Borrowing Power Calculator — How Much Can I Borrow in Australia?
This article provides general information only and does not constitute financial advice. For advice tailored to your situation, consult a licensed financial adviser. Learn more.
Contents
Estimate how much you may be able to borrow for a home loan based on your income, expenses, and existing debt commitments. This calculator applies APRA’s 3% serviceability buffer, which lenders use to stress-test your ability to repay if rates rise.
Borrowing Power Calculator
How Much Can I Borrow in Australia?
Your borrowing power — the maximum amount a lender will approve you for — is determined by your net surplus ratio (NSR) or debt service ratio (DSR). These calculations compare your income to your total debt commitments at a stressed interest rate.
As a rough guide:
| Annual gross income | Estimated borrowing power (single) | Notes |
|---|---|---|
| $60,000 | ~$270,000–$320,000 | Limited by low surplus income |
| $80,000 | ~$380,000–$450,000 | Depends on expenses and debts |
| $100,000 | ~$500,000–$600,000 | Based on moderate expenses |
| $120,000 | ~$620,000–$740,000 | Low debts, no dependants |
| $150,000 | ~$800,000–$950,000 | Low debts, no dependants |
| $200,000 | ~$1,100,000–$1,300,000 | Low debts, no dependants |
These are ballpark estimates only. Actual borrowing power varies considerably between lenders. For salary-specific guides, see our affordability guides.
How Lenders Calculate Borrowing Capacity
Step 1 — Gross Income Assessment
Lenders start with your verifiable gross income. This typically includes:
- Base salary / wages — fully counted (PAYG payslips and tax returns)
- Regular overtime and allowances — typically 80% of the last 2 years’ average
- Bonuses and commissions — typically 80% of 2-year average, if consistent
- Rental income — typically 80% of current rent
- Investment income, dividends — typically 80% if consistent
- HECS repayments — deducted as a commitment (see our HECS and home loans guide)
Self-employed income is calculated differently — lenders typically use the lower of the last two years’ taxable income or may apply discounts. See our guide to self-employed home loans.
Step 2 — The APRA Serviceability Buffer
Under APRA guidance, lenders must assess your ability to repay at 3 percentage points above the actual loan rate (the “serviceability buffer”). This means:
- If your rate is 6.00%, lenders run their serviceability test at 9.00%
- If your rate is 6.50%, the assessment rate is 9.50%
This buffer was introduced to ensure borrowers can still service their debt if rates rise substantially. It’s why your calculated borrowing power often feels conservative relative to current repayments.
Step 3 — Household Expenditure Measure (HEM)
Lenders don’t just take your word for your living expenses. They compare what you declare against the Household Expenditure Measure (HEM) — a benchmark developed from ABS household expenditure survey data.
If your declared expenses are lower than HEM for your household type, the lender uses HEM instead. HEM benchmarks vary by household composition and location. A single person in metro NSW has a higher HEM than a couple in regional QLD with the same income.
This limits how much you can reduce reported expenses to boost borrowing power.
Step 4 — Debt Commitments
All existing debt commitments reduce your available income for mortgage servicing. Lenders assess:
- Credit cards — 3% of the total credit limit per month (even if you pay the balance in full each month). Closing unused cards before applying is one of the most effective ways to increase borrowing power.
- Personal loans and car loans — actual monthly repayment
- Existing mortgages (for investors) — typically assessed at a higher stressed rate
- HECS-HELP debt — the compulsory repayment rate applied to your income (even though it comes off your tax return, lenders deduct it from income)
What Reduces Your Borrowing Power?
| Factor | Impact |
|---|---|
| High living expenses | Reduces net surplus income |
| Credit card limits | 3% of limit counted as monthly commitment |
| Existing loans | Full repayment counted as a commitment |
| HECS-HELP debt | Repayment rate deducted from income |
| Dependants | Increases HEM benchmark |
| Interest-only period (investment loans) | Assessed at P&I on full loan at buffer rate |
| Other investment properties | Carry their own servicing requirements |
How to Increase Your Borrowing Power
Close unused credit cards — this is the fastest, free improvement. Reducing your credit card limit from $15,000 to $5,000 adds approximately $30,000+ to your borrowing power.
Pay down existing loans — eliminating a $400/month car loan repayment can add $50,000–$80,000 to borrowing power.
Reduce declared living expenses — ensure your declared expenses are realistic (don’t under-declare, as lenders verify via bank statements). Cut genuine discretionary spending before applying.
Apply jointly — a second income dramatically increases borrowing power, particularly if the second applicant has minimal debts.
Choose a lender with more favourable policies — lenders differ in how they assess investment income, overtime, rental income, and other factors. A mortgage broker can identify which lender’s policy best suits your income structure.
HECS — consider paying it off — if your HECS balance is small, paying it out before applying eliminates the compulsory repayment deduction.
Borrowing Power by Salary — Quick Reference
For detailed guides on borrowing power at specific salary levels, see:
- How Much Can I Borrow on $60,000?
- How Much Can I Borrow on $80,000?
- How Much Can I Borrow on $100,000?
- How Much Can I Borrow on $120,000?
- How Much Can I Borrow on $150,000?
- How Much Can I Borrow on a Joint Income of $150,000?
FAQ — Borrowing Power Australia
What is the maximum I can borrow for a home loan in Australia?
There’s no absolute cap — your maximum depends entirely on your income, expenses, debts, and the lender’s credit policies. Lenders typically allow debt repayments of no more than 30–35% of gross income, assessed at the loan rate plus APRA’s 3% buffer. Use the calculator above to estimate.
Do all lenders assess borrowing power the same way?
No. Lenders differ significantly in how they treat income types (overtime, bonuses, rental income, self-employment) and which HEM benchmark they apply. This is why shopping multiple lenders — or using a mortgage broker — can uncover meaningfully different borrowing capacities.
How does the RBA cash rate affect borrowing power?
Higher rates reduce borrowing power directly. Because lenders assess serviceability at your rate plus 3%, a rising rate environment both increases your repayments and reduces what new borrowers can borrow. When rates fall, borrowing power increases.
Can I borrow more if I have a large deposit?
A larger deposit doesn’t directly increase borrowing power (which is income-driven), but it may improve your loan-to-value ratio (LVR), allowing you to access lower interest rates and avoid LMI. Lower rates and no LMI can make the loan more affordable without technically increasing approved loan size.
Does HECS reduce my borrowing power?
Yes — compulsory HECS repayments are treated as a debt commitment by most lenders, reducing your net surplus income. See our HECS and home loans guide for a full breakdown.
This calculator provides estimates only and does not constitute financial advice. Actual borrowing power will vary based on your lender’s credit policy, credit history, and individual circumstances. For advice tailored to your situation, speak with a licensed mortgage broker or financial adviser. Find one through the ASIC financial advisers register or MoneySmart.