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Understand your maximum borrowing power before you start property hunting. This estimate accounts for income, expenses, debts and APRA's mandatory 3% serviceability buffer.
Knowing your borrowing capacity gives you confidence when house hunting. This calculator estimates the maximum loan amount a lender may approve based on your financial situation and APRA's serviceability requirements.
Borrowing capacity refers to the maximum amount a lender is willing to lend you for a home loan. It's determined by your income, existing debts, living expenses, and the lender's assessment criteria. Understanding this figure before you start looking at properties helps you set realistic expectations and negotiate with confidence.
The Australian Prudential Regulation Authority (APRA) requires all lenders to assess your ability to repay at an interest rate at least 3 percentage points above the actual loan rate. This "buffer" ensures borrowers can handle potential rate increases. For example, if the actual rate is 6.14%, the lender must assess whether you can afford repayments at 9.14%. Our calculator applies this buffer automatically.
The Household Expenditure Measure (HEM) is a benchmark lenders use to estimate your living expenses. If the expenses you declare are lower than the HEM benchmark for your household size and income bracket, the lender will typically use the higher HEM figure instead. This can reduce your borrowing capacity below what you might expect.
There are several strategies to improve your borrowing power: reducing existing debts (credit cards, personal loans, car loans), increasing your deposit to lower the loan-to-value ratio, extending the loan term, adding a co-borrower's income, and choosing lenders with more favourable assessment criteria. For personalised strategies, speak with our specialists.
Once you know your borrowing power, use our Mortgage Repayment Calculator to see what your repayments would look like, and our NSW Stamp Duty Calculator to budget for upfront purchase costs. Together, these tools give you a complete picture of what you can afford.