Australian Borrowing Power Calculator

Last updated: May 2026. Reflects current Australian metrics.

Find out exactly how much Australian banks will lend you. This calculator accounts for the APRA 3% serviceability buffer, estimated tax, and the Household Expenditure Measure (HEM) to give you a highly accurate maximum borrowing capacity.

Income & Expenses

$
$
$

Loan Details

%
We automatically add the 3% APRA buffer to this rate.
Yrs
$

Maximum Borrowing Power

Based on your income and APRA rules

$0
Max Property Price (with Deposit) $0
Recommended Borrowing (80% LVR) $0

Borrowing below this amount avoids paying Lenders Mortgage Insurance (LMI).

Assessment Breakdown

Assessed Interest Rate (incl. 3% buffer) 9.14%
Est. Net Monthly Income $0
Assessed Living Expenses (HEM checked) $0

How to Use This Calculator

  1. Enter your gross income: Provide your pre-tax annual salary. If you have a partner, select "Joint" and add their income. The calculator estimates your net take-home pay using standard ATO tax brackets.
  2. Detail your expenses: Enter your realistic monthly living costs. Banks use a benchmark called HEM (Household Expenditure Measure) based on your dependents. If your entered expenses are below HEM, banks will use the higher HEM figure.
  3. Include debts: Add monthly payments for car loans or personal loans. For credit cards, lenders typically assess your limit (e.g., assessing 3.8% of a $10,000 limit = $380/month), even if the card is paid off.

Understanding Your Borrowing Capacity in Australia

Your borrowing power isn't just about what you think you can afford; it's heavily regulated by the Australian Prudential Regulation Authority (APRA) to protect both lenders and borrowers. When assessing a home loan application, the Big 4 banks (CBA, Westpac, NAB, ANZ) and non-banks must adhere to strict responsible lending criteria under the National Consumer Credit Protection Act.

The 3% Serviceability Buffer

The most significant factor affecting how much you can borrow is the serviceability buffer. Even if the loan you are applying for has an interest rate of 6.00%, APRA mandates that banks assess your ability to make repayments at a rate 3.00% higher (i.e., 9.00%). This ensures that if the Reserve Bank of Australia (RBA) raises the cash rate significantly, you won't immediately default on your mortgage.

HEM: The Household Expenditure Measure

Banks won't just take your word on how much you spend each month. They cross-reference your stated living expenses against the HEM (Household Expenditure Measure). HEM is a standard benchmark that estimates a modest level of expenditure based on your income, marital status, and number of dependents. If you claim your expenses are $1,500 a month but the HEM for your profile is $2,400, the bank will use the $2,400 figure in their calculations.

Debt-to-Income (DTI) Ratios

In addition to monthly serviceability, lenders also look at your Debt-to-Income (DTI) ratio. This is your total debt divided by your gross annual income. APRA considers a DTI ratio over 6 as 'high risk'. If a joint couple earns $150,000 combined, many banks will cap their total borrowing (including existing car loans and credit card limits) at around $900,000, regardless of whether their monthly cash flow could support more.

Related Calculators

Mortgage Calculator Borrowing Power Stamp Duty

For more information on purchasing property, visit ASIC MoneySmart Home Loans.

10 Frequently Asked Questions

1. What is the current RBA cash rate?
As of 2026, the RBA cash rate influences all variable home loans. Check the official RBA website for the exact daily rate, but currently, variable rates sit around the low 6% mark.
2. How does the 3% serviceability buffer work?
APRA mandates that banks assess your ability to repay a loan at an interest rate 3% higher than the rate you are applying for. This ensures you can handle future rate hikes.
3. What is Lenders Mortgage Insurance (LMI)?
LMI is insurance that protects the lender if you default. It is usually required if your deposit is less than 20% of the property's value (LVR > 80%).
4. Should I choose a fixed or variable rate?
A variable rate offers flexibility (like offset accounts), while a fixed rate provides repayment certainty for a set period (usually 1-5 years).
5. What is a Comparison Rate?
Required by Australian law, the comparison rate rolls the interest rate and most fees into a single percentage to show the true cost of a loan.
6. What is an offset account?
An offset account is a savings account linked to your loan. Its balance is subtracted from your loan principal before interest is calculated, saving you money.
7. Can I make extra repayments?
Yes, most variable loans allow unlimited extra repayments. Fixed loans usually cap extra repayments (e.g., $10k/year) and charge break fees if exceeded.
8. What is negative gearing?
Negative gearing is an Australian tax strategy where the costs of owning an investment property exceed its rental income, allowing you to deduct the loss from your taxable income.
9. What are stamp duty concessions?
Each Australian state offers stamp duty exemptions or concessions for First Home Buyers purchasing below a certain price threshold.
10. How is interest calculated?
In Australia, home loan interest is generally calculated daily on your outstanding balance and charged monthly.