How Much Can I Borrow in Australia? Borrowing Power Calculator (2026)

Your borrowing power — the maximum amount an Australian lender will approve for a home loan — is not simply a multiple of your income. It is calculated using a set of rules set by APRA (the Australian Prudential Regulation Authority) that are considerably more conservative than most people expect.

This guide explains exactly how Australian banks calculate borrowing capacity, what reduces it (credit cards are the biggest trap), how much you can borrow on common Australian salaries, and what you can do to increase your borrowing power before applying.

Use the Dolaro Borrowing Power Calculator to calculate your estimated borrowing capacity instantly using the same rules Australian lenders apply.

Quick answer: On a $100,000 salary with no dependants and no existing debts, most Australian lenders will approve approximately $450,000–$550,000. On $150,000, approximately $700,000–$850,000. A $20,000 credit card limit — even unused — reduces borrowing power by approximately $100,000. The APRA 3% buffer means your loan is assessed at your rate plus 3%, not the actual rate.

How Australian Banks Calculate Borrowing Power

Australian lenders use a specific assessment methodology mandated by APRA. Understanding this methodology is essential because it explains why your borrowing power is almost always lower than a simple income multiple would suggest.

Step 1: Assessed Income (Not Gross Income)

Not all income is treated equally. Lenders apply different assessment percentages depending on the income type:

Income type	Assessment rate	Why
Base salary / PAYG wages	100%	Guaranteed, stable
Overtime and bonuses	50–80%	Variable, not guaranteed
Rental income	70–80%	Net of vacancy and expenses
Dividend income	70–80%	Variable
Self-employment / ABN income	100% of 2-year average	Must be demonstrated consistently
Government benefits	100% (some lenders)	Stable but non-universal

Total assessed income is the starting point for the calculation.

Step 2: The APRA 3% Serviceability Buffer

This is the single biggest factor reducing borrowing power for most Australians.

Since October 2021, APRA requires all authorised lenders to test whether you can service your loan at the actual interest rate plus 3%. If your loan is at 6.25%, the lender must confirm you can afford repayments at 9.25%.

The rationale: APRA wants borrowers to still be able to make repayments if interest rates rise significantly after settlement. In 2022–2023, rates rose by 4.25% in 18 months — exactly the scenario the buffer is designed to stress-test.

Impact: This single rule can reduce your maximum loan by 20–30% compared to what a simple income-multiple calculation would give you. A borrower who could theoretically service $800,000 at 6.25% may only be approved for $600,000–$650,000 once the assessment rate is applied.

Step 3: HEM — The Living Expense Benchmark

The Household Expenditure Measure (HEM) is a benchmark published by the Melbourne Institute that lenders use to validate your declared living expenses. The rule: lenders use the higher of your declared living expenses or the HEM for your household size.

If you declare $1,500/month in living expenses but the HEM for a single person in your postcode is $2,100/month, the lender uses $2,100. You cannot understate living expenses to boost your borrowing power.

HEM estimates by household type (2025–26):

Household	HEM estimate (monthly)
Single, no dependants	~$2,100
Couple, no dependants	~$2,900
Single, 1 dependant	~$2,700
Couple, 1 dependant	~$3,300
Couple, 2 dependants	~$3,800
Couple, 3+ dependants	~$4,300+

HEM values vary by postcode and lifestyle — higher in inner Sydney and Melbourne, lower in regional areas.

Step 4: Existing Debt Commitments

All existing monthly debt commitments reduce the amount available for a new loan repayment. Lenders add up:

All existing loan repayments (home loans, car loans, personal loans)
Credit card monthly commitments (see below)
Buy Now Pay Later commitments (some lenders)
HECS/HELP repayments (calculated from your balance and income)

Step 5: The Credit Card Trap

This is the most widely misunderstood aspect of borrowing power — and the most actionable.

Lenders do not assess your actual credit card balance. They assess 3.8% of your total credit card limit per month as a committed outgoing — regardless of whether you ever carry a balance.

The impact is dramatic:

Credit card limit	Monthly commitment assessed	Approximate reduction in borrowing power
$5,000	$190/month	~$25,000
$10,000	$380/month	~$50,000
$20,000	$760/month	~$100,000
$30,000	$1,140/month	~$150,000
$50,000	$1,900/month	~$250,000

A couple with two credit cards totalling $30,000 in limits — even if they pay them off in full every month — is assessed as having $1,140 in monthly credit commitments. This alone reduces their joint borrowing power by approximately $150,000.

