Home Loan Borrowing Power Calculator

Most Australian lenders will lend 5-6 times your annual pre-tax income, minus existing debts. For example, someone earning $100,000 annually with no debts could borrow approximately $500,000-$600,000. However, actual borrowing capacity depends on living expenses, dependents, interest rates, and lender policies. Use our borrowing power calculator above for a personalized estimate.

Key factors include: your gross annual income (salary, bonuses, rental income), partner or spouse income, monthly living expenses (rent, groceries, utilities), existing debts (car loans, personal loans, credit cards), number of dependents, your deposit amount, current interest rates, and employment stability. Lenders also apply a 3% serviceability buffer above the interest rate to ensure you can afford repayments if rates rise.

Your deposit directly impacts your maximum property price, not your borrowing limit. If you can borrow $500,000, a $100,000 deposit (20%) lets you buy a $600,000 property. With only $50,000 (10%), you can buy a $550,000 property but will pay Lenders Mortgage Insurance (LMI). Larger deposits reduce LMI costs and may qualify you for better interest rates. First home buyers can access low-deposit loans (5% deposit) with LMI waivers under certain schemes.

The 3% serviceability buffer is a regulatory requirement to ensure you can still afford repayments if interest rates increase. Lenders assess your loan at the actual interest rate PLUS 3%. For example, if the rate is 6.5%, they test serviceability at 9.5%. This protects both borrowers and lenders from payment default risks during rate rises. It typically reduces borrowing capacity by 20-30% compared to assessments without the buffer.

Yes, through several strategies: 1) Increase income (secure a pay rise, add overtime/bonuses, include rental income from investment properties), 2) Reduce debts (pay off credit cards, car loans, or personal loans), 3) Lower living expenses (move to cheaper rent temporarily, reduce discretionary spending), 4) Add a co-borrower (partner or family member with income), 5) Reduce credit limits (even if balances are $0, limits reduce borrowing power), and 6) Increase your deposit through savings or family gifts. Paying off $20,000 in credit card debt can increase borrowing power by $100,000+.

No, borrowing power varies significantly between lenders. Big Four banks (CBA, Westpac, NAB, ANZ) often have stricter policies, while smaller lenders and non-banks may offer 10-15% higher borrowing capacity. Lenders use different expense benchmarks (HEM - Household Expenditure Measure), assess income differently (some include 100% of bonuses, others 80%), and have varying policies on rental income, overtime, and self-employment income. A mortgage broker can compare 40+ lenders to maximize your borrowing capacity.

Lenders assess your "declared" living expenses against the HEM (Household Expenditure Measure) benchmark and use whichever is higher. For a single person, minimum HEM is ~$2,000/month; for couples with 2 children, ~$3,600/month. High living expenses reduce net disposable income available for loan repayments. Reducing monthly expenses from $4,000 to $3,000 can increase borrowing power by $50,000-$80,000. Lenders scrutinize bank statements for 3-6 months to verify expenses, so genuine reductions (not temporary) are required.

Standard maximum LVR is 95% (5% deposit plus LMI), meaning you can borrow up to 95% of the property value. First home buyers can access 95% LVR with government guarantees (no LMI). Some specialist lenders offer 98% LVR loans, though these come with higher rates and stricter criteria. An 80% LVR (20% deposit) is ideal as it avoids LMI ($15,000-$50,000 for typical loans) and qualifies for the best interest rates. Borrowing at 95% LVR on an $800,000 property requires only $40,000 deposit but adds $25,000-$35,000 in LMI costs.