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Borrowing power calculator

How much can you borrow? This borrowing capacity calculator answers it the way a bank does — after-tax income at FY 2026–27 rates, your real expenses, and the 3% APRA buffer — with every step of the working shown.

FY 2026-27 rates · verified

Rates verified against the official sources — how we check.

Everything except rent and loan payments — food, transport, utilities, insurance, subscriptions, kids. Banks use the higher of what you declare and the HEM benchmark.

Each dependant adds $500/mo to assessed expenses here — a mid-range HEM increment; lenders' own tables vary.

You'll be assessed at this rate + 3% (the APRA serviceability buffer).

Your tally

Net income (after tax) / mo$7,023
Expenses & commitments / mo−$3,500
Assessed at 8.9% over 30 years$3,523 free
Borrowing power≈ $441,000

Repayment at your actual rate: $2,615.73/mo.

Who this models: Single Australian resident for tax purposes, no other offsets. Family and senior Medicare thresholds, SAPTO and the Medicare levy surcharge are not modelled.

A transparent estimate, not a loan offer — lenders add HEM floors, income shading and dependants, and each tunes the model differently. Treat it as the shape of the answer, then get a pre-approval.

You're not assessed at your rate — you're assessed at your rate + 3%.

APRA requires lenders to test every borrower at the loan rate plus at least three percentage points. At 5.9%, you're assessed as if repaying at 8.9%. It's the main reason bank answers feel stingy — and the reason borrowers from 2021's 2% era were protected when rates jumped.

How the estimate works

The machinery is simple and worth seeing. Start with gross income and take out FY 2026-27 income tax and the Medicare levy — the same engine as our tax-based calculators. Subtract monthly living expenses and commitments: other loan repayments in full, and 3.8% of total credit card limits (banks assume you could max them tomorrow). Whatever's left is your assessable surplus, and your borrowing power is simply the loan that surplus could repay over 30 years at your rate plus the 3% buffer.

Notice what that means: borrowing power isn't about the deposit — it's a cash-flow calculation. The deposit decides your price ceiling together with the loan (and whether you'll pay LMI); the surplus decides the loan itself.

Borrowing power by income

At 5.9% (assessed at 8.9%), no other debts. Singles at $3,200/month expenses, couples at $3,800:

Borrowing power by income
Household incomeSingleCouple (income split evenly)
$80,000≈ $266,000≈ $286,000
$100,000≈ $408,000≈ $437,000
$120,000≈ $550,000≈ $576,000
$150,000≈ $752,000≈ $787,000
$180,000≈ $943,000≈ $1,000,000

The couple borrows more on the same household income — two tax-free thresholds mean more of each dollar survives tax. Every figure comes from the same tested engine as the calculator.

The levers that actually move the number

  • Credit card limits. A $10,000 limit — used or not — costs about $47,000 of borrowing power on a typical single income. Cancel cards you don't need before applying, not after.
  • Car and personal loans. Their full repayment comes straight off your surplus; a $600/mo car loan can cost well over $70,000 of home borrowing capacity.
  • Declared expenses. Banks read your statements and apply HEM as a floor — so the lever isn't creative declaring, it's genuinely trimming spending for the months they'll see.
  • The lender itself. Assessment policies (income shading, HEM tables, buffer treatment of existing debts) differ far more between banks than advertised rates do. The same couple can be offered $80,000+ more elsewhere.

Frequently asked questions

How do banks calculate borrowing power?
Broadly the way this page does: your after-tax income, minus living expenses (they use the higher of what you declare and the HEM benchmark for your household), minus existing commitments — then they ask what loan that surplus could service at your interest rate plus a 3% buffer, over 30 years. Every lender tunes the details differently, which is why quotes vary by tens of thousands.
What is the 3% serviceability buffer?
APRA requires lenders to test you at your actual rate plus at least 3 percentage points — a 5.9% loan is assessed as if it cost 8.9%. It protects you from rate rises, and it’s the single biggest reason "how much can I borrow" answers feel low compared with what the repayment maths alone suggests.
Why do credit cards reduce borrowing power so much?
Banks assume you could max every card overnight, so they count roughly 3.8% of your total limit as a monthly commitment — a $10,000 limit is treated as $380 a month, which at assessment rates is about $47,000 of lost borrowing power. Cancelling unused cards (or cutting limits) before applying is the cheapest capacity boost there is.
What is HEM?
The Household Expenditure Measure — a benchmark of typical living costs by household size, income and location. Lenders use the higher of your declared expenses and HEM, so understating your spending doesn’t help. Genuinely trimming discretionary spending for three months before applying can, because banks read your statements.
How can I increase my borrowing power?
In rough order of impact: close or cut credit card limits; clear car and personal loans and buy-now-pay-later accounts; apply with two incomes where possible (two tax-free thresholds mean more net pay from the same gross); tidy discretionary spending in the months banks will look at; and compare lenders — assessment policies differ more than advertised rates do.
Is this what a bank will actually lend me?
No — it’s a transparent estimate using the standard method and current FY 2026–27 tax rates, including compulsory HELP repayments when you tick the debt box. Real assessments add HEM floors, income shading (overtime, bonuses and rent are counted at less than 100%), dependants and lender-specific policy. Use it to understand the machinery and the levers, then get a real pre-approval.

Keep tallying

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The other big number in your budget — duty compared across every state and territory.

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Assumptions & sources

  • Rates are FY 2026-27 as legislated, with one exception: the Medicare levy low-income thresholds are the 2025-26 figures carried forward, because they are legislated retrospectively each Budget. They only affect results at low incomes, and we update them when the Budget lands.
  • Income tax at FY 2026-27 resident rates, with the Medicare levy (single low-income phase-in) and the Low Income Tax Offset applied. Family/senior levy thresholds and other offsets not modelled.
  • Serviceability buffer of 3 percentage points over your entered rate, per APRA guidance; 30-year term.
  • Credit cards assessed at 3.8% of the total limit per month — the common bank treatment.
  • HELP/HECS debts (when ticked) assessed as the compulsory repayment on the FY 2026-27 marginal schedule — 15c per $1 over $69,528, 17c over $129,717, capped at 10% of income — which APRA expects lenders to include unless the debt clears within about a year.
  • Dependants at $500/month each — a mid-range HEM increment; lenders' own tables vary by income and location.

Rates last verified 2026-08-27. General information only — not financial or credit advice, and not a loan offer.