Australia Borrowing Power Calculator

Since October 2021, the Australian Prudential Regulation Authority (APRA) has expected every ADI (bank) to assess your ability to repay a home loan at your contract rate PLUS a minimum 3 percentage point buffer — not the actual rate you'll pay. So a loan quoted at 6% is assessed as if it were at 9% for serviceability purposes. This is designed to confirm you could keep making repayments even if rates rose materially after settlement.

The HEM is a benchmark minimum living-expense figure, developed by the Melbourne Institute and used by most Australian lenders, that varies by income, location, and household size. Lenders use the GREATER of your own declared living expenses and the HEM benchmark for your household as the expense figure in their serviceability assessment — even if your actual expenses are lower, the lender won't assess you on a number below the HEM floor. This calculator lets you enter both figures and takes the higher one automatically.

APRA guidance flags loans at or above 6 times a borrower's gross income as warranting extra scrutiny — commonly called the DTI (debt-to-income) "speed limit". This is a portfolio-level constraint on how much of a bank's NEW lending can sit above this ratio, not a hard per-borrower cap, but it's a genuinely useful warning sign: loans above 6x income face closer underwriting and, in a rising-rate environment, materially higher repayment-to-income stress. This calculator flags it clearly when your estimated loan crosses the threshold.

It depends heavily on your living expenses, other debts, deposit, and the assessment rate applied — there's no single answer. As a rough illustration, a $120,000 gross income with modest living expenses, no other debts, and a $100,000 deposit might support a loan in the high six figures at a 9% assessment rate (6% contract rate plus the APRA buffer) over 30 years — though your specific numbers can move this meaningfully. Enter your own figures into the calculator above for a personalised estimate.

Yes — Australian lenders generally assess your existing credit card and other unsecured debt facilities at their full CREDIT LIMIT (typically at a notional minimum repayment rate), not your current balance, even if you always pay them off in full each month. This means unused credit card limits and "buy now, pay later" facilities can meaningfully reduce your borrowing power. Reducing card limits before applying is a common, legitimate way to boost your assessed borrowing capacity.

The APRA serviceability buffer, the HEM expense floor (which can exceed your real spending), and conservative treatment of other debts (like credit limits) are all deliberately cautious, by regulatory design, to keep the banking system resilient to future rate rises and borrower stress — not to reflect your day-to-day budget precisely. It's common for your genuinely affordable borrowing capacity to feel higher than what a lender's serviceability assessment allows.