Borrowing Power Calculator Australia 2026
Estimate how large a home loan your household’s after-tax income might support after living costs, dependants, existing debts and credit-card limits. Each applicant is taxed separately using current ATO resident rates and the Medicare levy. The result then applies theAPRA 3 percentage point serviceability buffer to the interest rate you enter. It is an estimate only — lenders differ, and this is not a loan offer.
How this estimate is worked out
The calculator converts each applicant’s income to monthly take-home pay using the same resident income tax brackets and Medicare levy as the take-home pay calculator(2026-27 ATO rates). Other ongoing income is taxed as its own amount. HECS-HELP is not deducted. Assessed living expenses (the higher of what you enter and the generic floor, unless you turn the floor off), existing debt repayments and a generic credit-card servicing amount are then subtracted. What remains is the monthly surplus that could service a new principal-and-interest home loan.
That surplus is then converted to a loan size using the interest rate you typedplus 3 percentage points. APRA’s published expectation is that authorised deposit-taking institutions apply a serviceability buffer of at least 3.0 per cent over the loan interest rate, ignoring short introductory or “honeymoon” discounts. APRA restated in May 2026 that the mortgage serviceability buffer remains at 3 percentage points.
Repayments shown at your entered rate are what the estimated loan would cost if the rate did not rise. The assessment-rate repayment is the higher figure used only to size the loan.
Living expenses and the generic HEM-style minimum
A sound serviceability assessment looks at the household’s actual spending, not only a declared budget. In industry practice that often includes a minimum based on a household expenditure measure. Those commercial tables are not an official government dataset, so this site does not reproduce them.
The floor used here is a generic assumption: $2,000a month for one adult, plus $800for a second adult, plus $500for each dependant. You can edit your expenses or switch the floor off. Raising the figure is usually the more cautious approach.
What this page does not do
- It does not recommend a lender, a loan type, or a particular interest rate.
- It does not assess credit history, employment type, or genuine savings.
- It does not shade overtime, bonuses or rental income the way a lender might.
- It does not automatically re-price your existing home loans at the buffered rate.
- It does not deduct HECS-HELP or other study-loan withholdings from the net income used.
ASIC’s MoneySmart pages on home loans and buying a house explain how to compare products and plan for the full cost of a purchase, includingstamp duty and other upfront amounts.
Frequently Asked Questions
What is borrowing power?
Borrowing power is an estimate of the largest home loan that remaining income might support after living costs and other debts. It is not an offer, a pre-approval, or a credit assessment. Each lender applies its own policy, and the amount you are actually offered can be higher or lower than this illustration.
Does this calculator use gross income or take-home pay?
It converts each applicant’s entered income to after-tax (take-home) pay before sizing the loan. Resident income tax brackets and the Medicare levy come from the same ATO 2026-27 data used by the take-home pay calculator. Applicants are taxed separately, not as one combined income. HECS-HELP is not deducted here. The surplus is that net monthly income minus the higher of your expenses or the generic floor, existing debt repayments, and a generic 3% of credit-card limits.
What is the APRA serviceability buffer?
The Australian Prudential Regulation Authority expects authorised deposit-taking institutions to test home-loan applications at the loan interest rate plus a buffer of at least 3 percentage points, unless APRA determines otherwise. APRA confirmed in May 2026 that this mortgage serviceability buffer remains at 3 percentage points. This calculator adds that 3 percentage point buffer to the rate you enter. Lenders may also use an interest-rate floor or apply the buffer to existing debts.
What is the HEM-style expense minimum in this calculator?
Many lenders compare the living expenses you declare with an internal household expenditure measure, sometimes described as a HEM floor. The commercial HEM figures used by lenders are not published by a government agency, so this tool does not copy them. It uses a simple, editable generic minimum instead. You can raise your declared expenses above that floor, or turn the floor off, to see how sensitive the estimate is.
Why do credit card limits reduce the estimate?
Unused card limits are still a potential monthly commitment. This calculator applies a generic 3% of the total limit each month as a servicing assumption. That percentage is not an official APRA or ASIC figure. Lenders choose their own treatment of credit cards, buy-now-pay-later accounts and other facilities.
Will a lender offer me this amount?
Not necessarily. Lenders may shade variable income, verify expenses from statements, reassess existing loans at a higher rate, apply their own credit policy, and consider your credit history. ASIC MoneySmart explains that you should compare home loans and understand the full cost of borrowing before you apply. This page is general information only.