Australian Borrowing Power Calculator

Find out how much you can borrow based on the APRA 3% serviceability buffer. Includes HEM benchmark, income shading by type, and lender comparison. All figures in AUD.

$ AUD
$ AUD
$
$
% p.a.
Maximum Borrowing Power
A$341,858
Assessed at 9.2% (contract 6.2% + APRA 3.0% buffer)
Actual Monthly Repayment
A$2,094/mo
Assessment Payment
A$2,800/mo
Total Household Income
A$120,000/yr
Expenses Used
A$3,500/mo (declared)
Available for Repayment
A$2,800/mo
Buffer Reduces Borrowing By
A$115,308 (25%)

APRA requires all authorised deposit-taking institutions (banks, credit unions) to assess your mortgage at your contract rate plus a minimum 3% serviceability buffer. This protects borrowers from rate rises.

Without Buffer (contract rate only)
A$457,166
Assessed at 6.2% — theoretical maximum
With APRA Buffer (reality)
A$341,858
Assessed at 9.2% — what lenders use
Borrowing Capacity Reduction
A$115,308
Impact of the 3% APRA buffer
Reduction Percentage
25.2%
Approximately 20-25% reduction from buffer
Assessment Rate
9.2%
Your 6.2% rate + 3% APRA buffer
Why the buffer exists: Since November 2021, APRA has set the minimum serviceability buffer at 3%. This means if rates rise by 3%, you should still be able to afford your repayments. Before 2021 the buffer was 2.5%. The buffer is applied by all APRA-regulated lenders — it cannot be negotiated away.

Borrowing power varies by up to A$100,000 between lenders due to different HEM tables and expense calculation methods.

Big 4 Banks (CBA, ANZ, NAB, Westpac)
A$341,858
Most conservative HEM tables. Use living expenses from bank statements. Strict income verification. Some use lower HEM versions.
Non-bank Lenders (Macquarie, ING, Athena)
A$369,206
Often use slightly more generous expense benchmarks. Some use lower-tier HEM. Can result in 5-10% more borrowing power for the same application.
Specialist Lenders (Bluestone, Pepper Money)
A$393,136
Accept non-standard income, credit impairments, self-employed applicants with less documentation. Higher rates offset by greater accessibility.

Estimates only. Actual approvals depend on your full financial profile. Speak with a mortgage broker to compare live options.

How to Use This Australian Borrowing Power Calculator

Enter your gross annual income (before tax), your monthly living expenses, any existing debt repayments, and your current interest rate. The calculator applies APRA's mandatory 3% serviceability buffer and the HEM benchmark to estimate your maximum borrowing capacity.

What Income Types Lenders Accept

Credit card limits reduce your borrowing power even if you pay balances in full each month — lenders assess 3% of your total credit limit as a monthly obligation.

The Formula

Serviceability Rate = Contract Rate + 3% (APRA buffer)

Monthly Capacity = (Gross Income × 0.28) − Existing Debts − HEM Benchmark

Maximum Loan = Monthly Capacity ÷ Monthly Payment per $1 at Serviceability Rate

Credit Card Load = Total Credit Limit × 3% per month

Example: $150,000 income, 6.2% rate → serviceability rate = 9.2%
Approx. borrowing power: $650,000–$700,000 (no other debts)

The Household Expenditure Measure (HEM) is used when your declared expenses are lower than the benchmark for your household type and income level. Lenders use whichever is higher — your declared expenses or HEM.

Example

James and Sophie Applying for a Home Loan in Sydney

James earns $95,000 and Sophie earns $80,000 gross. They have a $15,000 credit card limit and a $450/month car loan. Current rates are 6.20%.

Combined Gross Income$175,000
Contract Rate6.20%
APRA Serviceability Rate9.20%
Credit Card Monthly Load (3%)$450/mo
Car Loan Repayment$450/mo
HEM Benchmark (couple, Sydney)~$4,200/mo
Estimated Borrowing Power~$860,000
Borrowing Power if Cards Closed~$920,000

Frequently Asked Questions

APRA requires all regulated lenders to assess your mortgage at your contract rate plus a minimum 3% serviceability buffer. For example, if your loan rate is 6.2%, the lender tests your ability to repay at 9.2%. This buffer reduces maximum borrowing capacity by approximately 20 to 25% compared to qualifying at the contract rate alone. APRA introduced the 3% buffer in October 2021, raising it from 2.5%.
The Household Expenditure Measure (HEM) is a benchmark developed by the Melbourne Institute that estimates minimum living expenses by household size, income, and location. Australian lenders use the higher of your declared monthly expenses or the HEM benchmark to ensure borrowers are not underestimating their cost of living. If your declared expenses fall below HEM, the lender substitutes the HEM figure, which reduces your borrowing power.
Australian lenders assess 3% of your total credit card limit as a monthly repayment commitment, regardless of whether you carry a balance. A $20,000 credit card limit equates to a $600 per month obligation in the lender's calculation. This can reduce your borrowing capacity by $80,000 to $120,000. Closing or reducing unused credit limits before applying for a home loan is one of the most effective ways to increase your borrowing power.
Yes, a joint application combines both incomes and typically increases borrowing capacity significantly. However, lenders also combine household expenses and any joint debts. The net benefit depends on the partner's income relative to any additional expenses or liabilities they bring. For most couples where both partners work, the joint borrowing power is substantially higher than either individual application alone.
Self-employed income is typically assessed as the two-year average from your tax returns (Notice of Assessment). Lenders use the lower of the two years or the two-year average. Some lenders apply a further discount of 5 to 10% for income variability. You need at least two years of ABN registration and tax returns for most standard loans. Low-doc loans are available for those who cannot provide full financials but carry higher interest rates and stricter LVR limits.

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