Borrowing Power Calculator — How Much Will a Lender Lend You?
Lenders do not ask what you earn — they ask what is left.
Your monthly position
Advanced options — assessment buffer & deposit
The assessment buffer and your deposit are already included in the result with their default values — open Advanced options to change them.
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Your borrowing power
Your surplus, as a waterfall
Your take-home pay, block by block: living costs, existing repayments and the card assessment come off the top, and whatever survives is the surplus a lender converts into a loan.
- Lenders test what is left, not what you earn: take-home pay minus living expenses, existing repayments and 3.00% a month of your total credit card limits.
- Your surplus is stress-tested at the loan rate plus a buffer — 2.50% by default, so you are tested at 8.50%, not the 6.00% you would actually pay — before it becomes a maximum loan.
- Closing unused card limits raises your power without repaying a cent: cutting $10,000 of limits to $0 lifts the example household’s loan from $422,674.34 to $461,690.43.
Lenders do not ask what you earn — they ask what is left. This calculator works the way a lender’s serviceability test does: take-home pay minus living costs, existing repayments and a charge against your credit card limits, then converts that monthly surplus into a maximum loan at a buffered assessment rate.
What borrowing power means
People arrive here looking for a borrowing power calculator, a home loan borrowing power calculator, a home loan borrowing calculator, a borrowing calculator or a borrowing capacity calculator — five names for one question: how much will a lender actually lend me? Borrowing power is the answer a lender’s serviceability test produces: the largest loan your income can carry once living expenses, existing repayments and a charge against your credit card limits have been subtracted, with the repayment tested at a rate higher than the one you would pay. You calculate borrowing power before you apply precisely because the lender’s version of your budget — not yours — decides the ceiling.
Two things follow. First, borrowing power is an estimate from the lender’s side of the desk, not a promise: the same salary produces very different answers for a debt-free single applicant and for a couple with two car loans and $15,000 of card limits. Second, it is not pre-approval — a lender’s conditional decision after checking documents. Borrowing capacity is the raw number that decision starts from, before the property, your credit history and final verification have their say. Reading this page from the US? The framing there runs through debt-to-income ratios instead — our Mortgage Calculator covers that side.
Keep exploring
Three companion tools for the buying decision.
How it works
Three steps from pay packet to maximum loan.
Find the surplus
Take-home pay minus living expenses, existing repayments and 3.00% per month of your total credit card limits. No surplus, no loan.
Stress-test the rate
The lender adds a buffer — 2.50% by default — to the loan rate, so you are tested at 8.50%, not the 6.00% you would actually pay.
Convert surplus to a loan
The annuity factor turns that monthly surplus, at the assessment rate over the term, into the largest loan it can service. Add your deposit for the maximum price.
The math behind borrowing power
Serviceability is a two-part test. First, the monthly surplus: surplus = take-home pay − living expenses − existing repayments − 3.00% × total card limits. The card charge surprises people — lenders assume your cards could be drawn, so the limit itself is treated as a potential monthly cost of 3.00% of the limit. Second, the surplus is converted into a loan using the present-value annuity factor at the assessment rate (loan rate + buffer): with i = assessment rate ÷ 12 and n = term in months, max loan = surplus × [1 − (1 + i)−n] ÷ i. The maximum purchase price is the max loan plus your deposit, and the repayment shown alongside is computed at the actual loan rate, not the assessment rate.
Worked examples:
| Household | Calculation | Result |
|---|---|---|
| $6,800 take-home · $2,800 expenses · $450 repayments · $10,000 card limits · 6.00% rate · 30 yrs · $60,000 deposit | Card assessment $300.00 · surplus $3,250.00 · assessment rate 8.50% · factor 130.0536 · $3,250.00 × 130.0536 · repayment at the real 6.00% rate | Loan $422,674.34 · price $482,674.34 · repayment $2,534.15/mo |
| Same household, card limits closed down to $0 | Card assessment $0.00 · surplus rises to $3,550.00 · same 8.50% assessment rate and 130.0536 factor · $3,550.00 × 130.0536 | Loan $461,690.43 |
Read the second row again: closing $10,000 of unused card limits — without repaying a single dollar of debt, because there is none — lifts borrowing power by about $39,016. That is why brokers tell applicants to cut card limits before they apply, not after.
