Borrowing Power Calculator
Get an indicative estimate of how much you could borrow for a home loan in Australia based on income, expenses, existing debts and a lender assessment rate.
Your results
Calculation breakdown
- Assessed monthly income
- (Gross income − estimated income tax) ÷ 12
- Monthly surplus
- Assessed income − living expenses − dependant allowance − existing debts − (credit card limits × 3.8%)
- Indicative loan
- Present value of (surplus × serviceability ratio) at the assessment rate over the loan term
Assumptions
- This is a simplified indicative model — every lender uses its own income shading, expense benchmarks and buffer rates.
- Credit card limits are assessed as a monthly commitment, not the balance owing, matching common lender practice.
- Income tax is estimated using current resident tax brackets and does not include offsets or Medicare levy.
- Actual borrowing power depends on a full credit assessment — treat this as a starting point only.
How this calculator works
Lenders work out how much they'll lend by assessing your income against your living expenses, existing debts and an assessment (buffer) rate well above current mortgage rates, to make sure you could still service the loan if rates rise. This calculator follows the same broad approach: it estimates your after-tax income, subtracts living expenses, a dependant allowance, existing debt repayments and an assumed monthly commitment on your credit card limits, then applies a serviceability ratio to the remaining surplus. That surplus is treated as the maximum repayment you could service, and the calculator works out the loan amount that repayment would support at the assessment rate over your chosen term. Every lender uses its own income shading rules, expense benchmarks, buffer rates and credit policies, so real lending decisions can vary substantially from this estimate — treat the result as a general guide for budgeting and shopping around, not a substitute for a formal pre-approval from a lender or broker.
Frequently asked questions
Why do lenders use an assessment rate higher than the actual loan rate?
Regulators require lenders to check you could still afford repayments if interest rates rise, so they apply a buffer — commonly around 3 percentage points above the actual rate — when assessing your borrowing capacity.
Do credit card limits reduce my borrowing power even if I pay them off in full?
Yes, most lenders assess your full credit card limit as a monthly commitment, regardless of your balance or repayment history, because you could draw on that limit at any time.
Why might my actual pre-approval differ from this estimate?
Lenders apply their own income shading (discounting certain income types), expense benchmarks, and credit policy on top of the general approach used here, so actual pre-approved amounts can be higher or lower than this indicative figure.
Results are estimates only and are not financial, tax, legal or credit advice.