How Much Can You Actually Borrow?

They are accurate at what they are built to do. A bank mortgage calculator shows an indicative maximum for that lender, using a simplified version of its own policy. It is a marketing and guidance tool, not an assessment.

The gap opens up because a real assessment applies rules a quick tool usually skips. The three with the largest effect are the HEM expenditure floor, the serviceability buffer, and the treatment of credit card limits. There is also a structural limit worth understanding. A mortgage calculator on a lender website can only show you that lender policy, so it cannot answer the question most people are really asking, which is what the market will lend them.

Below is indicative borrowing capacity by household income, produced by the same calculation engine that powers our Smart Mortgage Calculator. Living expenses are set at the HEM benchmark and there are no other debts.

One result surprises people. A couple on a combined $100,000 has a lower indicative capacity than a single person on the same $100,000. That is not an error. The HEM benchmark for a couple is higher than for a single person, because two adults are assessed as having higher minimum living costs. Two incomes help when they add up to more than one income, not when they simply split the same total.

The assessment runs in four steps.

1. Income is reduced to an after-tax figure. Some income types are also discounted. Overtime, bonus, commission and rental income are commonly counted at 80% or less, and the discount varies by lender.
2. Living expenses are floored at HEM. The Household Expenditure Measure is published by the Melbourne Institute and estimates minimum household spending. If you declare less than the benchmark, the benchmark is used instead.
3. Commitments are subtracted. Other loan repayments, HECS or HELP, and a monthly figure for your total credit card limits.
4. The surplus is converted at a buffered rate. What is left each month is turned into a loan amount using an assessment rate about 3 percentage points above the actual rate. APRA sets the supervisory expectation for that buffer.

The buffer is the step people underestimate. It is applied to the rate, so it compounds through the loan term rather than reducing your number by a fixed amount.

It depends on your income, because HELP repayments are calculated on a marginal basis. For the 2026-27 income year there is no compulsory repayment on income up to $69,528, and 15 cents in the dollar applies above that in the first band. Lenders then treat that compulsory repayment as an ongoing monthly commitment.

Each dependant raises the HEM floor applied to your household, which lowers your assessed monthly surplus. The effect is mechanical and it is larger than most people expect.

No. They are two separate numbers. Borrowing power is what a lender will advance. Your deposit is savings you contribute on top.

The price you can consider is roughly your borrowing power plus your deposit, less the cash you need for stamp duty, Lenders Mortgage Insurance and settlement costs. This is where buyers get caught. They have the capacity to borrow for a purchase but not the cash to complete it, because upfront costs can run to tens of thousands of dollars beyond the deposit itself. Our First Home Buyer Planner works out the full cash to settle rather than the deposit alone.

Everything above assumes a first purchase. If you already own, two things change.

Your equity can act as the deposit. Usable equity is generally 80% of the property value less the outstanding loan. The 80% ceiling is the point beyond which Lenders Mortgage Insurance usually applies.

Your existing repayment reduces what you can borrow next. The repayment on your current loan is assessed as an ongoing commitment, which means the rate you are paying on it directly affects your capacity for the next purchase.

Read the top and bottom rows together. Refinancing that $500,000 loan from 7.00% p.a. to 5.60% p.a. saves about $456 a month, and lifts what you can borrow next by roughly $56,000. The saving is the part people expect. The extra borrowing capacity is the part they do not, and it is why reviewing an existing loan is usually the first step before looking at a second property or an upgrade. Our Refinance Savings Calculator compares your current rate against the market and estimates the monthly saving on your own balance.

There are three levels of certainty, and they are often confused.

• A calculator estimate is an indication based on figures you type in. Nothing is verified and no lender has seen it.
• A pre-approval means a lender has assessed documented income and expenses and indicated a conditional amount. It is usually valid for three to six months and remains subject to a property valuation.
• A formal approval applies to a specific property, after valuation and final checks.

Treat an estimate as a planning starting point. It is not a commitment from any lender, and it is not something to bid at auction on.

There is no single lender that lends the most to everyone, because the answer depends entirely on how your income and liabilities are treated. Lenders differ on:

• How much overtime, bonus and commission income they count
• How they assess self-employed, contract and casual earnings
• Whether they apply HEM or a higher expense floor
• How they treat HELP debt that is close to being repaid
• What debt-to-income limit they apply
• How they treat rental income and existing investment debt

The same applicant can receive materially different numbers from different lenders. That is the structural limitation of using one bank tool to answer a market-wide question, and it is the reason the number you get from a single calculator is a starting point rather than an answer.

The change with the largest effect for most people is the one that feels least relevant. Lenders assess your credit card limit, not your balance, at roughly 3.8% of the limit per month. A card you never use still reduces your capacity.

The levers that generally move the number most, in order:

1. Reduce or close credit card limits. Dropping a $20,000 limit to zero lifts indicative capacity by around $94,000 on a $100,000 income.
2. Clear small personal and car loans. A $600 monthly repayment costs roughly $74,000 of capacity.
3. Pay down Buy Now Pay Later facilities. These are scrutinised closely and are simple to clear before applying.
4. Evidence your genuine living expenses. If your real spending is above HEM you cannot avoid it, but accurate categorisation stops avoidable overstatement.
5. Clear a HELP debt that is nearly finished. Under the 2025 APRA guidance, some lenders will then disregard it entirely.
6. Refinance or consolidate what you already owe. If you have an existing home loan, a lower rate cuts the repayment that is assessed against you. Moving a $500,000 loan from 7.00% p.a. to 5.60% p.a. lifts capacity by around $56,000. Rolling high-rate personal or card debt into the mortgage can help too, though it stretches that debt over a longer term, so weigh the total interest cost rather than the monthly figure alone.
7. Match the lender to your income type. If a large share of your income is overtime, bonus or self-employed earnings, lender choice can be worth more than every other item on this list combined.