How much can I borrow? Borrowing power calculator (2026)
Estimate your home-loan borrowing power the way lenders actually do it — stress-tested at the APRA 3% buffer, with a debt-to-income check. Built broker-grade: it handles overtime and essential-services shading, bonuses, self-employed add-backs, rent and Airbnb, negative gearing, HECS and more. Open the panels below to add your situation.
The straight answer
Your max loan is what’s left of your after-tax pay — minus real living costs and every debt — stress-tested at your rate plus 3%. That buffer is why a 6.90% loan gets assessed at 9.90%, and why this number is smaller than your bank’s flattering one.
Two things people miss: a $10,000 card limit costs about $380 a month of borrowing power even at $0 owing, and loans above 6× income cross APRA’s scrutiny line — fewer lenders will write them.
What this calculator does
This tool estimates your borrowing power — the maximum home loan a lender might be willing to give you — and turns that into an estimated maximum purchase price once you add your deposit.
Treat it as a planning figure — not a pre-approval.
Why the answer is a range, not one number
It mirrors the core of a real bank’s serviceability assessment, which is the test of whether you can comfortably afford repayments. The headline is a range because no two lenders calculate it identically — the biggest swings come from which lender you choose (their HEM table, income shading and assessment floor all differ), not from a tidy ±. Treat the top of the range as “a generous lender on a good day”, and expect a real approval to land below it.
Exactly how it’s calculated
The maths runs in five steps, the same order a lender works through.
- After-tax income FY2025-26 tax + 2% Medicare levy; couples split by the share you set
- Living expenses the higher of your declared spend or a flat HEM minimum for your household
- Commitments other repayments, HECS, plus 3.8% of credit-card limits per month
- Monthly surplus what’s left is the maximum you could put toward a mortgage each month
- Three ceilings the smallest of what your surplus services (at rate + 3.00%), the DTI scrutiny line, and your deposit’s LVR limit (after stamp duty + costs)
Step 1 — after-tax income, in full
We take your gross household income and apply a simplified FY2025-26 resident tax calculation — the Stage 3 brackets plus the 2% Medicare levy — then add any other income you’ve already shaded.
| Taxable income | Marginal rate |
|---|---|
| Up to $18,200 | 0% |
| To $45,000 | 16% |
| To $135,000 | 30% |
| To $190,000 | 37% |
| Above $190,000 | 45% |
For couples we split income across two earners using the “higher earner’s share” you set (50% = equal earners; ~100% = a single-income couple), so each person gets their own tax-free threshold and low brackets. A lopsided split is taxed more heavily — which lowers borrowing power, exactly as a real lender would find. It’s still a simplification: it ignores low-income offsets, salary packaging and the private-health surcharge. HECS/HELP repayments are now counted separately.
Step 2 — the HEM floor, in full
We subtract the higher of your declared monthly living expenses or an indicative HEM (Household Expenditure Measure) floor for your household size. HEM is a benchmark of sensible minimum spending; lenders won’t let you claim you live on less than it. We use a flat household minimum here (it doesn’t rise with your income) — a real lender licenses its own table that also scales up with income, so your assessed figure could be higher. Indicative only.
Step 3 — cards and commitments, in full
We subtract your other monthly loan repayments, plus a charge for credit cards. Cards are assessed on your total limit, not your balance, at about 3.8% of the limit per month — so a $10,000 limit costs roughly $380/month of borrowing power even at a zero balance.
Step 5 — the stress-test formula
This is the crucial bit. Your loan is tested not at the rate you’ll actually pay but at the assessment rate = your rate + the APRA 3.00% buffer. We then reverse the standard amortisation formula to find the largest loan that surplus could service:
P = M × ((1 + r)n − 1) ÷ (r × (1 + r)n)
- P — the loan
- M — your monthly surplus
- r — the monthly assessment rate (annual ÷ 12)
- n — the number of monthly payments (term × 12)
A 6.90% loan is therefore tested at 9.90%, which is why your borrowing power feels lower than a basic repayment calculator implies. Your maximum purchase price is then the max loan plus your deposit.
The debt-to-income (DTI) check
On top of serviceability, there’s a second test: debt-to-income.
DTI under 6.0×
- Most lenders on the table
- No extra APRA scrutiny
DTI 6.0× or higher
- Not banned, but fewer lenders
- Extra scrutiny under the 2026 cap
How the DTI cap works
On top of serviceability, we calculate your implied debt-to-income ratio — the proposed loan divided by gross annual income. From February 2026 APRA limits how much new lending banks can write at a DTI of 6.0 or higher (to no more than 20% of new loans). Loans at or above 6× income aren’t banned, but fewer lenders will write them and they draw extra scrutiny. If your estimate pushes DTI to 6 or more, we flag it and trim the headline range accordingly.
Key caveats
An estimate, not advice — lenders can differ by $100,000+ on the same applicant.
