Last Updated: 9th May, 2024

‘How Much Can I Borrow’ Calculator

Disclaimer: The ‘How much can I borrow?’ calculator takes your income and expenditure and provides an accurate indication of how much you can afford to borrow.It combines the exact method used by the serviceability calculators of three banks to find out whether you’d be eligible for a home loan.

We Have More Calculators To Help You With Your Situation.

How Do I Use The ‘How Much Can I Borrow?’ Calculator?

The calculator can be completed in three easy steps:
  • Input your household details.
  • Input your income.
  • Input your expenses and how much you would like to borrow. Commitments would include any current home loans you have, credit cards, personal loans, car loans and similar obligations.
Once you have entered all your other details, you can press ‘VIEW RESULTS’. The calculator will show the maximum amount you can borrow. If you enter your email in the field requested and press ‘SEND’, the calculator will email you a copy of the results. If you’re unsure of what to enter in the calculator, simply click on the question mark (?) next to the description for further details.

Major Elements Of The Calculator

To make it even easier for you to use and understand our calculator, here is more information about some of the details you must enter to see your borrowing power.
Most lenders accept up to two applicants for a mortgage. In the case of two applicants, one is classified as the primary applicant and the other is the co-applicant; the primary applicant is preferably the higher income earner. While assessing borrowing power, the lender will consider both applicants’ incomes, expenses and liabilities. In most cases, both applicants must be employed and earn an income to qualify for a home loan. While having two incomes is advantageous, on a joint application the combined expenses and liabilities the lender considers will be higher, too. Before deciding whether to apply jointly or on your own, be sure to see which method works out the best for your borrowing power.
If you have dependants on your loan application, the lender will calculate a lower borrowing capacity. This is because the lender will factor in the additional financial responsibility of supporting another person. The more dependants you have, the lower your borrowing power.
Lenders will assess your taxable and tax-free income to calculate your borrowing power. Your taxable income is the base income you earn plus any additional income you make, such as bonus or commission income, for which you are liable to pay a specific portion as tax. The borrowing power calculator determines your income after tax by deducting the estimated taxes you are liable to pay on the taxable amount. Your tax-free income is any benefit you receive from the government periodically, such as family tax benefits and energy supplement benefits. Also, the first $18,200 of any income you make in a year is tax-free if you are an Australian resident.
Some banks have errors in the tax rates that they are using. They are usually very minor errors; however, we’ve copied those errors into our calculator so that we get the same results as the banks. If you have an investment loan with negative gearing benefits then the discrepancies may be even larger. Some banks calculate negative gearing benefits using the same method as the tax office but some use a more conservative method.
Banks ask for your housing situation to estimate the amount of money you’re likely to spend on housing each month, which will be factored into your borrowing capacity. If you are renting a space, the monthly rent you pay is factored in. The total loan amount, interest, term, and repayment are considered if you have a current mortgage. But if you live with your parents rent-free or are a homeowner, you do not have a repayment or rental expense, which boosts your borrowing power. If you are buying an owner-occupier property, then the lender will not factor in your current rental expense, as this expense won’t exist once you move into the property.
The monthly repayment you will be making on the property you want to buy is also factored in when calculating your borrowing power. Lenders typically calculate your repayments using an assessment rate – which, as of November 2021, is usually 3% higher than the actual rate on your home loan. This ensures that you can still afford the loan if interest rates increase. The assessment rate can vary depending on if the loan is for a new home buyer or a refinance and on the loan product chosen. Features such as interest-only repayments are also assessed differently by different banks. Any existing mortgage you make repayments for, credit card debts, student loans, and other ongoing financial commitments are also included in this calculation. Most banks will use the actual rent you are paying or the actual repayments on any personal loans in their assessment. They will check to make sure you can afford your home loan even if you max out your credit cards. Our calculator does the same. But, not every lender assesses your situation in this way and they differ in the repayments they calculate for your credit card debt.
Each bank has its own method of estimating the living expenses for your family. These are the day-to-day costs that you have, excluding taxes, rent and debt repayments. What banks actually do is estimate your living expenses, check that number against their standard estimate for a family of your size and then use whichever number is higher. Most banks use the Household Expenditure Method (HEM) to estimate your household expense.
Some lenders require you to have surplus funds left over, known as a buffer, to further reduce the risk of you not being able to afford your repayments. This is a conservative method of assessing whether or not you can afford a loan as they have already used a higher interest rate than the actual rate that you are paying.

