Borrowing Power Calculator

This calculator follows the same basic logic a lender uses, in a simplified form. First it estimates your after-tax income using the 2026–27 Australian resident tax rates and the Medicare levy. If you are applying jointly, each applicant's tax is worked out separately, because tax is charged per person, not per household.

Next it works out your monthly surplus: your after-tax income, less your living expenses, less your existing loan repayments, less an allowance for your credit card limits. Lenders treat a credit card as if it were fully drawn, so we allow 3.8% of your total limits each month, whether you use the cards or not.

Finally, it asks a simple question: what loan could that surplus repay over your chosen term? It doesn't test this at your actual interest rate. Like lenders, it adds a serviceability buffer of 3 percentage points to make sure you could still afford the loan if rates rise. The maximum loan is the amount your surplus could repay at that higher assessment rate.

Income is the obvious one, but it isn’t the whole story. Two households on the same income can have very different borrowing power because of what goes out each month. Living expenses, dependants, car loans, personal loans and HECS/HELP repayments all reduce the surplus available for a home loan.

Credit cards surprise a lot of people. A $20,000 limit you never touch still counts against you, because the lender has to assume you could. Closing or reducing unused cards before you apply is one of the easiest ways to lift your borrowing power.

The interest rate and loan term matter too. A higher rate or a shorter term means bigger repayments, so the same surplus supports a smaller loan. That is why borrowing power falls when rates rise, even if nothing else in your life changes.

Every lender has its own rules. Most compare the expenses you declare against a benchmark based on household size and income, and use whichever is higher. Some only count part of bonus, overtime, rental or self-employed income. Others apply different buffers or treat HECS/HELP debts differently.

That means the same application can produce a noticeably different result from one lender to the next. As brokers, we compare those policies for you and match your situation to a lender whose rules suit it.

Underestimating living expenses is the big one. Lenders will check your bank statements, so it pays to be realistic from the start. Forgetting to include HECS/HELP, buy now pay later accounts or a car loan that is nearly paid off is another. And remember that borrowing power is not the same as what you should borrow. Leave room in your budget for rate rises, maintenance and life in general.

Borrowing power also isn’t your purchase price. You will usually need a deposit, plus money for stamp duty, legal fees and other costs. Use our stamp duty calculator to get a feel for those costs too.