Borrowing Capacity Estimator
Estimate how much a lender might approve based on your income, expenses, and dependants.
Your finances
Estimated borrowing capacity
$297,317
Assessed at 9.5% (APRA buffer +3%)
What this means
Estimates only. Actual borrowing capacity varies by lender. Speak with a mortgage broker for an accurate assessment.
How this calculator works
Australian lenders assess your borrowing capacity using the APRA serviceability buffer: they test your ability to repay a loan at your actual interest rate plus 3%. So if you apply at 6.5%, the bank checks whether you could afford repayments at 9.5%. This buffer is designed to protect borrowers if rates rise after they take out the loan.
This calculator applies a 28% debt-to-income ratio as the maximum serviceability threshold — a common guideline used by lenders. It also deducts a $500/month allowance per dependant and a fraction of your declared living expenses (banks typically apply the higher of your declared expenses or the Household Expenditure Measure benchmark).
Worked example
Scenario: Single applicant, $120,000 annual income, $3,000/month expenses, no dependants, 6.5% rate, $100,000 deposit
Add a partner earning $80,000 and the borrowing capacity rises to approximately $570,000 — a combined budget of $670,000.
Key assumptions & limitations
- • The APRA 3% buffer has been mandatory since November 2021. Removing it requires APRA approval — unlikely for most borrowers.
- • Each lender calculates capacity differently. Some use a floor rate (e.g. 6% minimum) as well as the buffer. Results here are a guide, not a bank's formal assessment.
- • Existing debt (car loans, credit card limits, HECS/HELP) will reduce your borrowing capacity. Enter these as part of your monthly expenses for a more conservative estimate.
- • Self-employed income, rental income, and bonus income are typically discounted by lenders — usually by 20%.
Frequently asked questions
Why is my borrowing capacity lower than I expected?
The APRA buffer adds 3% to your rate for assessment purposes — this significantly reduces calculated capacity versus what a simple income-multiple estimate would suggest. Credit card limits also reduce capacity even if you never carry a balance; cancelling unused cards before applying can help.
Does HECS/HELP debt affect borrowing capacity?
Yes. Lenders treat HECS repayments as an ongoing expense, reducing your net income for serviceability purposes. The impact depends on your repayment threshold and outstanding balance.
How can I increase my borrowing capacity?
Reduce credit card limits, pay off personal loans, increase your deposit to lower the LVR, reduce declared living expenses (within honest bounds), or apply jointly with a partner. A mortgage broker can assess multiple lenders simultaneously to find the best fit.
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