Introduction
The Borrowing Power Calculator shows you how much a lender may let you borrow for a home loan. Enter your income, your bills, and your debts, and it estimates the loan size you could support.
It works for one person or a couple. You can pick a first home, a home to live in, or an investment property. If you buy an investment, the tool adds your expected rent and your tax savings from negative gearing.
The maths follows what real lenders do. It works out your tax and Medicare levy, counts extra income and rent at 80%, and tests your loan at your rate plus a 3% buffer. If you skip your living costs, it fills in a HEM-style estimate for you.
Your results show your loan size, the price of home you could buy with a 20% deposit, your repayment, and how much money you would have left each month. Charts show where your pay goes and what happens if rates rise or fall. The "What if?" sliders let you test more income, lower bills, or a new rate. A step-by-step section shows every number behind the answer.
This is an estimate only. Your real limit depends on the lender, your credit file, and your deposit.
How to use our Borrowing Power Calculator
Enter your income, your expenses and your debts, and this home loan borrowing power calculator shows how much you may be able to borrow, your likely repayment, and how much money you would have left each month.
Who is applying: Pick "Just me" if you are buying alone, or "Two of us" if you are buying with a partner. Picking two adds fields for their income.
What are you buying: Choose your first home, a home to live in, or an investment property. Investment loans use a higher rate and add a rent field.
Dependent children: Use the plus and minus buttons to count kids under 18 who rely on you. More kids means higher assumed living costs.
Dependent adults: Count adults aged 18 and over who you support. These are counted apart from children.
When do you plan to buy: Pick your buying timeframe. This changes the tip you get with your result.
Your income before tax: Type your gross pay, before tax is taken out. Then pick weekly, fortnightly, monthly or yearly to match how you get paid.
Your other income: Add steady extra money like bonuses, overtime, a second job or dividends. Lenders only count 80% of it.
Your partner's income before tax: If you chose "Two of us", type their gross pay and pick the right frequency.
Your partner's other income: Add their regular extra income, such as bonuses or overtime. It is also counted at 80%.
Current rental income: Enter rent you already get from an investment property you own. Leave it at 0 if you have none.
Expected rental income: For an investment purchase, enter the rent you think the new property will earn. This is used for negative gearing too.
Living expenses: Enter what you spend on food, bills, transport, insurance and fun. Leave it at 0 and we will estimate it for you.
Rent you'll pay after buying: If you will still rent your own home after you buy, put that rent here.
Existing home loan repayments: Enter repayments on a mortgage you already have. Do not add the new loan you are working out.
Other loan repayments: Add car loans, personal loans, HECS/HELP and any other set repayments.
Total credit card limit: Enter the total limit on all your cards, not the balance. Lenders count 3.8% of the limit each month.
Other regular commitments: Add things like child support, buy now pay later or school fees.
Custom interest rate: Turn this on in the results to test your own rate. Leave it off to use our default rate.
Loan term: Choose 10 to 30 years. A longer term lifts borrowing power but costs more interest.
Show repayments: Pick weekly, fortnightly or monthly to see your repayment your way.
What if sliders: Move the sliders to test more income, lower expenses or a rate change. Only this panel changes.
Calculate and Reset: Press Calculate to see your results, or Reset to go back to the starting numbers.
What Is Borrowing Power?
Borrowing power is the amount of money a lender thinks you can safely pay back on a home loan. It is also called borrowing capacity. Lenders work it out by looking at what you earn, what you spend, and what you already owe. Whatever money is left over each month is what you can use to make loan repayments.
What Affects How Much You Can Borrow
- Your income: Your salary before tax is the biggest factor. Bonuses, overtime, side jobs and rent you collect also count, but lenders usually only count about 80% of them because they can stop or change.
- Living costs: Food, power bills, transport, insurance and fun money. If you enter a low number, lenders will still use a benchmark figure (called HEM) that matches your household size and income.
- Debts and repayments: Car loans, personal loans, HECS/HELP and rent you keep paying all cut your borrowing power.
- Credit card limits: Lenders look at your limit, not your balance. A $10,000 limit is treated like a real debt, even if you owe nothing. Around 3.8% of the limit is counted as a monthly cost.
- People who depend on you: Each child or adult you support raises your costs and lowers what you can borrow.
- Interest rate and loan term: A higher rate means bigger repayments and a smaller loan. A longer term lowers each repayment but costs more interest overall.
The 3% Interest Rate Buffer
Lenders in Australia must check that you could still pay your loan if rates went up. They add about 3% to the real rate and test you at that higher number. So if the rate is 6.24%, they check your budget at 9.24%. This is why your borrowing power is lower than you might expect.
Owner-Occupier vs Investment Loans
Loans for a home you live in usually have a lower rate than loans for an investment property. If you buy an investment, the rent you expect to earn is added to your income (again, usually at 80%). If the loan interest costs more than the rent, the loss can lower your tax bill. This is called negative gearing, and it can lift how much you are able to borrow.
How to Increase Your Borrowing Power
- Lower or close credit card limits you do not use.
- Pay off car loans, personal loans and buy-now-pay-later accounts.
- Cut regular spending for a few months before you apply.
- Grow steady income, such as a pay rise or a second stable job.
- Apply with a partner so two incomes are counted.
- Save a bigger deposit, which lowers the loan you need and can avoid lenders mortgage insurance.
A Good Rule for Repayments
A common target is to keep home loan repayments under 30% of your take-home pay. Between 30% and 40% is tight, and over 40% leaves little room for surprises like a car repair or a rate rise. Borrowing the maximum you are offered is not always smart. Pick a repayment you can still handle on a bad month.
Note: This is an estimate only. Every lender uses its own rules, and the real amount you can borrow depends on your credit history, job type, deposit size and the property itself. Talk to a mortgage broker or lender before you make an offer.