Borrowing Power Calculator

Every lender runs the same basic test, with its own settings. It starts with what you take home, not what you earn: your salary after income tax and the Medicare levy, plus a share of any other income it is prepared to count. From that it takes your living expenses and the repayments on everything you already owe. What is left each month is the most you could put toward a new loan.

The lender then asks how big a loan that monthly amount would repay over 30 years — at a rate deliberately higher than the one you will be charged. That loan is your borrowing power. For a single applicant on $100,000, with $2,400 a month of living expenses and no other debts, take-home pay is $6,456.67 a month, $4,056.67 is left over, and at a 6% rate tested at 9% the answer is about $504,000.

APRA, which regulates the banks, requires every lender to check that you could keep up your repayments if the rate were 3 percentage points higher than the one on your loan. It has been 3 points since October 2021. So a loan priced at 6% is assessed at 9%, and the $504,000 loan above is the one whose repayment at 9% — $4,056.67 a month — uses up the whole surplus, even though you would actually pay about $3,023 a month at 6%.

The buffer is why borrowing power falls so sharply when rates rise, and why it recovers when they fall: the test rate moves with the actual rate. Some lenders also apply their own minimum assessment rate.

Existing repayments come straight off the monthly surplus, and at the assessment rate every dollar of monthly commitment costs a lot of loan. A $600 a month car loan reduces the $504,000 estimate by about $74,600.

Credit cards are counted by their limit, not their balance. Lenders treat between 3% and 3.8% of every card’s limit as a monthly repayment whether you owe anything or not, because you could. At 3.8%, a $10,000 limit you never use costs about $47,000 of borrowing power. Many lenders count buy-now-pay-later limits too.

Since February 2026, APRA has also capped how much high-DTI lending each bank can do: no more than 20% of new home loans can go to borrowers whose total debt is six or more times their gross income. The limit applies separately to owner-occupier and investor loans, and loans for building or buying a new home, along with owner-occupier bridging loans, are exempt.

It is not a ban on borrowing six times your income, but it means fewer lenders will have room for that loan at any given time. The calculator shows your ratio beside the estimate and flags it when it reaches six.

Two lenders can look at the same payslips and come up tens of thousands of dollars apart. They count overtime, bonuses, commission and rental income differently; they apply different living-expense benchmarks and scale them with income in different ways; they set different floors on the assessment rate; and they treat HELP debts, childcare and the size of your credit card limits in their own way.

That spread is the practical case for a broker. The lender with the highest borrowing power for your situation is not always the one with the lowest rate, and working out which lenders will say yes to the loan you actually need is most of what our mortgage broking team does.

• Close or cut card limits you do not need. Every $10,000 of limit is roughly $47,000 of borrowing power on the settings above. Do it before you apply, and make sure it shows on your credit file.
• Clear small debts first. A car or personal loan with a year or two left can cost far more borrowing power than its balance; paying it out is often worth more than adding the same money to your deposit.
• Keep your spending steady before you apply. Lenders read recent bank statements, and the expenses you declare have to match them.
• Apply together if it is a joint purchase. Two incomes are taxed separately, so a couple usually borrows more than one person earning the same total.
• Talk to a broker before you talk to a bank. The estimate above is one model. Lenders run dozens, and the difference between them is the loan.