Find out how much you may be able to borrow for a home loan based on your income, debts, deposit and interest rate.
Rates as of Q2 2025 (example)
This calculator estimates the maximum home loan amount you may be able to borrow, based on your income, existing debts, deposit, interest rate, and a debt-to-income (DTI) ratio threshold — and translates this into the maximum property price you could afford given your deposit. It gives a general indication of your borrowing capacity before you approach a lender, though actual approval depends on the lender's own serviceability assessment.
This calculator derives the maximum monthly loan repayment from the income-based DTI limit, then reverse-calculates the loan amount using the standard amortisation formula. The maximum property price is the maximum loan plus your deposit.
Formula: Max Monthly Repayment = (Annual Income × DTI%) ÷ 12 − Monthly Existing Debts. Max Loan = Max Monthly Repayment × [(1 + Monthly Rate)Months − 1] ÷ [Monthly Rate × (1 + Monthly Rate)Months]. Max Property = Max Loan + Deposit.
Example: A$95,000 annual income, A$500/month existing debts, A$80,000 deposit, 6% rate (example rate), 30-year term, 35% DTI limit: Max monthly repayment = A$95,000 × 35% ÷ 12 − A$500 = A$2,270.83. Maximum loan ≈ A$378,756. Maximum property price ≈ A$458,756 (loan + deposit). (Note: this is an estimate only — actual lender assessments differ.)
In Australia, home loan borrowing capacity is assessed by lenders using their own serviceability criteria, which are more complex than a simple DTI ratio. APRA (the Australian Prudential Regulation Authority) requires authorised deposit-taking institutions (ADIs — banks and building societies) to add a serviceability buffer of at least 3 percentage points above the loan's interest rate when assessing a borrower's ability to repay — meaning if you are applying for a loan at 6%, the lender tests your repayment capacity at approximately 9%. This buffer is designed to ensure borrowers can still service their loan if interest rates rise significantly. As a result, your borrowing capacity from an actual lender will typically be lower than what this calculator shows using the actual rate — the lender is effectively using the assessment rate (rate + 3% buffer) in their calculation, even though your actual repayments will be at the contract rate. The APRA serviceability buffer requirement was increased from 2.5% to 3% in October 2021 in response to rising household debt levels. In addition to the serviceability buffer, lenders assess each borrower's actual expenses through the Household Expenditure Measure (HEM) or their stated living expenses, and apply credit policies that may further restrict lending — particularly for borrowers with irregular income, high levels of existing debt, or certain property types (e.g., small apartments, regional properties).
This calculator uses a simple debt-to-income ratio approach to estimate borrowing capacity. Actual lenders apply the APRA serviceability buffer (currently 3% above the loan rate), use a Household Expenditure Measure (HEM) to estimate living costs, and apply their own credit policies around income types, employment status, and existing liabilities. The actual approved loan amount can be higher or lower than this estimate depending on these factors — to get an accurate figure, speak with a mortgage broker or use a lender's own calculator.
APRA requires Australian ADI lenders (banks, building societies, credit unions) to assess borrowers' ability to repay at least 3 percentage points above the loan's interest rate, to ensure borrowers can still meet repayments if rates rise. This means a borrower applying for a loan at 6% is tested at 9%. This significantly reduces borrowing capacity compared to what you would calculate using just the actual rate — a common reason applicants are surprised by the loan amount they are approved for.
Yes — Australian lenders include compulsory HECS-HELP repayments in their serviceability assessments, treating them as an ongoing income commitment (similar to a regular loan repayment). Even though HECS-HELP has no interest rate, the compulsory repayment based on your income reduces your effective disposable income for lending purposes. Include your estimated annual HECS-HELP repayment (from our HECS-HELP Calculator) ÷ 12 in the monthly debts field for a more accurate borrowing power estimate.
Your deposit directly determines the loan-to-value ratio (LVR) of your loan (Loan ÷ Property Value × 100%). An LVR above 80% typically triggers lenders mortgage insurance (LMI), which adds to your upfront cost. Some lenders also cap the amount they will lend at higher LVRs, or apply higher interest rates — both of which reduce effective borrowing capacity. A larger deposit (below 80% LVR) generally gives access to a wider range of products at better rates, increasing effective borrowing power.
Yes — most Australian lenders include 3% of your total credit card limit per month in their serviceability assessment as a "notional" repayment, regardless of whether you carry a balance. This is often a significant factor — for example, A\$20,000 in credit card limits adds A\$600/month to your assessed monthly commitments. If you have unused credit cards you do not plan to keep, closing them before applying can improve your assessed borrowing capacity.
Borrowing power is a general estimate of how much you might be able to borrow, based on financial metrics — it is not a commitment by any lender. Pre-approval (or conditional approval) is a formal assessment by a specific lender confirming that, subject to final verification and a satisfactory property valuation, they would be willing to lend you up to a specified amount. Pre-approval typically involves a credit check and a formal application, and is usually valid for 90 days — it is the appropriate step before making an offer on a property.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice or a credit assessment. This calculator uses a simplified debt-to-income ratio model and does not replicate any specific lender's serviceability assessment, which will include the APRA-mandated 3% serviceability buffer, HEM-based living expense assessments, and lender-specific credit policies. Actual borrowing capacity depends on your individual financial circumstances and the specific lender approached. Consult a licensed mortgage broker or financial adviser for a formal assessment.