Everything this estimate leaves out
This is general information, not advice, and it is an estimate. It omits things real lenders model carefully:
- HECS/HELP debt
- Casual or self-employed income shading
- Rental income and negative gearing
- Lenders mortgage insurance (LMI) when your deposit is under 20%
- Family guarantees
- Each bank’s individual policy and HEM table
It also ignores upfront costs — stamp duty, conveyancing, building inspections and LMI — which reduce the deposit available for the purchase itself. Two lenders can legitimately differ by $100,000+ on the same applicant.
The Australian specifics
Three regulator levers sit behind these numbers.
| Setting | Where it stands |
|---|---|
| APRA 3% serviceability buffer | A macroprudential setting in place since October 2021, confirmed to remain at 3 percentage points through 2026 |
| Income tax brackets | Post-Stage-3 FY2025-26 resident rates — the 16% bottom rate is legislated to fall to 15% from 1 July 2026, which would slightly lift after-tax income next financial year |
| DTI speed limit | The newest lever — live since February 2026 |
All of these are levers regulators can change, so always sanity-check the current settings before relying on a number — the dated source list is in the disclaimer below.
How lenders count different kinds of income
The point: not every dollar you earn is counted the same. Lenders “shade” income they see as less reliable — and choosing the right lender for your income type is one of a broker’s biggest levers.
| Income type | Typically counted |
|---|---|
| Base salary / wages (permanent) | 100% |
| Overtime, shift & penalty loadings | 80% standard — 100% for essential-services workers |
| Bonus & commission | 80%, usually 2-year average |
| Casual income | 100% of the annualised amount, once you have 6–12 months’ history |
| Second job | 50% standard, up to 100% at generous lenders |
| Car / fixed allowances | 100% if a condition of employment |
| Government benefits (Family Tax Benefit) | ~100% at accepting lenders, if children stay eligible for the loan term |
| Long-term rent | 75–80% (the 20–25% haircut covers vacancy & costs) |
| Short-stay / Airbnb | ~65%, and only some lenders accept it (12–24 months’ history) |
| Self-employed net profit | 2-year average (or 1 year × 90% at some majors), plus add-backs |
Essential-services workers (nurses, police, fire, ambulance)
Most lenders shade overtime to 80%. But Westpac and Macquarie assess overtime and shift allowances at 100% for essential-services workers — hospital-employed nurses and doctors, police, firefighters, and ambulance officers/paramedics. For a heavy-overtime shift worker that alone can lift borrowing power 10–15% with no change to their finances. Toggle “essential-services worker” above to see it. Documentation must show the overtime is regular and ongoing.
Self-employed & sole traders — the add-backs that help you
Lenders start from your business’s net profit before tax, then usually take a 2-year average (a rising year is capped at 120% of the year before — the “20% rule”). CBA, NAB, ANZ and Westpac now all offer a 1-year option too (most recent year, often at a 10% haircut, LVR ≤ 80%). Then they add back non-cash and one-off costs, which lifts your assessable income: depreciation (100% at most lenders; Macquarie caps at 20% of net profit), interest on business debt this loan is refinancing, super you paid above the 12% compulsory minimum, and genuine one-off expenses your accountant confirms. Company directors can also have their share of retained company profit counted. Because methods differ so much between lenders, the same financials can produce very different numbers — this is where a good broker earns their keep.
Negative gearing — how the tax benefit lifts serviceability
If an investment property runs at a loss (loan interest + costs exceed the rent), that loss reduces your taxable income, so you pay less tax and keep more to service a loan. Rather than a bolt-on “add-back”, this calculator folds the property’s tax position straight into the tax step: your loss lowers taxable income, your tax bill drops, and the saving flows through to net serviceable income automatically — at your actual marginal bracket, not a flat guess. On a $500k loan at 6.4% with $26k rent, the ~$11,200 loss saves roughly $4,400 a year in tax at a 39% marginal rate. A rental profit, by contrast, is taxed and lowers your take-home. Note a 2026 policy shift: from mid-2026 some lenders restrict the negative-gearing benefit to properties under contract before the change or to new builds — check current policy. The Recognise negative gearing? toggle turns the loss offset on or off.
How to increase your borrowing power (what good brokers actually do)
The point: your income and the APRA buffer are mostly fixed — but a surprising amount is within your control. These are legitimate levers, roughly biggest-first.
- Credit-card limits Assessed on the limit, not the balance — each $10k of limit costs ~$45k–$60k of borrowing power. Closing or cutting unused limits is the cheapest quick win.
- Lender choice for your income type Essential-services overtime at 100%, self-employed 1-year policies, an 80%-rent lender vs a 75% one — same finances, more capacity.
- HECS/HELP timing From 2025, CBA ignores it if you’ll clear it within 12 months; NAB if the balance is ≤ $20,000. Paying it down before applying can restore ~$40k–$95k.
- A second applicant (carefully) Combining incomes is the single biggest lever — but couples’ expenses (HEM) rise and both debts pool, so it’s not automatic.
- The 3-month statement window Lenders read ~3 months of statements and use the higher of your declared expenses or the HEM benchmark — trimming only helps if you’re declaring above HEM.
- Small debts & BNPL Personal loans, car loans and Buy-Now-Pay-Later each carry an assessed monthly commitment; clearing them frees up surplus dollar-for-dollar.
