How to use the borrowing capacity calculator (australia)
- Enter your combined after-tax (net) monthly income, and any other income with the share a lender might count.
- Enter your living expenses, existing loan repayments and total credit card limits.
- Enter the interest rate you expect, the loan term and a serviceability buffer (3 percentage points by default).
- Read the illustrative maximum loan, the repayments at your rate and at the assessment rate, and the surplus behind it.
Worked example
$9,000 net monthly income, $4,000 expenses, $10,000 card limits, 6.00% plus a 3 point buffer
Credit cards count as 3% of the limit, or $300 a month, leaving a surplus of $9,000 − $4,000 − $300 = $4,700. At the 9.00% assessment rate over 30 years that surplus services a loan of about $584,000 (rounded down to the nearest $1,000). The repayment on that loan would be $3,501.38 a month at 6.00% and $4,699.00 at 9.00%.
How it works
Monthly surplus = net income + (other income × share counted) − living expenses − existing repayments − (card limits × card loading %). The assessment rate is your rate plus the buffer. The maximum loan is the present value of the surplus as a monthly repayment at the assessment rate over the term, L = S × (1 − (1 + r)−n) ÷ r, rounded down to the nearest $1,000.
Assumptions
- An illustrative model only. Real lenders use their own income shading, expense benchmarks (such as the Household Expenditure Measure), buffers and credit policies.
- Living expenses are your own figure; lenders use the higher of your figure and their benchmark.
- Credit card commitments default to 3% of the limit per month, a common lender assumption that varies by lender.
- The serviceability buffer defaults to 3 percentage points, the minimum APRA has guided lenders to use. Check APRA’s current guidance.
Frequently asked questions
Is this how much a bank will lend me?
No. It is an illustrative serviceability scenario, not approval or a loan offer. Lenders also consider credit history, employment, deposit, LVR, dependants and their own policies, and results between lenders can differ widely.
What is the serviceability buffer?
Lenders check that you could still make repayments if rates rose. APRA has guided lenders to assess new loans at least 3 percentage points above the loan rate. This setting can change, so check APRA’s current guidance.
Why do credit card limits reduce my borrowing?
Lenders usually treat the full limit as if it could be used, and assume a monthly repayment on it (often around 3% of the limit) even if you pay the card off in full. Reducing unused limits can increase borrowing capacity.
Does my deposit change the result?
Not this figure, which is about repayments. Your deposit decides how much you can spend on a property and whether you need LMI.
Limitations
- Not financial advice, lender approval or a loan offer.
- Does not model tax, HECS-HELP repayment thresholds, dependants or lender expense benchmarks; enter those costs yourself.