How much can I borrow — the serviceability walk-through
Ask how much can i borrow — as how much can i borrow home loan, how much can i borrow mortgage, or into any how much can i borrow calculator — and no salary multiple answers it. There is a sequence instead. Here it is, run on one household: a couple buying together.
| Step | What the lender does | This household |
|---|---|---|
| 1. Income, after haircuts | Base pay counts in full. Variable income is shaded — overtime, bonuses and commissions are commonly counted at 80% or less, and only with a track record. | Base take-home pay of $8,400 a month counts in full. Regular overtime averaging $1,000 a month is shaded to 80% — $800 counted. Assessed income: $9,200 a month. Counted in full instead, the same pay would support $652,090.68 — the haircut alone costs $101,690.55 of loan. |
| 2. Expenses, floor-checked | Your declared living expenses are compared with a benchmark floor for a household of your size and income (HEM-style tables). If the floor is higher, the floor is used. | They declare $3,600 a month; the floor applied is $3,900. That $300 difference costs $38,133.96 of loan against the declared figure. |
| 3. Existing commitments | Every current repayment comes off, and card limits are charged as if drawn. | Car loan repayment $520 a month. Card limits of $15,000 assessed at 3.00% = $450.00 a month. |
| 4. The surplus | Income minus expenses minus commitments — the only money the new loan can be tested against. | $9,200 − $3,900 − $520 − $450.00 = $4,330.00 a month. |
| 5. The buffered test | The surplus is converted to a loan at the assessment rate — loan rate plus buffer — over the term. | 6.25% + 2.50% buffer = 8.75%; factor 127.1132 over 30 years. Maximum loan $550,400.12, with an actual repayment of $3,388.91 a month at the real 6.25% rate. Add their $80,000 deposit and the maximum purchase price is $630,400.12. |
Change any line and the answer moves. A salary-only table cannot know about the car loan, the card limits or the expense floor, so it cannot know your number — run your own household through the calculator at the top of this page and the same five steps happen to your figures.
Go deeper
The stress test, and the parts of a real assessment this page cannot see.
The buffer exists because a 30-year loan outlives any rate promise:
- Rates will move. If you can only just afford the loan at today’s 6.00%, the first rise puts you under water. Testing at 8.50% proves the surplus survives a plausible rate cycle.
- The buffer cuts the loan, not the repayment. At the assessment rate, $3,250 a month services $422,674.34. At the real 6.00% the same surplus would service roughly $542,000 — the stress test is what stands between those two numbers.
- Card limits are assessed whether you use them or not, at 3.00% of the limit per month in this model. A $10,000 limit costs you $300 a month of surplus — and about $39,016 of borrowing power — even at a $0 balance.
- The term matters too: a shorter term shrinks the annuity factor, so the same surplus at the same rate supports a smaller loan.
This calculator reproduces the core serviceability sum. A real lender then adjusts it in ways that mostly point one way — down:
- Income shading: many lenders count only a share of variable income — overtime, bonuses, commissions and rental income are often shaded to 80% or less, and new or casual employment may be discounted entirely.
- Living-expense floors: if the expenses you declare look implausibly low for your household and income, lenders substitute a benchmark floor (HEM-style tables) instead of your number. Understating expenses here flatters the estimate; it would not survive a real application.
- Existing loans get buffers too: repayments on your other debts are often assessed at a higher rate than you currently pay, and some commitments are loaded further.
- Deposit is not the whole cash story: purchase costs — stamp duty or transfer taxes, legal fees, lender fees and moving costs — come out of your cash on top of the deposit, unless you borrow them as part of a higher loan, which itself needs more surplus.
Treat the result as a well-built estimate of your ceiling, not an approval, a pre-approval or a quote.
The buffer rate: tested above the rate you will pay
The buffer exists because a 30-year loan outlives any rate promise. Testing your surplus at the loan rate plus a margin proves the repayment survives rate rises, a pay cut or an expense shock — on paper, before the bank’s money is at risk. You never pay the assessment rate; it only decides how large a loan your surplus may support.
How large the buffer is depends on the lender and the market — a practice range, not a universal constant. In Australia, APRA has expected banks since October 2021 to test repayments at at least 3.0 percentage points above the loan product rate, up from the 2.5 points commonly used before (APRA, 2021); some lenders add a floor rate as well, and non-bank lenders often test lower. The calculator’s 2.50% default buffer is yours to change — set it to the standard your lender works to.
