How Much Can I Borrow? Borrowing Power Calculator

How lenders work out how much you can borrow

A lender works out your borrowing power by taking your assessable income, subtracting your living expenses and existing commitments, and testing whether what is left covers the repayment at an assessed rate well above the one you are offered. The result is a monthly surplus, and your maximum loan is whatever that surplus can service over the term.

Income is rarely taken at face value. Base salary is usually counted in full, but overtime, bonuses and commissions are commonly shaded to between 80% and 100% depending on how long you have earned them. Rental income is typically shaded by around 20% to allow for vacancy and costs. Self-employed income is generally averaged over two years of tax returns, and many lenders take the lower of the two years rather than the average.

Living expenses are not taken at face value either. Lenders compare what you declare against the Household Expenditure Measure, a benchmark based on ABS survey data, and assess you on whichever is higher. Declaring implausibly low expenses does not increase your borrowing power - it just gets substituted for the benchmark.

What is the APRA serviceability buffer?

The serviceability buffer is a margin lenders must add to your actual interest rate when testing whether you can afford the loan. APRA has required at least 3.0 percentage points since November 2021. On a rate of 6.10%, you are assessed as though you were paying 9.10%.

This is the single biggest reason people can borrow less than they expect. The buffer exists so a borrower can absorb rate rises without falling into hardship, and it applies to the loan you are applying for as well as to existing debts you are keeping.

It is also why shopping around on headline rate alone rarely changes your maximum. Two lenders offering rates 0.15 points apart will produce similar assessed capacity, because both are testing you three points above their own rate. What moves the number is how each lender treats your income and expenses, not the rate itself.

That is why two lenders can quote borrowing capacities tens of thousands of dollars apart on identical inputs. The gap is policy: which income they shade and by how much, whether they use the higher of your declared expenses or the benchmark, and how they treat existing commitments. It is widest for variable income, so if you work for yourself it is worth reading how lenders assess self-employed income before you rely on any single number.

What reduces your borrowing power

Credit card limits reduce borrowing power more than most people expect, because lenders assess the limit rather than the balance. A card with a $20,000 limit and nothing owing is usually treated as a commitment of around 3.8% of the limit each month - about $760 - whether or not you use it. Closing unused cards before applying is often the fastest way to increase capacity.

A HECS-HELP debt reduces it too. The compulsory repayment is a deduction from your assessable income for as long as the debt exists, and at higher incomes that repayment is substantial. Since 2025-26 repayments are calculated marginally, on income above the threshold rather than on the whole amount, which softened the effect but did not remove it. Some lenders will disregard a HELP debt that is within a year or so of being cleared - it is worth asking.

Other commitments work the same way: car loans, buy-now-pay-later facilities, personal loans and after-tax obligations such as child support are all deducted before the surplus is calculated. So is the repayment on any existing mortgage you are keeping, assessed at the buffered rate.

Dependants raise your benchmark living expenses, and the number of applicants matters: two incomes usually beat one, but two applicants also carry two sets of expenses.

Buy-now-pay-later accounts deserve a specific mention. Many borrowers do not think of them as credit, but they appear in banking transaction data that lenders now read directly, and repeated use is treated as a commitment even where no limit is formally recorded. Clearing and closing these accounts a few months before applying removes both the commitment and the pattern in your statements.

How to increase how much you can borrow

The changes that move the number most are reducing or closing credit card limits, clearing small consumer debts, and demonstrating a longer history of any variable income. Each directly increases the surplus a lender calculates, and all three are within your control before you apply.

Extending the loan term lowers the assessed repayment and raises the maximum, though it increases total interest paid. A larger deposit reduces the loan needed rather than your capacity, but it can move you below 80% LVR, which avoids lenders mortgage insurance and opens up sharper pricing.

Timing matters more than most borrowers realise. Lenders typically want three to six months of clean transaction history, so the account conduct that supports an application is the conduct from before you started thinking about applying. Gambling transactions, dishonoured direct debits and regular overdrawing all show up and all count against you.

Be cautious with the common advice to simply apply elsewhere. Every application leaves a credit enquiry, and a cluster of enquiries in a short window reads as distress to the next lender. Establishing which lender suits your income profile before applying is a better use of the effort.

Why lenders give different answers

Two lenders can differ by more than $200,000 on identical circumstances, because the assessment rules are set by each lender rather than by regulation. APRA sets the minimum buffer; almost everything else is a policy choice.

The variables that differ most are how much overtime, bonus or commission income is counted, how self-employed income is averaged, how rental income is shaded, whether HELP debt near payoff is disregarded, and what benchmark is used for living expenses. A borrower with a straightforward salary sees a narrow spread. A self-employed borrower, or one with significant variable income, can see an enormous one.

This calculator uses common market assumptions to give an indicative range. It is not a pre-approval, and no result here commits any lender to anything.