Are The Calculator Results Accurate?

This calculator uses the exact same method the banks use. It works for people in a normal situation with no lending policy exceptions. It’s extremely accurate, even for investors with negative gearing and other complex situations. When looking at the results, you may have noticed there are a number of items that differ from lender to lender.

Frequently Asked Questions

There are three different methods that lenders use to calculate your serviceability:

  • Net Surplus Ratio (NSR)
  • Debt Servicing Ratio (DSR)
  • Surplus / Uncommitted Monthly Income (UMI).

They differ in how they weigh up your income and expenses, and the way they display the result. The DSR method was commonly used in the past; however, it’s too simple and tends to be inaccurate for property investors or for people earning over $200,000 or under $30,000.

Some lenders require you to have surplus funds left over, known as a buffer, to further reduce the risk of you not being able to afford your repayments. This is a conservative method of assessing whether or not you can afford a loan as they have already used a higher interest rate than the actual rate that you are paying.
In order to cool down potentially unsustainable growth in the property market, one of the first levers that the Australian Prudential Regulation Authority (APRA) pulls is to restrict lending to investors. Banks usually respond to this by making borrowing power calculations a lot more conservative. In the past, your serviceability was assessed at the actual repayments you would pay every fortnight or month. For example, for a $200,000 interest loan at 3.5% a year, the banks would just need to see that you could afford $7,000 a year or $583 a month. Under tighter serviceability rules, your bank may assess your borrowing power at 6.00% or even higher. So on that same loan amount, you’d need to show a sufficient income to debt ratio to afford $12,000 a year or $1,000 a month. That’s almost double what you need to pay each month.

Can you borrow more than the value of a property? Yes, you can, but mainly through a guarantor loan. Here’s how it breaks down:

  • First-time Home Buyers: You can borrow up to 105% of the property’s value.
  • Building a Home: Also up to 105%, but this includes both the land value and construction costs.
  • Refinancing: Up to 100% of your property’s value.
  • Debt Consolidation and Purchase: Even more, at 110% of the property’s value.
  • Investors: Up to 105% for investment properties.

Although there isn’t a maximum loan size, for loans over $1,000,000, you might need to meet extra credit requirements. You’ll need a guarantor, usually a close family member like a parent, who agrees to use their property as security for your loan.

Claiming an instant asset tax write-off does not necessarily decrease your borrowing power for a loan. In fact, some lenders may actually increase your assessable income by adding these one-off tax deductions back to your taxable income. For example, if you’ve claimed up to $30,000 for an asset and your taxable income was originally $100,000, adding back the write-offs could elevate your assessable income to $130,000. This process acknowledges these expenses as capital investments intended to generate further business revenue, thus positively affecting your borrowing capacity.

Lenders employ various alternative income verification methods when calculating assessable income, especially for self-employed borrowers. Some might choose the lower income figure from your last two years, others opt for the most recent year’s income, or they average the two years’ incomes. A few lenders even consider adding one-time capital expenses – which include instant asset tax write-offs – back into your taxable income, enhancing your eligibility for a higher loan amount.

Several expenses can be added back into your taxable income to improve your borrowing power, including extra superannuation contributions, carried forward losses, negative gearing deductions from investment properties, one-off business expenses like relocation or legal settlements, instant asset write-offs, trust distributions made for tax purposes, and depreciation. Each of these adjustments can significantly influence your borrowing capacity in a positive way.

Regarding risk fees and Lenders Mortgage Insurance (LMI), both are designed to protect the lender in case of a loan default, but they function differently. Risk fees are an alternative to LMI that is self-insured by the lender, which means they don’t involve third-party insurers like Genworth or QBE. The approach to, and the amount of, risk fees or LMI can vary widely among lenders, depending on how they assess your financial situation after adjustments for tax write-offs and other add-backs.