Action: Cancel or reduce credit card limits at least 3 months before applying for a home loan.

How Much Can I Borrow on My Salary?

The following figures are estimates for single applicants with no dependants, no existing debts, and living expenses at the HEM benchmark. Assessment rate: 9.25% (6.25% actual + 3% APRA buffer). Loan term: 30 years P&I.

Annual salary	Estimated borrowing power
$60,000	$270,000–$310,000
$70,000	$320,000–$370,000
$80,000	$370,000–$430,000
$90,000	$420,000–$490,000
$100,000	$470,000–$550,000
$120,000	$570,000–$670,000
$150,000	$720,000–$850,000
$180,000	$870,000–$1,020,000
$200,000	$970,000–$1,140,000

These are starting-point estimates. Actual borrowing capacity varies significantly based on lender-specific policies, credit score, employment type, existing debts, living expenses, and property type. Use the Borrowing Power Calculator with your actual figures for a personalised estimate.

Joint Applicants: The Multiplication Effect

Joint applications (couples) can borrow significantly more than either applicant alone — but not simply double. The assessment combines income at 100% but also combines living expenses and debt commitments.

Example — couple on $90,000 + $75,000:

Combined assessed income: $165,000/year
HEM for couple, no dependants: ~$2,900/month
No existing debts
Estimated joint borrowing power: $750,000–$880,000

Compare to the $90,000 applicant alone ($420,000–$490,000) and the $75,000 applicant alone ($340,000–$400,000). The joint application unlocks a home loan significantly above what either applicant could achieve individually.

What Reduces Borrowing Power Most

Ranked by typical impact:

1. Existing mortgage (largest impact) An existing home loan — for example, if you own an investment property — adds its repayments directly to your monthly commitments. A $500,000 investment loan at 6.25% P&I over 25 years has repayments of approximately $3,400/month. This alone can reduce borrowing power for a new home by $400,000+.

2. Credit card limits As explained above — 3.8% of total limits per month regardless of balance. The most actionable reduction to address before applying.

3. Dependants Each dependant increases the HEM benchmark the lender applies. Two dependants add approximately $900/month to assessed living expenses compared to no dependants, reducing borrowing power by approximately $100,000–$120,000.

4. HECS/HELP debt Lenders include your compulsory HECS repayment as a monthly commitment. On a $100,000 salary with $40,000 in HECS, the compulsory repayment is 7% ($7,000/year = $583/month), reducing borrowing power by approximately $70,000–$80,000.

5. Personal and car loans Monthly repayments are added directly to your commitment figure. A $400/month car loan reduces borrowing power by approximately $50,000.

6. Buy Now Pay Later (BNPL) Afterpay, Zip, and similar services are increasingly being assessed by lenders as committed monthly outgoings. Closing BNPL accounts before applying is advisable.

How to Increase Your Borrowing Power

1. Cancel or reduce credit card limits (biggest impact, free) Cancel cards you don't need. Reduce limits on cards you keep. Do this at least 3 months before applying — some lenders require a seasoning period before treating reduced limits as genuine.

2. Pay down personal loans and car loans Reducing or eliminating a car loan before applying directly reduces your monthly commitments and increases available capacity.

3. Add a co-borrower A joint application increases assessed income significantly. Even a part-time income from a co-borrower can add $100,000–$200,000 to joint borrowing capacity.

4. Increase your deposit A larger deposit reduces the loan amount needed without changing your assessed income. More importantly, a deposit above 20% removes LMI and may qualify you for better interest rates — reducing the actual rate and therefore the assessment rate too.

5. Reduce living expenses in the 3 months before applying Lenders check your bank statements for the past 3 months. Reduced discretionary spending (dining, subscriptions, gambling, discretionary shopping) during this period demonstrates lower actual expenses, which may allow the lender to assess below the HEM if your statements support it.

6. Clear HECS as a priority (if close to paying off) If your HECS balance is relatively small and you are a few years from paying it off, consider clearing it before applying. Eliminating a $500/month HECS commitment can add $60,000–$70,000 to borrowing capacity.