LMI waivers by profession — buy sooner with a smaller deposit
This doesn’t change how much you can service, but it changes how much you can buy: some professionals borrow at 90–95% with no Lenders Mortgage Insurance (often thousands saved). Doctors, dentists and medical specialists: up to 95% LVR, no LMI, no minimum income (CBA, Westpac, ANZ, NAB, Macquarie). Nurses & allied health, accountants (CA/CPA), lawyers: typically 90% LVR no LMI, with an income test (~$90k–$100k) and professional-body membership. Teachers, police, firefighters, paramedics: not covered by the big-four medico waivers, but some mutual/specialist lenders (Bank First, BankVic, Granite) offer waivers — and Westpac gives emergency-services workers the 100%-overtime benefit instead.
Levers that sound good but don’t work the way people think
Interest-only doesn’t raise borrowing power — lenders assess it as principal-and-interest over the remaining term after the IO period, so it slightly reduces assessed capacity (it only helps real-world cash flow). A family guarantee lets you borrow up to 100–110% of the price with no LMI, but you still have to service the full loan on your own income — it’s a deposit/LMI lever, not a serviceability one. A 40-year term adds only a few percent of capacity (the buffer dominates), is available at just a handful of lenders, and adds ~$200k+ of lifetime interest on a $600k loan.
Your call
Treat the number above as your planning figure, not your bank calculator’s. Three mechanical facts do most of the work: unused card limits are assessed at ~3.8% of the limit per month, so each $10k of limit costs roughly $45k–$60k of borrowing power even at a zero balance; lenders read about three clean months of statements, so that’s the spending window they’ll see; and if the deposit is the binding limit, deposit — not income — is the lever that moves the answer. Which levers you pull is your call. Shopping the lender policies is a broker’s game; that part is worth handing over.
Policy figures above are drawn from published 2025-26 lender credit guidelines and broker documentation (APRA, Macquarie, Westpac, CBA, NAB). They change often and vary by lender and applicant — general information only, not advice. A licensed mortgage broker can tell you which lender fits your situation.
Frequently asked questions
- How much can I borrow for a home loan in Australia?
- It depends on your household income, your living expenses, your other debts and the interest rate. Lenders work out your monthly surplus (after-tax income minus expenses minus other repayments), then test it at your loan rate plus the APRA 3% buffer. As a very rough guide, many borrowers land somewhere between 4 and 6 times their gross household income, but your own number can be higher or lower. Use the calculator above for an estimate based on your figures.
- What is the APRA 3% serviceability buffer?
- APRA requires lenders to check that you could still repay your loan if interest rates rose. Since October 2021 the buffer has been 3 percentage points, and APRA confirmed it stays at 3% in 2026. So a loan advertised at 6.90% is assessed as if the rate were about 9.90%. The buffer is the single biggest reason your borrowing power is lower than a simple repayment calculator suggests.
- What is HEM and why do lenders use it?
- HEM stands for the Household Expenditure Measure, a benchmark of minimum sensible living costs by household size and income, published by the Melbourne Institute. Lenders use the higher of your declared living expenses or the relevant HEM figure, so understating your spending will not boost your borrowing power below the HEM floor. The HEM amounts shown here are indicative only — each lender uses its own licensed table.
- What is a debt-to-income (DTI) ratio and why does 6 matter?
- DTI is your total debt divided by your gross annual income. From February 2026 APRA limits the share of new loans written at a DTI of 6 or higher, so loans at or above 6x income attract extra scrutiny and many lenders will pull back. A $600,000 loan on $100,000 of income is a DTI of 6.0. Staying under 6 keeps more lenders available to you.
- How are credit cards counted even if I owe nothing?
- Lenders assess your total credit-card limit, not your balance, because you could draw the full limit at any time. The common assumption is a monthly commitment of about 3.8% of your combined limits. So a $10,000 limit is treated as roughly $380 a month of repayments. Reducing or closing unused cards before you apply can noticeably lift your borrowing power.
- Is this calculator the same as a bank approval?
- No. This is a general estimate using simplified rules. Real lenders shade some income types, treat HECS/HELP debt, dependants, casual income and rental income differently, and each has its own policy and HEM table. Use this to set expectations, then confirm with a lender or a licensed mortgage broker before you make an offer.
General information only — an estimate, not financial, tax, credit or legal advice. Figures current as at FY2025-26, reviewed June 2026. Confirm with the ATO / your lender / the relevant state revenue office.
Sources: APRA, “APRA announces update on macroprudential settings” (3% serviceability buffer retained, 2026) — apra.gov.au; APRA, “APRA to limit high debt-to-income home loans” (DTI ≥ 6 limit live from Feb 2026) — apra.gov.au; Australian Taxation Office, “Tax rates — Australian resident” (FY2025-26 brackets) — ato.gov.au; Melbourne Institute / Canstar, “Household Expenditure Measure (HEM) explained” (indicative living-cost benchmark, credit-card assessment ~3.8%/month of limit) — canstar.com.au.