On the walk-through household (surplus $4,330.00, 6.25% loan rate, 30 years), the buffer alone moves the answer by tens of thousands: tested with a 2.00% buffer (8.25%) the maximum loan is $576,359.97; at 2.50% (8.75%) it is $550,400.12; at 3.00% (9.25%) it falls to $526,331.51. APRA’s own estimate matches the shape of that arithmetic: a half-point rise in the buffer cuts a typical borrower’s maximum capacity by roughly 5% (APRA, 2021).
Debts and credit-card limits
Existing debts reduce borrowing power in two different ways. Repayments on loans you already hold — car, personal, student — come straight off your surplus, dollar for dollar, and some lenders assess those repayments at a buffered rate of their own. Credit cards work differently: the balance is almost irrelevant. Because a limit can be drawn in full the day after settlement, lenders charge the limit itself as a monthly commitment — 3.00% of the total limits per month in this calculator, with the exact percentage varying by lender.
That is what makes closing a card such a precise lever. At the default test on this page, every $1,000 of card limit costs $30 a month of surplus, which is $3,901.61 of maximum loan. The walk-through couple’s $15,000 of limits costs them $58,524.14 of capacity even though their balances are paid off monthly. Closing one unused $5,000-limit card before applying returns $19,508.05 of borrowing power — without repaying a cent, because there was nothing to repay. Store cards and buy-now-pay-later limits are charged the same way.
What raises and lowers your number
Raisers. A higher assessed income — a pay rise, or a partner’s income in a joint application. Fewer commitments: clearing a small loan removes its whole repayment from the test, worth more than the same money off a card balance. Lower card limits, as the previous section priced. A longer term spreads the loan thinner (at the cost of more interest overall), and living expenses you can document — bank statements beat estimates, provided they stay above the lender’s floor.
Lowerers. Dependants: lenders raise the living-expense floor for each dependant, so children reduce capacity through the expense line even though they add no debt. Student-loan obligations of the HECS-HELP kind: repayments are collected through tax and scale with income, shrinking take-home pay before the test starts. Shaded income — overtime, bonuses, commissions, recent self-employment. And a joint application is not automatically twice a single one: both incomes count, but so do both partners’ debts, card limits and the shared household floor.
None of these factors has a fixed multiplier, which is why honest answers come from running the serviceability sum itself — the calculator above — rather than from rules of thumb.
Deposits and guarantors: what changes your number
The loan is the surplus converted; the deposit decides the price that loan can buy.
Your borrowing power is the loan your monthly surplus supports at a buffered assessment rate. Your deposit decides what that loan can buy, because purchase price equals loan plus deposit, before purchase costs. A bigger deposit therefore buys a higher price on the same loan, and it lowers the loan relative to the price, which is the direction lenders prefer. The table below prices that relationship on an illustrative $550,000 loan: a 5% deposit supports a $578,947.37 price, a 10% deposit supports $611,111.11, and a 20% deposit supports $687,500.00 — before transfer taxes, legal and lender fees, which come out of your cash on top. A guarantor changes the deposit side rather than the income side: a family member guarantees part of the loan, usually with their own property as security, so the lender will accept a smaller cash deposit. The lender still tests whether you can service the loan yourself, and the guarantee is usually limited to a stated portion — for example, a guarantee covering a defined dollar amount rather than the whole loan — so the guarantor’s exposure has a boundary. Being a guarantor is not free for the guarantor either: lenders count the contingent liability when the guarantor later borrows, and if the borrower stops paying, the lender can call on the guarantee and the security behind it. Anyone considering either side of a guarantee should take independent legal and financial advice before signing.
| Deposit share of price | Purchase price | Deposit needed | Loan |
|---|---|---|---|
| 5% | $578,947.37 | $28,947.37 | $550,000.00 |
| 10% | $611,111.11 | $61,111.11 | $550,000.00 |
| 20% | $687,500.00 | $137,500.00 | $550,000.00 |
Frequently asked questions
Quick answers about how much a lender will lend.
How is borrowing power calculated?
A lender subtracts living expenses, existing debt repayments and an assessment on your credit card limits (3.00% of the total limits per month here) from your take-home pay. The surplus left over is converted into the largest loan it can service at a buffered assessment rate over the term, using the annuity factor. Add your deposit to that loan for a maximum purchase price — $422,674.34 of loan and $482,674.34 of price on this page’s default numbers.
How much can I borrow on my salary?
There is no fixed multiple of salary, because the test runs on what is left of your salary, not the salary itself. The worked household on this page has assessed income of $9,200 a month and reaches a maximum loan of $550,400.12 — after an expense floor, a car repayment and card-limit charges. Two people on the same salary with different debts and limits get different answers, which is why salary-only tables mislead.
