Finance & property Australia
Borrowing Power Calculator Australia
How much a bank will lend depends on how much of your income is left after tax, living costs and existing debts, tested at a rate three percentage points above the one you will actually pay. This calculator runs that serviceability test and shows an indicative maximum loan.
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Your honest figure. Lenders compare it with a benchmark and use the higher.
Car loans, personal loans, HECS and buy-now-pay-later.
Indicative maximum loan
—Monthly surplus
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Assessment rate
—
Repayment at your rate
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Estimated property budget
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Debt to income
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The serviceability test
Working with a different rate? Edit the rates this calculator uses
These are the figures we verified on 2026-10-26. Change them to work with a historic period, or with a new rate that has been announced but which we have not published yet.
APRA expects lenders to test at least 3 points above the loan rate
Lender assumption; varies by lender
Indicative, not a pre-approval. Indicative only. Each lender applies its own income shading, expense benchmark and credit assessment, and nothing here is a loan offer or a pre-approval. Speak to a broker or lender; MoneySmart has independent guidance.
How much can I borrow for a home loan in Australia?
Lenders work out your monthly surplus after tax, living costs and debts, then find the largest loan whose repayments that surplus could meet at your rate plus a 3-point buffer. On $120,000 with $38,400 a year of living costs and a 6.2% loan over 30 years, that is roughly $535,984. Each lender's own assumptions will differ.
What lenders look at
Lenders add up your income after tax, subtract your living expenses and commitments, and test whether you can still make the repayments if rates rise. They use a benchmark for living costs (the Household Expenditure Measure) and assess credit cards on the limit, not the balance.
That is why clearing a card or cancelling an unused limit can lift your borrowing power more than a small pay rise.
The 3-point buffer and the debt-to-income limit
APRA expects lenders to assess loans at an interest rate at least three percentage points above the actual rate. From February 2026 it also limits the share of a bank's new lending that can be at a debt-to-income ratio of six or more to 20%. That is a limit on the lender's portfolio, not a rule that stops you borrowing six times your income, but loans above that level are harder to get.
To see the repayments on a loan of a given size, use the mortgage calculator.
How this is calculated
The rule, step by step, so you can check any figure by hand.
monthly surplus = income after tax and Medicare ÷ 12 − living expenses − debt repayments − 3.8% of credit card limitsassessment rate = your loan rate + the 3-point serviceability buffermaximum loan = the loan whose repayment at the assessment rate over the term equals your surplusproperty budget = maximum loan + deposit
The buffer is the whole story behind why lenders offer less than you expect. At a 6.2% loan rate the test rate is 9.2%, so the repayment tested is much higher than the one you will pay, and the maximum loan at 9.2% is roughly 20% smaller than at 6.2%.
The calculation assumes you will commit the whole surplus to repayments, which no sensible borrower does, so treat the result as a ceiling and plan to borrow well below it.
A worked example
A single borrower on $120,000, with $3,200 a month in living costs, no debts, a 6.2% loan and a 30-year term.
- Income after tax and Medicare$91,080
- Monthly surplus$4,390.00
- Assessment rate, 6.2% + 3%9.20%
- Maximum loan the surplus can service$535,984
- Repayment on it at 6.2%$3,282.73
About $535,984, with a repayment of $3,282.73 a month at the real rate.
A lender will also check your deposit, credit history and the property.
Ways borrowing power improves
Reduce your credit card limits, repay or consolidate other debts, add a second income, borrow over a longer term, increase your deposit or choose a lender whose expense benchmark suits your situation. Each lever's effect is easy to test by changing the fields above.
What it leaves out
Income shading on bonuses and overtime, rental income from investments, family payments and a lender's credit policy are not modelled. A mortgage broker can compare how different lenders treat your circumstances.
What this calculator does not do
- Indicative; every lender applies its own credit policy
- Living expenses are your figure, not a lender benchmark
- Does not shade bonuses, overtime or rental income
- No HELP repayment threshold changes beyond the tax maths
Common questions
How much can I borrow on $120,000?
Roughly $536,000 for a single borrower with $3,200 a month of living costs and no debts, at a 6.2% rate over 30 years. Your own figures will change it.
What is the serviceability buffer?
A three percentage point margin lenders add to the loan rate when testing whether you could afford repayments.
Do credit cards reduce my borrowing power?
Yes, lenders count the limit, not the balance, so an unused card still reduces it.
Is there a cap of six times my income?
APRA limits the share of lending at that ratio, not each loan, but loans near it are scrutinised.
Will the bank lend this amount?
Not necessarily. This is an estimate; only a lender can assess your application.
Where these numbers come from
- APRA — housing lending (submission, May 2026) The 3-point serviceability buffer and the debt-to-income limit
- MoneySmart — home loans ASIC's independent guidance on borrowing, repayments and refinancing
- ATO — tax rates, Australian residents 2026-27 resident brackets, 15% lowest rate and the $18,200 tax-free threshold
Rates last verified 2026-10-26 Every figure APRA sets is re-checked against the source at least once a year, and again whenever a change is announced. Out of date? Tell us and we will fix it.
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