Borrowing Power Calculator
Get a realistic estimate of how much you could borrow in 2026, calculated the way lenders actually assess you, including the 3% serviceability buffer.
Estimate your borrowing power
Move the sliders to match your situation. The estimate updates instantly.
Guide only. Not financial advice. Lenders assess differently and apply their own expense benchmarks. Speak with a professional to confirm your figures.
How much can I borrow on my income?
As a general guide, most Australian lenders allow borrowers to access between 4 and 6 times their gross annual income. Your real figure depends on your living expenses, existing debts, the number of applicants, and the rate you are assessed at. The calculator above gives an indicative estimate using the way lenders assess in 2026. A broker can confirm your exact capacity across multiple lenders.
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Two people on identical incomes can have very different borrowing capacity. The difference comes down to living expenses, dependants, credit card limits, car and personal loans, and HECS. Each of these reduces the surplus income a lender uses to work out what you can repay. The calculator above lets you see how each lever moves the number.
How do lenders actually calculate borrowing power?
Lenders work out your net monthly income after tax, subtract your living expenses and all existing financial commitments, and arrive at a monthly surplus. They then calculate the largest loan whose repayment, tested at your loan rate plus the 3% buffer, fits inside that surplus. The result is your serviceability limit, which is then checked against the debt-to-income cap.
The process is essentially a stress test. The lender is not asking whether you can afford the repayment at today’s rate. They are asking whether you could still afford it if rates were 3 percentage points higher. That single rule is the biggest reason borrowing power feels lower than people expect.
Net income after tax, minus living expenses, minus existing loan repayments, minus an allowance for credit card limits, equals the monthly surplus a lender uses to size your loan. Increasing income or reducing any of those commitments increases the surplus, and therefore the loan.
What is the 3% serviceability buffer?
The serviceability buffer is an extra interest rate that lenders must add on top of your actual loan rate when assessing your application. APRA sets it at 3 percentage points. If your loan rate is 5.99%, the lender tests whether you can afford repayments at 8.99%. This is why your assessed capacity is lower than what you could comfortably repay at the real rate.
APRA confirmed in 2026 that the buffer stays at 3 percentage points, citing high household debt and economic uncertainty. In practical terms, the buffer reduces maximum borrowing power by roughly 15% to 20% compared with assessing at the actual rate. It applies to almost all regulated lenders, which is why shopping for a lower loan rate also lifts your borrowing capacity, since a lower rate plus 3% produces a lower assessment rate.
A lower interest rate does not just reduce your repayments. Because every lender assesses at your rate plus 3%, a lower rate also raises the amount you are allowed to borrow. This is one of the clearest reasons to compare lenders rather than accept the first offer.
The new 6x debt-to-income limit
From February 2026, APRA limits how much lending banks can write to borrowers whose total debt is more than 6 times their gross income. Loans above 6x income are treated as higher risk and are restricted. For most borrowers this acts as a ceiling on borrowing power, separate from the serviceability test.
This means your borrowing power is now the lower of two figures: what your surplus income can service at the assessment rate, and 6 times your gross annual income. On higher incomes the debt-to-income cap is often the binding limit. The calculator above applies both tests and shows you when the 6x cap is the one holding your number down.
What income do lenders count?
Lenders count base salary in full, but treat variable income more cautiously. Overtime, bonuses, commissions, and rental income are often shaded, meaning only a portion is counted. Self-employed income is assessed from tax returns. How a lender treats your specific income mix can change your borrowing power significantly.
- ✓Base PAYG salary is counted in full at almost every lender
- ✓Overtime and bonuses are often counted at 80%, and some lenders count 100% for essential service workers
- ✓Commission income is usually averaged over one to two years
- ✓Rental income is typically counted at 70% to 80% to allow for vacancy and costs
- ✗One-off or irregular income is generally excluded
This is where a broker often recovers borrowing power that an online calculator or a single bank would miss. If a large part of your income is commission, overtime, or self-employed earnings, the choice of lender can change your approved amount substantially, because each lender applies its own shading rules.
How can I increase my borrowing power?
The fastest levers are reducing or closing credit card limits, paying down personal and car loans, and choosing a lender with a lower assessment rate. Beyond that, extending the loan term, adding an eligible second applicant, and reducing genuine living expenses all help. A broker comparing lenders is often the single biggest factor.
- ✓Reduce or close unused credit card limits. Lenders assess the limit, not the balance
- ✓Pay down or clear car and personal loans before applying
- ✓Choose a lower rate, which lowers the assessment rate and lifts capacity
- ✓Review your living expenses so they are accurate rather than overstated
- ✓Compare lenders, since each one assesses income and expenses differently
Credit card limits surprise more buyers than anything else. A $20,000 combined limit can reduce borrowing power by tens of thousands of dollars, even if you pay the cards off in full every month, because lenders assess the full limit as an ongoing commitment.
General information only. This calculator provides an indicative estimate based on simplified assumptions, including a 5.99% example loan rate, the 3% APRA serviceability buffer, the February 2026 debt-to-income limit, and 2025-26 resident tax rates. It is not a loan offer, a pre-approval, or financial advice, and your personal circumstances have not been considered. Lenders apply their own living expense benchmarks, income shading, and credit policies, so your actual borrowing capacity will differ. Always confirm your figures with a licensed mortgage broker. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.