A Smarter Home Loan Borrowing Power Calculator

What actually determines home loan borrowing power?

Borrowing power is not a simple multiple of salary. A lender considers income it is willing to rely upon, existing debt commitments, living expenses and the new mortgage repayment under a stressed assessment interest rate. This calculator shows the moving pieces separately. It deliberately avoids promising a bank-specific approval amount.

Why can two lenders assess the same borrower differently?

Variable income can be discounted, card-limit commitments can be assessed at different monthly rates, and lenders may apply an expenditure floor above your declared household spending. Loan terms, assessment-rate floors and existing facilities can also produce different outcomes. Change one assumption at a time to see which actually drives the result.

Why an unused credit card can shrink borrowing power

Imagine you clear your card every month but still have a $20,000 limit. Under an illustrative commitment assessment of 3% per month, the lender may reserve $600 of monthly serviceability for that facility. It is not the interest you actually pay. It is an assessed capacity allowance. Reducing the credit limit from $20,000 to $5,000 reduces that assumed commitment to $150 per month, freeing $450 of monthly assessment capacity. Whether an actual lender accepts an account closure or limit reduction depends on its evidence and timing.

Should you repay HELP before applying for a mortgage?

This is a two-sided decision. Clearing HELP may increase monthly borrowing capacity, but it also uses cash that could otherwise support your deposit, duty and buying costs. The advanced HELP field shows the impact of removing an assumed monthly repayment; it does not calculate HELP liability or your deposit-funded purchase capacity. Use the sensitivity result alongside your deposit and settlement cash before acting.

How are overtime, bonuses and rental income treated?

Income you regularly receive isn't necessarily income a lender assesses at 100%. APRA guidance discusses prudent discounts on non-salary income and expected rent. The advanced section lets you adjust those percentages. This is particularly important for variable-income and investment borrowers, where a headline annual income can conceal a much lower assessed amount.

What happens when rates rise before approval?

A higher assessment rate increases the stressed repayment on the proposed debt and can reduce maximum borrowing capacity. You can change the indicative rate or assessment buffer to understand this effect. A preapproval figure is therefore not an unchanging entitlement when circumstances, rates or assessed commitments move.

How the borrowing-power estimate is calculated

We begin with monthly after-tax employment income, add the selected portions of variable income and rent, then deduct the greater of your declared living costs and your entered expense floor. Existing loans, credit-card limits, HELP contributions, assessed existing mortgage obligations and an optional monthly reserve are also deducted. The remaining monthly amount is converted into a maximum principal-and-interest loan using the selected term and a stressed rate.

The assessment rate is the higher of the nominated loan rate plus buffer, or the chosen floor. The default buffer is 3 percentage points, consistent with APRA's current minimum for regulated banks; individual lender practices can be more restrictive. The result is a serviceability-only sensitivity estimate. Deposit, LVR, valuation, product eligibility, tax/HELP calculations, income verification and lender-specific benchmarks are not modelled.

Frequently asked borrowing-power questions

Does cancelling a credit card increase borrowing power?

It may, because lenders can assess the total limit even when the account carries no balance. The calculator quantifies the illustrative effect under your selected card-limit commitment factor.

Does a car loan affect how much I can borrow?

Yes. Its monthly commitment reduces assessed surplus. Add your car and personal loan commitments to other monthly loans; see how existing car finance affects borrowing capacity.

What if I have a HELP debt?

Enter the monthly repayment you expect for HELP. The comparison shows the serviceability impact of removing it, but not the cash cost of clearing the balance.

Can I include bonuses, commissions and overtime?

Use Advanced settings to enter the monthly amount and test a lender-assessed income discount. For uncertain earnings a larger discount can be more useful for stress testing.

Does home equity guarantee I can borrow more?

No. Security/equity is different from the capacity to repay additional debt. Both matter in an actual borrowing decision.

Why is this number different from a bank calculator?

Banks have their own assessed-income rules, living-expense benchmarks, treatment of debts, buffers, floors and product policies. This tool explains sensitivities rather than pretending to replicate a proprietary lending engine.

Keep exploring the borrowing decision

Complete your mortgage picture: deposit and purchase costs, stamp duty and first-home relief, repayment schedules and refinance break-even.

Research and methodology sources

Borrower questions: credit-card limit, closing facilities, HELP repayment versus deposit and preapproval changes. Source method: APRA APG 223 Residential Mortgage Lending; current buffer: APRA May 2026 decision. More detailed formulas and limitations are provided in the calculator's methodological explanation above.