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.
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Estimated Borrowing Power
$0
Based on 30-year P&I loan
Monthly Repayment
$0
At estimated market rate
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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.
Since October 2021, APRA requires all lenders to assess loan applications at an interest rate at least 3 percentage points above the product rate. This means if you're applying for a loan at 6.5%, the lender must check that you can afford repayments at 9.5%. This buffer significantly reduces the amount most borrowers can access compared to pre-2021 lending.
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.
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.
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.
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.
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.
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.
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