7. Use a mortgage broker Different lenders have different credit policies, HEM benchmarks, and income assessment rules. A broker with access to 30+ lenders can identify which lender's policy gives you the highest borrowing capacity for your specific situation — often a difference of $50,000–$150,000 between the most and least generous lender.

Borrowing Power vs How Much You Should Borrow

Your borrowing power is the maximum a lender will approve. It is not necessarily the amount you should borrow.

A useful personal benchmark: your total mortgage repayments should not exceed 30–35% of your gross household income. At this level, most households can manage repayments, maintain an emergency fund, and continue saving and investing.

At current rates (6.25% variable), the repayment on a $600,000 loan over 30 years is approximately $3,690/month. For this to be below 30% of gross income, you need household income of at least $147,600/year.

Borrowing at your maximum approved amount — where repayments consume 40–50% of income — leaves very little margin for rate rises, job changes, family expansion, or unexpected expenses. The fact that a lender will approve a loan does not mean it is the right financial decision.

Frequently Asked Questions

How much can I borrow in Australia on a $100,000 salary?

On a $100,000 salary with no dependants, no existing debts, and average living expenses, most Australian lenders will approve approximately $470,000–$550,000 at a 9.25% assessment rate (6.25% actual + 3% APRA buffer) over 30 years. The range reflects different lender policies and HEM benchmarks. Adding a co-borrower, eliminating debts, or reducing credit card limits can increase this significantly.

How much can I borrow as a couple in Australia?

A couple's joint borrowing power combines both incomes at 100% but also combines living expenses (higher HEM benchmark than single applicant). A couple earning $90,000 + $75,000 ($165,000 combined) with no dependants and no existing debts can typically borrow $750,000–$880,000. Use the Borrowing Power Calculator with both incomes entered for a personalised estimate.

What is the APRA 3% serviceability buffer?

APRA requires all Australian banks and authorised lenders to assess your ability to repay a loan at the actual interest rate plus 3%. If your loan rate is 6.25%, the lender tests whether you could still make repayments if the rate rose to 9.25%. This buffer, introduced in October 2021, reduces maximum borrowing amounts by 20–30% compared to being assessed at the actual rate.

Why do credit card limits reduce my borrowing power even if I pay them off?

Australian lenders assess 3.8% of your total credit card limit as a committed monthly outgoing — regardless of your actual balance. A $20,000 credit card limit is treated as a $760/month commitment. This is because lenders are assessing your maximum potential exposure, not your current behaviour. Cancelling or reducing card limits before applying is the single most effective free action to increase borrowing power.

Does HECS debt affect borrowing power?

Yes. Lenders add your compulsory HECS repayment to your monthly committed outgoings when calculating borrowing capacity. At a $100,000 income with $40,000 HECS, the compulsory repayment rate is 7% ($7,000/year = $583/month), reducing borrowing power by approximately $70,000–$80,000. Paying off remaining HECS before applying, if the balance is small, can meaningfully increase your approved loan amount.

How accurate is a borrowing power calculator?

Online calculators provide estimates, not guaranteed approvals. Actual borrowing capacity depends on your credit score, employment type (PAYG vs self-employed), the specific lender's policies, property type and location, and factors the calculator cannot assess. Use the calculator as a starting point and confirm with your lender or a licensed mortgage broker for an accurate pre-approval.

What is the difference between borrowing power and pre-approval?

Borrowing power is an estimate of how much you could be approved for based on your income, expenses, and debts — calculated without a formal credit check. Pre-approval is a conditional approval from a specific lender after reviewing your actual documents, credit file, and application. Pre-approval is typically valid for 90 days and gives you confidence to bid at auction or make formal offers.

How do I maximise my borrowing power in Australia?

The most effective steps before applying: cancel unused credit cards and reduce limits on active cards; pay down or eliminate personal and car loans; avoid new debt or credit applications in the 3 months before applying; maintain stable employment; reduce discretionary spending visible on bank statements; consider adding a co-borrower; and use a mortgage broker to identify the lender with the most favourable assessment policy for your situation.

This article is general information only and does not constitute financial or legal advice. Borrowing capacity estimates are indicative only and vary by lender, credit history, employment type, and other factors. Always confirm with your lender or a licensed mortgage broker before making financial decisions.