for your household type, lenders will use the HEM figure instead. This is a conservative benchmark used by most major Australian banks to ensure borrowers have realistic living cost assessments.
How to Maximise Your Borrowing Power
- Pay off or reduce credit card limits (lenders assess potential debt, not actual balances)
- Pay off personal loans and car loans before applying
- Avoid applying for new credit in the months before your home loan application
- Save a larger deposit — avoiding LMI reduces the loan amount needed
- Consider a longer loan term (30 years reduces required monthly payment)