Borrowing Power Calculator
Estimate how much you can borrow for an Australian home loan. This calculator includes APRA's serviceability buffer to provide realistic borrowing capacity estimates.
Applicant Details
Monthly Income
Most lenders only count a portion of rental/other income
Monthly Living Expenses
Quick Expense Estimator
Note: Lenders may apply their own minimum benchmarks (HEM)
Existing Debts
Add Existing Debt
Loan Parameters
Assessment rate: 9.29%
💡 Tips to Increase Borrowing Power
- ✓ Increase your income through salary raises or additional income sources
- ✓ Reduce living expenses where possible
- ✓ Pay off or consolidate existing debts, especially credit cards
- ✓ Consider a longer loan term (but note this increases total interest)
- ✓ Apply with a co-borrower to combine incomes
Understanding Borrowing Capacity in Australia
Your borrowing capacity is the maximum amount a lender will allow you to borrow for a home loan. In Australia, lenders assess this using your income, expenses, existing debts, and apply APRA's serviceability buffer to ensure you can handle potential interest rate increases.
What is the APRA Serviceability Buffer?
The Australian Prudential Regulation Authority (APRA) requires lenders to assess whether you can afford loan repayments at an interest rate at least 3% higher than the actual loan rate. This buffer, introduced to promote responsible lending, means if you're offered a 6% interest rate, the lender will calculate your repayments at 9% to ensure you can still afford them if rates rise.
How Lenders Assess Your Income
Not all income is treated equally by lenders. While your base salary is typically counted at 100%, other income sources like rental income, overtime, bonuses, and investment returns are often "shaded" or discounted. For example, rental income might only be counted at 80% to account for potential vacancies and maintenance costs.
The Impact of Existing Debts
Existing debts significantly impact your borrowing capacity. Credit cards are particularly important - lenders typically assess them based on the credit limit, not the current balance, assuming you could max them out. They usually calculate a minimum monthly repayment of 3-4% of the limit. Other loans like car loans and personal loans reduce your available income for servicing a new mortgage.
Living Expenses and HEM
Lenders will assess your declared living expenses but also apply the Household Expenditure Measure (HEM) as a minimum benchmark. HEM is a standardized measure of basic living expenses based on household size and income. If your declared expenses are lower than HEM, lenders will use HEM instead to ensure a realistic assessment of your spending.