Knowing your borrowing power before house hunting is one of the most important steps in buying property. Lenders use a detailed serviceability assessment and the result can be very different from what you expect.
How Lenders Calculate Borrowing Power
- Income assessment — salary, rental, investment income (at 80–100% depending on type)
- Expense assessment — your actual living expenses or HEM benchmark, whichever is higher
- Buffer rate — APRA requires assessment at 3% above the actual loan rate
- Existing debts — credit cards, car loans, personal loans and HECS all reduce borrowing capacity
Borrowing Power by Income (Approx.)
| Gross Income | No Debts | With Debts |
|---|---|---|
| $80,000/year | ˜$430,000 | ˜$340,000 |
| $100,000/year | ˜$550,000 | ˜$450,000 |
| $150,000/year | ˜$840,000 | ˜$720,000 |
5 Ways to Increase Borrowing Power
- Reduce credit card limits
- Pay off car and personal loans
- Reduce HECS debt
- Increase your deposit
- Add a co-borrower
Calculate Your Borrowing Power
Enter your income and expenses for your maximum loan amount.
Disclaimer: General information only. Not financial or legal advice. Consult a qualified professional before making decisions.