How Much Can I Borrow for a Home Loan in Australia? BorrowWise

The amount you can borrow depends on your income, living expenses, dependents, existing debts, credit card limits, the interest rate and the loan term — and on the policy of the individual lender. Two lenders can produce materially different figures for the same applicant.

A borrowing power calculator gives an indicative estimate using a standard serviceability approach. It is not a loan offer and it is not the same as pre-approval. A formal assessment by a lender or mortgage broker uses verified documents and current credit policy.

Use the borrowing power calculator to run your own figures before reading on.

How lenders work out borrowing capacity

Australian lenders generally follow the same broad steps.

1. Estimate after-tax income for each applicant.

2. Deduct living expenses (often the higher of what you declare and a benchmark).

3. Deduct existing commitments — other loans, HECS/HELP if relevant, and credit card limits assessed as a monthly obligation whether or not the cards are used.

4. Treat the remaining surplus as the repayment you could sustain.

5. Convert that repayment into a loan amount at an assessment rate above the actual loan rate.

That last step is driven by the APRA serviceability buffer. Authorised deposit-taking institutions are expected to test whether you could still meet repayments if the rate were three percentage points higher than the rate on offer. A loan priced at 6.00%, for example, may be assessed as if the rate were 9.00%.

The buffer is reviewed from time to time and can change. Non-bank lenders are not bound by the same prudential rules in the same way and may apply different floors or policies.

Worked examples (illustrative only)

These figures use a simplified model similar to a calculator: after-tax income, a serviceability buffer, and credit cards assessed at a percentage of limits. They are not quotes from any lender.

Single applicant

• Gross income: $100,000

• No dependents, modest living expenses, no other loans

• No credit card limits

Indicative capacity might sit in a range that supports a mid–six-figure loan at a typical owner-occupier rate, once the buffer is applied. Add a large unused credit card limit and the surplus falls, so maximum borrowing falls with it.

Couple

• Combined gross income: $160,000

• One dependent

• Car loan and credit card limits

Joint applications can borrow more than either person alone, but dependents and existing repayments reduce the surplus. Lenders also differ on how they treat second incomes, overtime and bonuses. Actual results depend on the full picture a lender sees: employment type, length of service, declared expenses versus benchmarks, and the product you apply for.

Why different lenders give different numbers

Credit policy is one of the main ways lenders compete. Institutions vary on:

• How much overtime, bonus, commission and rental income they count

• Which living-expense benchmark they apply

• Whether negative gearing benefits are included for investors

• Minimum assessment rates and floors

• Treatment of casual, contract or newly self-employed income

Differences of 15% to 20% in maximum loan between mainstream lenders are ordinary. That is why a single calculator result should be treated as a guide, not a ceiling or a floor.

Credit cards, HELP debt and other commitments

Credit cards

Lenders typically assess cards on the approved limit, not the balance owing. A monthly commitment is calculated as a percentage of that limit and deducted from the surplus available to service a home loan. Reducing or cancelling unused limits before you apply can increase borrowing capacity.

HELP / HECS

Compulsory repayments reduce take-home pay. Many calculators do not deduct them automatically. For a more realistic estimate, include the approximate monthly HELP repayment with other loan repayments.

Other loans

Personal loans, car loans and existing mortgages all reduce capacity dollar for dollar on the repayment side. Clearing small high-rate debts before applying can help both serviceability and credit presentation.

Income types lenders scrutinise

PAYG employees with stable base salary are usually straightforward. Overtime and bonuses may be averaged over one or two years and accepted only in part.

Self-employed applicants are generally assessed on taxable income from recent tax returns (often two years), not on business turnover or drawings. Newly established businesses face tighter rules.

Rental income is usually shaded (only a percentage is counted) to allow for vacancies and costs. Investor applications are assessed on the combined position across all debts.

Parental leave or recent job change can affect how income is treated until a return-to-work pattern is clear.

Calculator estimate vs pre-approval

Pre-approval is still not a guarantee of final approval. Final approval follows valuation of the specific property and a last check of your circumstances.

Debt-to-income and other limits

Since early 2026, authorised lenders have faced portfolio limits on writing new loans at high debt-to-income ratios. That is a limit on the share of a lender’s new lending, not a hard ban on every high-DTI application. Borrowing at higher multiples of income can still be possible, but the market of willing lenders may be narrower.

A large deposit improves the loan-to-value ratio and may avoid lenders mortgage insurance, but it does not replace the need to service the loan at the buffered rate.

How to improve your borrowing power

Practical steps that often help:

1. Reduce credit card limits you do not need.

2. Clear or reduce personal loans and car loans where the repayment is high relative to the balance.

3. Document income carefully — especially overtime, bonuses or self-employed returns.

4. Avoid new credit in the months before applying.

5. Compare more than one lender — policy differences matter as much as rate.

6. Use a realistic expense figure — understating living costs can cause problems later in assessment.

None of these guarantees a higher limit. They improve the inputs a lender uses.

Using the BorrowWise borrowing power calculator

The BorrowWise borrowing power calculator estimates capacity from gross income, dependents, living expenses, existing repayments and credit card limits. It taxes income on a simplified resident basis, applies a three percentage point assessment buffer, and assesses cards at a percentage of limits.

Results are estimates for general information only. They do not take your full circumstances into account and are not a credit offer.

For a figure tied to current lender policies, request a free assessment. An accredited broker can compare your scenario against 30+ lenders without obligation. The enquiry does not trigger a credit check on its own.

Frequently asked questions

How much can I borrow for a home loan in Australia?

It depends on income, expenses, dependents, existing debts, credit card limits, the interest rate and term, and the lender’s policy. A calculator provides an indicative estimate; a lender or broker assessment is more reliable.

How is borrowing capacity calculated?

Lenders estimate after-tax income, deduct living expenses and commitments, and convert the surplus into a loan amount at an assessment rate above the actual rate — typically including a serviceability buffer of about three percentage points.

What is the APRA serviceability buffer?

It is a margin APRA expects banks and other authorised deposit-taking institutions to add when testing whether a borrower can afford repayments. The buffer is currently three percentage points and is subject to review.

Do credit card limits affect borrowing power?

Yes. Lenders generally assess the approved limit, not the balance. Unused limits still reduce capacity.

Can self-employed borrowers use a borrowing power calculator?

Yes. Enter taxable income from recent returns rather than turnover. Lenders usually want two years of returns and may apply extra scrutiny to new or variable income.

Is the estimate the same as pre-approval?

No. A calculator is a general indication. Pre-approval is a conditional assessment by a specific lender based on documents and policy.

How does a HELP debt affect borrowing power?

Compulsory HELP repayments reduce take-home pay. Include them in other commitments for a more realistic estimate.

Why do brokers and banks quote different amounts?

Policies differ on income types, expense benchmarks, buffers and product rules. Comparing more than one option is normal.

Next steps

1. Run the borrowing power calculator with realistic expenses and all card limits.

2. Cross-check deposit and upfront costs with the deposit and stamp duty calculators.

3. When you want numbers tied to live lender policy, request a free assessment.

This article is general information only. It is not financial, credit, legal or tax advice. Calculator results are estimates and do not take your personal objectives or circumstances into account.