How much could you borrow?
That’s the question behind almost every property decision you’re about to make. Until you have a clear answer, it can all feel a bit like guesswork. Your borrowing capacity is how much a lender is likely to let you borrow, based on your income, expenses, existing debts and a few other factors.
What affects your borrowing capacity
Income
Your base salary, plus overtime, bonuses, rental income and other regular earnings, though lenders often only count a portion of less predictable income.
Living Expenses
What you actually spend, tested against a minimum benchmark set for your household size and location, known as the Household Expenditure Measure (HEM).
Existing Debts
Credit cards (assessed on your full limit, even at a zero balance), car loans, personal loans and HECS-HELP debt all reduce what's left over.
Dependants
Each dependant increases your assessed living costs, which reduces how much surplus you have for loan repayments.
Deposit and LVR
A larger deposit means a lower loan-to-value ratio (LVR), which can improve your options and reduce the need for Lenders Mortgage Insurance (LMI).
The Serviceability Buffer
Lenders don't just test you at today's interest rate. They add a buffer on top (currently around 3 percentage points under APRA's guidance) to check you could still manage repayments if rates rise.
Try our borrowing capacity calculator
Use the calculator below to get a quick, indicative estimate. Pop in your income, your regular expenses, any existing debts and your household details, and we’ll give you a ballpark figure to work with.
Income gross annual
Expenses & Commitments
Household
Loan Details
Estimated Borrowing Capacity
Capacity Position
Where you sit relative to peak borrowing capacity
Peak borrowing assumes no mortgage, personal loans, credit cards, or other lending commitments apply. Living expenses are held at the higher of your declared amount or the HEM benchmark — your lifestyle costs are always reflected regardless.
Assessment rate of 8.80% p.a. applied. Existing mortgage and personal loan repayments are reassessed at this rate over assumed remaining terms (24.5 years and 5 years respectively) rather than taken at face value. Credit card commitment calculated at 45.6% of total limit. Rental income is included at 70% of gross (a 30% expense allowance is deducted), while declared investment property expenses are deducted from net income in full. HEM living expense benchmark (Melbourne Institute), banded by household income and family composition, applied where declared living expenses fall below it. A 1.0x net surplus ratio buffer is applied. Results are indicative only and not financial advice. Actual borrowing capacity depends on full credit assessment and lender policy.
Speak with the team to find the best loan for you
How lenders read your income and expenses
Not every dollar you earn or spend is treated equally once it lands in front of a lender. Here’s a simplified breakdown of how it generally works.
| Category | How it's typically assessed |
|---|---|
| Base salary | Counted in full |
| Overtime and bonuses | Often shaded (partially counted), varies by lender |
| Rental income | Usually counted at 70-80% of the total |
| Self-employed income | Averaged over 1-2 years of tax returns, policies vary widely |
| Living expenses (declared) | Compared against the HEM benchmark, whichever is higher is used |
| Credit card limits | Counted on the full limit, not the balance owing |
| HECS-HELP debt | Reduces net income once compulsory repayments kick in |
Reach out for a free chat!
Frequently Asked Questions
Is the calculator estimate what I'll actually be approved for?
Not exactly. It gives you a solid ballpark based on the details you enter, but real approval depends on the specific lender’s policies, your full documentation and their current serviceability rules. Think of it as your starting point for a conversation, not a guarantee.
Does checking my borrowing capacity affect my credit score?
Using a calculator like ours doesn’t touch your credit file at all, since it’s just an estimate based on what you enter. A credit check only happens once you formally apply with a lender, which is something we’ll only do when you’re ready.
How do dependants affect how much I can borrow?
Each dependant increases the living expenses a lender assumes you have, which reduces the surplus income available for loan repayments. It’s one of the more overlooked factors, and it’s worth factoring in early if your family situation is changing.
I'm self-employed. Is my borrowing capacity calculated differently?
Yes, generally. Most lenders average your income over one to two years of tax returns rather than using a single year’s figure, and policies on how they treat that income vary a lot from lender to lender. This is exactly the kind of thing our 50+ lender panel helps with, since some lenders are far more generous with self-employed income than others.
Can I increase my borrowing capacity before I apply?
Often, yes. Closing unused credit cards, paying down existing debts, and making sure all your income is properly documented can genuinely move the number. We can talk through what’s realistic for your situation on a discovery call.
