Borrowing Power Calculator

This calculator estimates how much you may be able to borrow using a simple income servicing model. It combines your annual income and any partner income into a gross monthly figure, then applies a servicing ratio to find the maximum amount that could go toward loan repayments each month.

From that amount it subtracts your monthly debt repayments, an allowance for your credit card limit, and a buffer for living expenses when they are high relative to your income. The remaining repayment is converted into a loan using your interest rate and loan term, and your deposit is added to estimate a total property budget.

Borrowing power, sometimes called borrowing capacity, estimates how much a lender may allow you to borrow based on your income, expenses and financial commitments. Rather than valuing a particular property, it reflects how large a loan your repayments can realistically service over the loan term.

Understanding your borrowing power early helps you focus on a realistic price range, avoid disappointment, and approach lenders with a clearer picture of what you can afford to repay.

Lenders start with your verified income and subtract your existing debts such as car loans, personal loans and buy-now-pay-later commitments. They assess credit card limits on the full limit rather than the balance, and apply detailed living expense benchmarks that account for dependants.

They also review your credit history, value a larger deposit because it reduces their risk, and apply an interest rate buffer to test whether you could still afford repayments if rates rose by several percent. All of these feed into the final borrowing capacity.

Consider a household with the following figures:

• Annual income: $120,000
• Partner income: $0
• Monthly living expenses: $3,500
• Monthly debts: $500
• Credit card limit: $10,000
• Deposit: $100,000
• Interest rate: 6.5%
• Loan term: 30 years

Gross monthly income is about $10,000. Applying the standard 30% servicing ratio gives roughly $3,000 a month toward a loan. After subtracting $500 of debts and around $300 for the credit card limit (and noting expenses sit near the income-based buffer), the remaining repayment is fed into the mortgage formula at 6.5% over 30 years to estimate borrowing power. Adding the $100,000 deposit then gives an estimated property budget. The exact figures shift with your inputs and chosen scenario, which is why the calculator shows a range rather than a single promised number.

Borrowing power estimates how much you may be able to borrow from a lender, based on your income and commitments. Home affordability estimates the property price that is comfortable for your budget and repayment risk.

The two are closely linked but answer different questions. A lender might be willing to lend you a large amount, yet a more cautious affordability view may suggest a lower, more comfortable price. Using our borrowing power and home affordability calculators together gives a fuller picture before you start house hunting.

• Reduce existing debts so more of your income is available to service a loan.
• Lower your credit card limits or close unused cards, since limits count against you.
• Increase your income through a raise, extra work or adding a second applicant.
• Reduce discretionary expenses to improve your assessed living costs.
• Increase your deposit to lift your total property budget and reduce risk.
• Compare interest rates between lenders, since a lower rate supports a larger loan.
• Improve your credit score to access better rates and smoother approval.