How much can I Borrow? | Borrowing Capacity Calculator
Obtain a quick quote for your home loan using our borrowing capacity calculator. Have your income and expenses handy, if not available estimates are fine.
How Much Can I Borrow?
Calculate how much you can borrow based on your salary and financial commitments. This calculator estimates your borrowing power based on your income, financial commitments and loan details entered. This can be used in conjunction with our loan repayment calculator to help you to work out your repayments based on the amount you wish to borrow.
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What is Borrowing Capacity?
Borrowing capacity (sometimes called “borrowing power”) is the maximum amount a lender is likely to approve for your home-loan application. Banks and non-bank lenders run the numbers on your income, expenses, debts, and overall risk profile to decide how much you can comfortably repay—even if interest rates rise. Understanding the calculation helps you set a realistic purchase budget, compare loan options, and identify quick wins to boost your capacity before you apply.
Working out how much you can borrow
Want to find out how much you might be able to borrow for a home loan? Our borrowing power calculator gives you an initial estimate of what a lender may be willing to lend to you.
This is a handy step to take before you contact your mortgage broker so that you can see the effect different interest rates and loan periods will have on the amount of money you can borrow, the total interest you pay and your estimated monthly loan payments.
By entering the length of the mortgage, your salary (plus additional salary if you’re looking to co-purchase), your expenses and the number of any dependants you may have, the calculator will assess your borrowing power based on your earnings and other financial commitments.
Make sure you enter realistic figures to get a more accurate picture of what you can comfortably afford to borrow. You’ll want to ensure that you don’t end up overstretched or struggling to meet your repayments. To work out different rates of repayments, pair this calculator with our home loan repayment calculator.
Need a personalised assessment?
Reach out for a free borrowing-capacity review. We’ll crunch the numbers with multiple lenders and give you a clear roadmap to finance your next home sooner.
Contact AdamBorrowing capacity explained.
Curious how much a bank will really let you borrow? In this quick tutorial, we break down the step-by-step method lenders use to calculate borrowing power. You’ll learn how income, existing debts, credit limits, and living-expense benchmarks (like Australia’s HEM) all feed into the equation—plus the interest-rate “stress test” every application must pass. Watch as we run live numbers through a free online calculator, then stick around for expert tips on boosting your capacity before you apply. Hit play and work out your true home-loan budget with confidence! Because rules can shift, always check the latest guidelines or speak with a mortgage broker before committing.
Key Factors Lenders Use to Calculate Borrowing Capacity
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Household income
Salaries, wages, overtime, bonuses, commissions, rental income, government benefits, dividends, and any other verifiable earnings. -
Living-expense benchmarks
Lenders test your declared spending against the Household Expenditure Measure (HEM) or their own internal tables to ensure expenses are realistic. -
Existing debts & credit limits
Credit-card limits (not just what you owe), personal or car loans, HECS/HELP, Buy Now Pay Later accounts, and any guarantees you’ve provided reduce capacity. -
Loan serviceability buffer
All Australian lenders apply a 3 percentage-point “stress test” (as set by APRA) to be sure you could still meet repayments if rates rise sharply. -
Deposit size & Loan-to-Value Ratio (LVR)
A larger deposit lowers the LVR, cuts—or removes—Lenders Mortgage Insurance (LMI) premiums, and may qualify you for sharper interest rates. -
Employment stability
Length in your current role, industry track record, probation status, and contract vs permanent work all affect how your income is weighted. -
Credit history
A strong credit score and clean repayment record boost confidence that you’ll manage higher debt levels responsibly. -
Property type & location
High-density apartments, serviced apartments, and some regional or hobby-farm properties can attract tighter lending limits or require bigger deposits.
Quick Tips to Boost Your Borrowing Power
- Reduce unused credit-card limits – lowering a $20 k limit to $5 k can add thousands to your capacity.
- Pay down (or consolidate) personal loans and Buy Now Pay Later balances before applying.
- Document all income – overtime, allowances, rental income, and second jobs can count if you can prove consistency.
- Tighten discretionary spending for three to six months; your bank statements must support the budget you declare.
- Consider a guarantor or increase your deposit to drop the LVR below key thresholds (e.g. 90 % or 80 %).
- Shop around – each lender’s credit policy is different; a mortgage broker can match you to one that maximises your capacity without over-stretching you.
- Utilise incentives - government grants and incentives for first home buyers can lower your LMI and stamp duty costs providing more capacity.
