Borrowing Power Calculator Australia
Free Australian borrowing power calculator. Enter your income, living expenses, and existing debts to estimate your maximum borrowing capacity. Uses the APRA 3% serviceability buffer that Australian lenders apply when assessing your home loan application.
Your Financial Position
APRA BufferRent, food, transport, utilities, subscriptions
Credit cards, car loans, HECS, personal loans
To calculate LVR
Starts at an indicative 6.26%, the average owner-occupier variable rate as at 31 August 2026. Put your own lender's rate in: the assessment rate is this plus the APRA 3% buffer, and it drives the whole result.
- Estimated Borrowing Power
- $0
- Based on 30-year P&I loan
- Monthly Repayment
- $0
- At estimated market rate
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How borrowing power works in Australia
Your borrowing power (or borrowing capacity) is the maximum amount a lender will approve for your home loan. It's based on your income, expenses, existing debts, and the number of dependants you have. Lenders use detailed serviceability assessments that go beyond simple income-to-debt ratios.
The APRA serviceability buffer
Since October 2021, APRA requires all lenders to assess loan applications at an interest rate at least 3 percentage points above the product rate. So a loan advertised at 6.26% has to be tested at 9.26%. This buffer significantly reduces the amount most borrowers can access compared to pre-2021 lending, and it is why the rate you type into the calculator above matters more than any other input.
Factors that affect your borrowing capacity
Income (including overtime, bonuses, and rental income), living expenses (lenders compare your declared expenses against the Household Expenditure Measure), existing debts and credit card limits, HECS-HELP obligations, and the number of dependants all play a role. Different lenders weight these factors differently, which is why borrowing capacity can vary by $50,000-$100,000 between institutions.
The borrowing power formula
The method comes down to one idea, how much surplus income is left each month after the essentials, and how big a loan that surplus can service once rates are stressed:
Monthly surplus = after-tax monthly income − living expenses − existing debt repayments − dependant allowance
Borrowing power = monthly surplus × [(1 + r)n − 1] ÷ [r × (1 + r)n]
where r is the monthly assessment rate (the annual assessment rate ÷ 12) and n is the number of monthly payments (360 for a 30-year loan). The assessment rate is the higher of the loan product rate plus the APRA 3% serviceability buffer, or the lender's floor rate of 5.5%, so a 6.26% product rate is assessed at 9.26%.
Worked example
A single applicant earns $95,000 gross a year with $3,000 of monthly living expenses, no existing debts and no dependants. After income tax, the low income tax offset and the 2% Medicare levy, that is about $6,173 a month in the hand, so the surplus the loan has to service is roughly $3,173 a month.
Stress-testing it at the 9.26% assessment rate (the indicative 6.26% loan rate plus the APRA 3% buffer) over a 30-year term gives a borrowing power of about $385,393. At the loan rate itself, the repayment on that amount is around $2,375 a month, comfortably inside the assessed surplus, which is exactly what the buffer is designed to confirm. Every figure in this example is computed by the same functions the calculator above uses, at the dated indicative rate, so change the rate and both move.
Frequently asked questions
How much can I borrow for a home loan?
As a rough guide, take your after-tax monthly income, subtract your living expenses and any existing debt repayments, and capitalise the surplus over a 30-year loan stress-tested at the APRA assessment rate (the product rate plus 3%). For example, a single applicant on $95,000 with $3,000 a month of expenses and no other debt keeps about $6,173 a month after income tax, the low income tax offset and the Medicare levy, leaving about $3,173 of surplus, which supports around $385,393 of borrowing once the APRA buffer is applied, and the calculator above will do it on your own rate rather than ours. Joint applicants, lower expenses, and no debts increase the figure; lenders make the final call against their own policy.
How do lenders calculate borrowing power?
Lenders assess your borrowing capacity by looking at your income (after tax), living expenses (using HEM benchmarks or declared expenses, whichever is higher), existing debts, and credit card limits. They then apply a serviceability buffer (currently 3% above the loan rate) to ensure you can still afford repayments if rates rise.
What is the APRA 3% serviceability buffer?
APRA (Australian Prudential Regulation Authority) requires lenders to assess your ability to repay at an interest rate at least 3 percentage points above the loan product rate, with a minimum floor rate. This buffer protects borrowers from potential rate increases.
Why is my borrowing power lower than expected?
Common reasons include: high living expenses, existing debts (including credit card limits even if unused), HECS/HELP debt repayments, too many dependants, or the lender using higher benchmark expenses than you declared. Credit card limits reduce borrowing power by approximately $5,000 per $1,000 of limit.
Do credit cards affect borrowing power?
Yes, significantly. Lenders assume you could max out your credit cards, so they factor in 3-3.8% of your total credit limit as a monthly commitment, even if you pay the balance in full each month. A $10,000 credit limit could reduce your borrowing power by $30,000-$50,000.
How can I increase my borrowing power?
Reduce credit card limits, pay off personal loans and car loans, reduce discretionary spending (lenders check bank statements), increase your deposit, consider a longer loan term, add a co-borrower's income, or shop around as different lenders have different assessment criteria.
Sources & methodology
How we calculate this
This calculator estimates serviceability by deducting your declared monthly living expenses, existing debt repayments and a HEM-style dependant allowance from your after-tax income, then capitalising the surplus over a 30-year principal-and-interest term at the APRA assessment rate, which is your loan rate plus the 3% APRA serviceability buffer, floored at 5.5%. The rate is yours to set: it starts at an indicative 6.26%, the average owner-occupier variable rate as at 31 August 2026, which is a market average published by a comparison site rather than a lender quote (the RBA's own lenders' rates statistics refuse automated requests). Gross income is converted to after-tax income with the resident income tax scale, the low income tax offset and the 2% Medicare levy for the current financial year, and each applicant is taxed on their own income rather than on the household total, so the result moves smoothly with a pay rise instead of stepping. What it does NOT model: HELP or HECS repayments (put those in monthly debt repayments), the Medicare levy surcharge, family or senior levy thresholds, and any HEM floor, since real lenders assess on the higher of your declared expenses and their own household benchmark and those tables are licensed. Figures are computed in your browser and nothing you enter is stored or sent to a server.
Authoritative sources
Reviewed by Bishal Shrestha, Founder of OneBookPlus, 10+ years building tools with Australian tax-agent and BAS-agent practices. Rates and thresholds last verified: .
Disclaimer: This tool produces estimates only and is not credit, legal, or financial advice. Lender criteria, APRA buffer changes, and your individual circumstances will affect the actual figure. Speak to a licensed mortgage broker or financial adviser before acting on these results.
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