Why is my borrowing power less than expected?

Lenders use conservative assessments including a 3% buffer rate, HEM benchmarks for expenses, and may discount variable income. Credit card limits also reduce borrowing power even if you pay them off monthly.

How can I increase my borrowing power?

Close unused credit cards, pay down existing debts, reduce declared expenses, apply with a partner, or consider extending your loan term. Some lenders also accept bonus income more favorably than others.

Does HECS/HELP affect borrowing power?

Yes. Lenders must factor in your HECS repayments based on your income. At $85,000 income, this could reduce your borrowing power by $30,000-$50,000 compared to someone without HECS.

Borrowing Power Calculator

Calculator

Calculate how much you can borrow with AI insights on lender policies

Free to useNo data storedAI insightsUpdated: February 2026

Your borrowing power determines the maximum loan amount lenders will approve. It's based on your income, expenses, and existing debts. Our calculator uses APRA serviceability standards and provides AI insights on how different lenders might assess your application.

Enter Your Details

Real-World Examples

Single First Home Buyer

Taylor earns $85,000, has $2,500 monthly expenses, no dependants, and a $5,000 credit card limit.

Inputs Used:

grossIncome:85,000partnerIncome:0monthlyExpenses:2,500existingDebts:0dependants:0interestRate:6.5

Estimated borrowing power: ~$420,000. Closing the unused credit card could add ~$25,000 to this figure.

Couple with Dependants

Chris and Sam have combined income of $180,000, $4,500 expenses, 2 kids, and a $500/month car loan.

Inputs Used:

grossIncome:100,000partnerIncome:80,000monthlyExpenses:4,500existingDebts:500dependants:2interestRate:6.5

Estimated borrowing power: ~$750,000. Each dependant reduces borrowing by roughly $60,000-$80,000 depending on the lender.

Frequently Asked Questions

Glossary

Serviceability

Your ability to make loan repayments. Lenders test this at your rate + 3% buffer to ensure you can handle rate rises.

HEM (Household Expenditure Measure)

A benchmark lenders use for minimum living expenses if your declared expenses are too low. Based on ABS data.

Buffer Rate

An additional 3% added to the loan rate when assessing if you can afford repayments. Required by APRA.

Pre-approval

A conditional approval for a loan amount, valid for 3-6 months. Subject to final verification before settlement.

Related Tools

Calculate Your Repayments

See exactly what you'll pay each month once you know how much you can borrow.

Check if You Need LMI

Find out if your deposit is enough to avoid Lenders Mortgage Insurance.

Stress Test Your Loan

See if you can handle rate rises by testing your budget at higher rates.

How to Use

1Enter your gross annual income (before tax)
2Add partner income if applying jointly
3Enter your monthly living expenses
4Include any existing debt repayments
5Select the number of dependants
6Get your estimated borrowing power

Key Information

Lenders use a buffer rate (usually 3%) above your actual rate
Credit card limits reduce borrowing power even if unused
HECS/HELP debt reduces your assessed income
Bonus and overtime income may be counted differently

Pro Tips

Close unused credit cards before applying - lenders count the full limit as potential debt
Apply with a partner if possible - combined income dramatically increases borrowing power
Some lenders count 100% of bonus/overtime, others only 50% - shop around
Consider a longer loan term (30 vs 25 years) to increase what you can borrow, then pay extra

Avoid These Mistakes

Not disclosing all credit cards - lenders check credit reports and will see them anyway
Underestimating living expenses - if too low, lenders use their own benchmarks which may be higher
Applying to multiple lenders in a short period - each credit check can lower your score
Thinking pre-approval means guaranteed approval - your circumstances must stay the same

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026