Do credit cards affect how much I can borrow?
Yes — through the limit, not the balance. Lenders assess card limits as if they could be drawn in full, here at 3.00% of the limit per month. Every $1,000 of limit therefore costs $30 a month of surplus, or $3,901.61 of maximum loan at the default settings, even if you pay the card off in full every month.
What is an assessment rate buffer?
It is the margin added to your loan rate when a lender tests whether you could still afford the loan if rates rose. In Australia, APRA has expected banks since October 2021 to test at at least 3.0 percentage points above the product rate (APRA, 2021); buffers elsewhere commonly sit in a 2–3 point range and vary by lender. You never pay the assessment rate — it only limits the size of the loan your surplus can support.
How can I increase my borrowing power?
Grow the monthly surplus. Close or reduce credit card limits (worth $19,508.05 of loan per $5,000 of limits removed, at the default test), clear small debts to remove their repayments entirely, keep documented living expenses realistic, and increase assessed income where you can. A bigger deposit raises your maximum purchase price, but not the loan itself.
Does having dependants reduce borrowing capacity?
Yes, indirectly. Dependants are not a debt, but lenders raise the living-expense floor they apply for each dependant, and a higher floor means a smaller surplus and a smaller loan. The effect arrives through the expense line of the assessment, even for households whose actual spending on their children is modest.
Is borrowing power the same as pre-approval?
No. Borrowing power is an estimated capacity — the output of the serviceability sum on the numbers you enter. A pre-approval is a lender’s conditional decision after checking your documents, credit history and, later, the specific property. It can come in below your calculated borrowing power, and it can still lapse if your circumstances or the property do not check out.
How do lenders treat overtime and bonus income?
As variable income, and cautiously. Many lenders count only a share of it — 80% is a common shading — and usually want to see a track record of receiving it. In the worked example on this page, shading $1,000 a month of overtime to $800 reduces the maximum loan by $101,690.55 compared with counting it in full, which is why a recent change to regular hours can move your number more than a pay rise does.
Should I close my credit card before applying for a loan?
If you do not need the limit, reducing or closing it before you apply is the standard move, because the assessment charges the limit whether or not you use it. Closing a $5,000-limit card lifts the maximum loan by $19,508.05 at this page’s default test. Keep at least the card you actually use, and make the change before applying — limits cut afterwards do not help an assessment already made.
How much deposit do I need as well?
Your maximum purchase price is your maximum loan plus your deposit. Lenders grow cautious as the loan passes 80% of the property’s value, so a 20% deposit is the comfortable benchmark: the worked household’s $550,400.12 loan at 80% supports a price of $688,000.15, needing $137,600.03 of deposit. Purchase costs — transfer taxes, legal and lender fees — come out of your cash on top of that.
Can a guarantor increase my borrowing power?
A guarantor can increase the price you can buy, usually by supporting the deposit side rather than the income side: their security lets the lender accept a smaller cash deposit. The lender still tests whether your own income services the loan, so a guarantor does not turn an unaffordable loan affordable. The guarantee should be limited to a stated portion where possible, and both sides should take independent advice before signing.
Does being a guarantor affect my own borrowing power?
Yes. When you later apply to borrow, a lender counts the guaranteed loan as a contingent liability — a debt you may have to pay — and it reduces the surplus available for your own loan. The effect lasts until the guarantee is released, which usually requires the original loan to fall to a level the lender accepts without support, or to be refinanced away from the guarantee.
What happens if the borrower stops paying?
The lender will first pursue the borrower, then call on the guarantee: the guarantor may have to make the payments or repay the guaranteed portion, and the property securing the guarantee can be at risk. That is why guarantees should be limited in amount, documented clearly, and entered into only with independent legal and financial advice — the family relationship does not change the lender’s rights.
Related guides
Three guides that work the numbers in full — the home loan calculation on one household, the same test applied to personal, car and investment borrowing, and how guarantors and deposits change the answer.
Related calculators
More tools for buying and borrowing.
Disclaimer
This calculator is for information only and is not financial advice, a loan approval, a pre-approval or a quote. It models one common serviceability method: a monthly surplus tested at a buffered rate. Real lenders also shade some income types, floor living expenses against benchmark tables, assess existing debts with their own loadings, and verify documents and credit history, so their answer can be materially lower — or occasionally higher. Rates, buffers and assessment percentages vary by lender and change over time. Speak to a lender or a licensed mortgage broker about your own circumstances before committing to a purchase.