Consulting with a mortgage broker can be invaluable for those looking into how instant asset tax write-offs could affect their loan applications. Brokers can navigate the various lender policies and find a match that best suits your financial scenario, potentially maximising your borrowing power by helping you find the most favourable way to present your income and expenses.

How Can A Broker Help Investors?

A strategy that our brokers often employ with their clients is to go with a bank at a high serviceability rate for 2-3 properties and then buy 2-3 more properties using a non-bank lender. Some non-bank lenders aren’t regulated by APRA, which means they don’t need to adhere to serviceability calculation rules. Despite the fact that you’ll be charged a slightly higher interest rate, it’s a strategy that may help you build your investment portfolio more quickly. Of course, you should discuss your situation with your mortgage broker to ensure that you have the right mortgage strategy for your investment plans.

Which Lenders Use Serviceability Calculators?

The following lenders use either the NSR, DSR or UMI method:
  • Adelaide Bank
  • Advantage (Formerly known as Challenger / Interstar)
  • AMP
  • ANZ
  • Australian First Mortgage (AFM)
  • Australian Secured & Managed Mortgages (ASMM)
  • Australian Unity
  • Bank of Queensland (BQLD)
  • BankWest (BW)
  • Better Mortgage Company (BMC)
  • Citibank
  • Commonwealth Bank of Australia (CBA)
  • FirstMac
  • Heritage Bank (Formerly a Building Society)
  • Homeloans Limited
  • Homeside Lending (A division of NAB)
  • ING Direct
  • LaTrobe Financial
  • Liberty Financial
  • Loan Ave
  • Mainstream Capital
  • Merchant Mortgages
  • MKM Capital
  • Mortgage Asset Services (MAS)
  • National Australia Bank (NAB)
  • Paramount Mortgage Services
  • Pepper Home Loans
  • RAMS Home Loans
  • St George Bank (StG / SGB)
  • Suncorp Metway
  • The Rock Building Society
  • Westpac Bank (WBC)
Although our ‘How much I can borrow?’ calculator doesn’t take all of these lenders into account, it does compare three of the top lenders. The amount that you can borrow can vary significantly among different lenders. If you’d like a borrowing power quote for a specific lender, please contact one of our mortgage brokers on 1300 889 743 or fill in our free assessment form.

How Can I Improve My Borrowing Power?

Your borrowing power will depend on your income, family size, location, current debts, type of loan and the lender that you choose. The easiest way to increase your borrowing power is to choose a lender that can lend more to someone in your situation. Some banks are conservative when lending to investors, some use higher living expenses in their assessment and others will lend you less if you have an interest-only loan. However, you can also change your situation to improve your borrowing capacity.
Borrowing Power Infographics

How Can We Get You A Better Deal?

If you’ve used another online calculator, you may have realised that most do a general assessment of your income and expenses; they do not use the same methods the banks use. How Is The ‘How much can I borrow?’ Calculator Unique? Our online calculator takes a very different approach to help you to find the most suitable loan:
  • It compares three banks in one go.
  • It uses the actual calculation methods the lenders’ credit departments use.
  • It can change the loan structure to work out your maximum borrowing power.
  • It takes into account advanced features such as fixed rates, negative gearing, interest-only periods and your family size.
In fact, the calculator is so accurate that it even copies small errors in the tax rates used by some of the banks. If you’d like to get the best mortgage deal then please fill in our free online assessment form or call us on 1300 889 743 and one of our mortgage brokers will provide you with an obligation-free quote. We have extensive knowledge of lender serviceability and criteria, so we can provide you with an accurate and competitive assessment of how much you can afford to borrow.


Whilst we try to be as accurate as possible, the results shown in the ‘How much can I borrow?’ calculator are estimates only. It is provided for illustrative purposes only and is based on the accuracy of the information provided. It does not constitute a loan approval, quote or an offer to lend. The calculator is not intended to be relied upon for the purposes of making a decision in relation to a financial product. The calculator does not assume changes in the cost of living over time or your actual living expenses, which may differ from those the banks calculate. Code errors or delays with updating the calculator may cause your result to be inaccurate. You should obtain a formal approval from a lender before making any offer on a property or any financial decision that relies on a new home loan.