How to use the Borrowing Power Calculator
- 1 Enter your income and any partner income.
- 2 Enter dependants and monthly living expenses.
- 3 Enter other loan repayments and total credit card limits.
- 4 Enter the rate and term and read your borrowing power.
Worked example
A single person earning $110,000 with $3,000 of monthly expenses, $400 of other repayments and $5,000 of card limits, at 6% over 30 years. After tax, about $3,433 a month is left for a home loan. Tested at 9%, that supports about $426,700, with repayments at 6% of about $2,558 a month.
Features
3% buffer
Lenders test repayments at your rate plus 3%, as APRA expects.
Credit card limits
Counted at about 3.8% of the limit a month, even if you pay them off.
Debt-to-income cap
Limited to six times gross income, a common lender limit.
Expense floor
Uses the higher of your expenses or a benchmark.
When to use it
House hunting
Know your budget before you look.
Before applying
See how cutting card limits raises borrowing power.
Couples
Compare single and joint applications.
Rate changes
See how higher rates reduce what you can borrow.
Frequently asked questions
How do lenders work out borrowing power?
They take your net income, subtract living expenses, existing debts and an allowance for credit cards, then test whether you could afford repayments at a higher buffered rate.
What is the serviceability buffer?
APRA expects lenders to assess loans at least 3 percentage points above the actual rate.
Why do credit card limits matter?
Lenders assume you could use the full limit, so they count a monthly repayment of about 3% to 3.8% of the limit.
What is the HEM benchmark?
The Household Expenditure Measure is a benchmark lenders use as a minimum for living expenses.
Does HECS-HELP reduce borrowing power?
Yes. Compulsory HELP repayments reduce net income for the assessment.
What is a debt-to-income limit?
Many lenders limit total debt to about six times gross income, and APRA watches lending above that level.
How can I borrow more?
Pay down debts, close unused cards, reduce expenses, add a partner's income or choose a longer term.
Is this my approval amount?
No. Each lender has its own policy, and you also need a deposit and good credit.
Should I borrow the maximum?
Not always. Leave room for rate rises and life changes.
Does a guarantor help?
A family guarantee can help with the deposit, but you still need to afford repayments.
Do lenders count rental income?
Yes, but usually only 70% to 80% of rent to allow for vacancies and costs.
Does a bonus count?
Many lenders count regular bonuses or overtime, often averaged over two years.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated