Find Out Exactly How Much You Can Borrow

Lenders calculate your borrowing power by taking your gross income, deducting tax and Medicare levy to arrive at net income, then subtracting monthly living expenses, existing debt repayments, and dependant costs. They apply an APRA assessment rate — your actual loan rate plus a mandatory 3% buffer — to determine the maximum repayment you can safely service. If your declared living expenses are lower than the Household Expenditure Measure (HEM) benchmark, banks will use the HEM figure. Your net surplus after all outgoings is then converted into a maximum loan amount using a standard annuity formula.

Each lender uses its own HEM expense benchmark, and these can vary by up to $400/month depending on the institution. Lenders also apply different income shading factors — for example, casual income may be accepted at 100% by one lender but only 80% by another. Self-employed applicants face further variation: some lenders require two years of tax returns, while specialist lenders accept 12-month financials or use add-back strategies for depreciation and one-off expenses. Rental income treatment, credit card limit policies (some count 3% of your limit as monthly debt), and residual debt calculations all affect the final number. A broker who works across a wide panel of lenders can identify which institution will maximise your capacity for your specific income type and financial profile.

Yes — often significantly. Proven strategies include: closing or reducing credit card limits before applying (unused limits still count as potential debt), consolidating or paying down personal loans and car finance, ensuring your declared living expenses accurately reflect actual spending (many applicants over-estimate), adding a co-borrower with verifiable income, and choosing a lender with more generous income acceptance policies for your employment type. For self-employed borrowers, engaging an accountant to prepare financials that accurately reflect business profitability — including legitimate add-backs — can materially increase assessed income. A broker can model each scenario for your specific situation and identify the lender who will give you the highest approved amount at the most competitive rate.

This calculator provides a robust general estimate using current 2024–25 ATO tax rates and the APRA-mandated 3% serviceability buffer. For most PAYG applicants with standard living expenses, the estimate will be close to what a lender approves. Actual lender assessments will differ based on your credit history, specific employment type, other liabilities not entered, lender-specific HEM benchmarks, and individual credit policy. For an accurate pre-approval figure — and to find the lender who will offer you the most — speak to one of our specialist brokers. The assessment is completely free, takes less than 20 minutes, and does not affect your credit score.