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.
The method comes down to one idea — how much surplus income is left each month after the essentials, and how big a loan that surplus can service once rates are stressed:
Monthly surplus = after-tax monthly income − living expenses − existing debt repayments − dependant allowance
Borrowing power = monthly surplus × [(1 + r)n − 1] ÷ [r × (1 + r)n]
where r is the monthly assessment rate (the annual assessment rate ÷ 12) and n is the number of monthly payments (360 for a 30-year loan). The assessment rate is the higher of the loan product rate plus the APRA 3% serviceability buffer, or the lender's floor rate — so a 6.5% product rate is assessed at 9.5%.
A single applicant earns $95,000 gross a year. After tax and the Medicare levy, that is roughly $5,700 a month. They have $3,000 of monthly living expenses, no existing debts, and no dependants, leaving a $2,700 monthly surplus.
Stress-testing that $2,700 at the 9.5% assessment rate (6.5% product rate + 3% APRA buffer) over a 30-year term gives a borrowing power of about $321,000. At the actual 6.5% product rate, the repayment on that loan is around $2,030 a month — comfortably inside the assessed surplus, which is exactly what the buffer is designed to confirm.
As a rough guide, take your after-tax monthly income, subtract your living expenses and any existing debt repayments, and capitalise the surplus over a 30-year loan stress-tested at the APRA assessment rate (the product rate plus 3%). For example, a single applicant on $95,000 with $3,000 a month of expenses and no other debt has about $2,700 a month of surplus, which supports roughly $321,000 of borrowing at a 9.5% assessment rate. Joint applicants, lower expenses, and no debts increase the figure; lenders make the final call against their own policy.
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.
Sources & methodology
This calculator estimates serviceability by deducting your declared monthly living expenses, existing debt repayments, and a HEM-style dependant allowance from your after-tax income, then capitalising the surplus over a 30-year principal-and-interest term at the APRA assessment rate — the higher of the 6.5% product rate plus the 3% APRA serviceability buffer (9.5%) or a 5.5% floor, as applied for FY 2025-26. Figures are computed in your browser and nothing you enter is stored or sent to a server.
Authoritative sources
Reviewed by Bishal Shrestha — Founder of OneBookPlus, 10+ years building tools with Australian tax-agent and BAS-agent practices. Last reviewed and updated: May 2026.
Disclaimer: This calculator produces estimates only and is not tax advice. Tax outcomes depend on your individual circumstances. For decisions that affect your tax position, consult a registered tax agent or the ATO directly.
OneBookPlus handles invoicing, GST tracking, BAS prep, and ATO lodgement automatically.
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