Home loans · Borrowing power
Borrowing power calculator
How much a bank might lend you, worked out its way: your income after tax, your expenses, and APRA’s 3-point buffer.
FY 2026-27 rates · verified against the official sources.
Your tally
You could borrow about
$430,000
Tested at 9.2%. At your 6.2% the repayment on it is $2,633.62 a month.
How it’s worked out
Who this models: Each income taxed separately as an Australian resident individual, no other offsets. Family and senior Medicare thresholds, SAPTO and the Medicare levy surcharge are not modelled.
A transparent estimate, not a loan offer — lenders add HEM floors, income shading and dependants, and each tunes the model differently. Treat it as the shape of the answer, then get a pre-approval.
How much can you borrow? This borrowing capacity calculator answers it the way a bank does — after-tax income at FY 2026–27 rates, your real expenses, and APRA’s minimum 3-point buffer — with every step of the working shown. Add the deposit you have saved and it turns the loan into a price ceiling as well.
You're not assessed at your rate — you're assessed at your rate + 3%.
Since 2021 APRA has required the banks it regulates to test new borrowers at the loan rate plus at least three percentage points. At 6.2%, you're tested as if repaying at 9.2%. It's the main reason bank answers feel stingy.
How the estimate works
The machinery is simple and worth seeing. Start with gross income and take out FY 2026-27 income tax and the Medicare levy — the same engine as our tax-based calculators. Subtract monthly living expenses and commitments: other loan repayments in full, and 3.8% of total credit card limits a month (our assumption; lenders set their own). Whatever's left is your assessable surplus, and your borrowing power is simply the loan that surplus could repay over 30 years at your rate plus the 3% buffer.
Notice what that means: borrowing power isn't about the deposit — it's a cash-flow calculation. The deposit decides your price ceiling together with the loan (and whether you'll pay LMI); the surplus decides the loan itself.
Borrowing power by income
At 6.2% (assessed at 9.2%), no other debts. Singles at $3,200/month expenses, couples at $3,800:
| Household income | Single | Couple (income split evenly) |
|---|---|---|
| $80,000 | ≈ $259,000 | ≈ $278,000 |
| $100,000 | ≈ $397,000 | ≈ $425,000 |
| $120,000 | ≈ $535,000 | ≈ $561,000 |
| $150,000 | ≈ $732,000 | ≈ $766,000 |
| $180,000 | ≈ $919,000 | ≈ $974,000 |
The couple borrows more on the same household income — two tax-free thresholds mean more of each dollar survives tax. Every figure comes from the same tested engine as the calculator.
The levers that actually move the number
- Credit card limits. A $10,000 limit — used or not — costs about $47,000 of borrowing power on a single $110,000 income. Cancel cards you don't need before applying, not after.
- Car and personal loans. Their full repayment comes straight off your surplus; on the same single income, a $600/mo car loan costs about $74,000 of home borrowing capacity.
- Declared expenses. Banks read your statements and apply HEM as a floor — so the lever isn't creative declaring, it's genuinely trimming spending for the months they'll see.
- The lender itself. Assessment policies — how much of each kind of income counts, which expense benchmark applies, how existing debts are treated — differ between lenders, so the same household can get different answers. Compare more than the advertised rate.
Frequently asked questions
How do banks calculate borrowing power?
What is the 3% serviceability buffer?
Why do credit cards reduce borrowing power so much?
What is HEM?
How can I increase my borrowing power?
Is this what a bank will actually lend me?
Keep tallying
Assumptions & sources
- Rates are FY 2026-27 as legislated, with one exception: the Medicare levy low-income thresholds are the 2025-26 figures carried forward, because they are legislated retrospectively each Budget. They only affect results at low incomes, and we update them when the Budget lands.
- Income tax at FY 2026-27 resident rates, with the Medicare levy (single low-income phase-in) and the Low Income Tax Offset applied. Family/senior levy thresholds and other offsets not modelled.
- Serviceability buffer of 3 percentage points over your entered rate — the minimum APRA requires of the banks it regulates (System Risk Outlook, May 2026); 30-year term.
- Credit cards assessed at 3.8% of the total limit per month — this calculator’s assumption; no public standard sets it, and lenders differ.
- HELP/HECS debts (when ticked) assessed as the compulsory repayment on the FY 2026-27 marginal schedule — 15c per $1 over $69,528, 17c over $129,717, capped at 10% of income. Counting it as a commitment is this calculator’s assumption; ask your lender how it treats a debt.
- Dependants at $500/month each — this calculator’s assumption; lenders’ own expense tables vary.
- The rate starts at 6.2%, the average on new owner-occupier variable home loans funded in August 2026 (RBA statistical table F6) — an average of loans written, not a quote for your loan.
- Maximum home price is simply the estimated loan plus the deposit you enter. Stamp duty, fees and LMI also come out of that deposit, so the price you can actually reach is lower.
Rates last verified 2026-08-27. General information only — not financial or credit advice, and not a loan offer.