Borrowing Capacity Calculator
A serviceability-style estimate of the maximum home loan an Australian lender might approve.
A HEM-style floor is applied automatically.
APRA expects banks to assess at rate + ~3%.
Estimated max borrowing
$604k
Assessed at 9.20% (incl. buffer)
About this calculator
This borrowing capacity calculator estimates the maximum home loan an Australian bank could approve for you based on income, household composition, living expenses and existing commitments. It mirrors the serviceability assessment lenders run under APRA’s prudential standards, including the 3 percentage-point buffer applied on top of the contract rate.
How serviceability is calculated
The calculator starts with your gross income, applies a simplified PAYG tax calculation to derive net income, then deducts the higher of your declared living expenses or the relevant Household Expenditure Measure (HEM) benchmark for your household composition. From the remaining surplus we subtract repayments on your existing debts, then capitalise the leftover monthly surplus into the maximum loan that could be repaid over the chosen term at the assessment rate (your nominated rate plus 3%).
Assumptions and limitations
- PAYG tax only — HECS/HELP, salary sacrifice, fringe benefits and investment income are not modelled.
- HEM benchmark is approximated; individual lenders apply their own version, scaled by postcode.
- Credit card limits are treated as 3.8% monthly minimum on the full limit (industry standard).
- No allowance for genuine savings, deposit size or LMI — this is a serviceability check only.
When to use it
Use this calculator before you speak to a broker, before you bid at auction, and any time you’re considering taking on a new debt or having another child. Pair it with our Mortgage Repayments calculator to see what the actual repayment on the maximum loan would look like — the bank’s “max” is rarely the amount you should actually borrow.
Frequently asked questions
- How do banks calculate borrowing capacity in Australia?
- Lenders take your net monthly income, subtract a benchmarked living-expense figure (typically the higher of your declared expenses or the Household Expenditure Measure), subtract commitments on existing debts, and capitalise the surplus into the maximum loan that can be repaid at the assessment rate. APRA requires the assessment rate to be the actual rate plus a 3 percentage-point serviceability buffer.
- Why is the assessment rate higher than the loan rate?
- APRA introduced the 3% serviceability buffer in October 2021 to protect borrowers and the banking system against future rate rises. Even if you take a fixed loan at 6%, lenders must check you could still service the loan at roughly 9%.
- Does my HECS/HELP debt reduce how much I can borrow?
- Yes. Lenders treat compulsory HELP repayments as a monthly liability that reduces the income available to service a mortgage. The impact grows with your salary because the repayment rate rises in income bands.
- How accurate is this estimate?
- It is a guide, not a pre-approval. Lenders apply their own living-expense benchmarks, treat rental and bonus income differently, and may add policy overlays for the postcode, property type or your employment status. Expect the actual figure to vary by 10–20% depending on the lender.
- How can I increase my borrowing capacity?
- Pay down credit cards (lenders use the full limit, not the balance), close unused store cards and Buy Now Pay Later accounts, reduce discretionary expenses for 3 months before applying, consolidate personal loans, and consider lenders that take a more generous view of rental income, bonuses or commission.
Estimates are indicative only and intended as a starting point. Actual figures depend on lender policy, market conditions, professional fees, taxes and other costs. Always confirm with a licensed broker, accountant, valuer or solicitor before acting.