Borrowing Power Calculator
Estimate how much you can borrow for a home loan in a few simple steps.
Who is the loan for?
What is the property for?
Number of dependents?
Your income before tax
e.g. bonus, overtime, dividends
Please enter expenses below. To have your expenses estimated automatically, please switch on.
My bills and living expenses (monthly)
(e.g. car loan, personal loan)
Based on your details, you can compare the following home loans
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How much can I borrow?
To work out how much a lender may choose to lend you, our Borrowing Power Calculator takes the following steps:
- Add up your total assessable income, including that of your joint borrowing partner (if applicable).
- Work out your total living expenses. You can manually enter your own expenses, including other home loans, personal loans and credit card credit limits. Alternatively, you can use an automatic estimate based on average spending data from the Australian Taxation Office (ATO) for singles or couples with different numbers of dependants.
- Set aside 15 per cent of your income as a buffer to cover any unforeseen circumstances.
- Work out how much money is left over in your budget to go towards your monthly mortgage repayments.
- Calculate your home loan repayments for a 30-year loan and an interest rate of 5.5 per cent. Fixed rates and variable rates are at historical lows, but lenders play it safe and assume they won’t always be. The floor rates used vary between lenders, though 5 or 6 per cent is a common benchmark.
- Determine the maximum borrowing capacity (loan size) based on your assessable income left over after your total expenses, including loans, credit cards and 15 per cent buffer are factored in.
Remember that this loan amount is just an estimate, and that each lender will look at your finances slightly differently when assessing your loan application. Your maximum borrowing amount may vary depending on which bank or mortgage lender you speak to.
Other important notes
- All calculations are estimates; they are not guarantees you’ll be able to borrow a particular amount, and are not pre-qualifications or pre-approvals for borrowing.
- Lender serviceability assumptions can change at any time; this will affect how much you can borrow.
- Interest rates can change at any time. The calculator assumes a floor rate of 5.5 per cent, but you may want to consider a higher percentage if you believe rates may rise even higher in future.
- This calculator measures loan serviceability, which is only one factor used by lenders when deciding whether to offer you loan approval. Your credit history, financial situation, employment details and what property you are buying may also play a role in determining your eligibility for a home loan product.
- This calculator is for information purposes only. Any advice is general and has not taken into account your personal circumstances. Read our full disclaimer.
Can my home loan deposit affect my borrowing power?
Once you have an idea of how much you may be able to borrow to buy a home or investment property, it’s important to also think about how much you can afford to pay as a deposit. Generally, the more money the home buyers can save up as a deposit, the easier it may be to secure a larger new home loan.
Many lenders in Australia will prefer that you pay a minimum home loan deposit of at least 20 per cent of the property value upfront. This is sometimes described as having a loan to value ratio (LVR) of 80 per cent. For example, if you’re planning to buy a property with a valuation of $500,000, you may need a deposit of $100,000 in order to borrow $400,000.
Having a smaller deposit doesn’t mean you can’t get a home loan, though it may be harder to get the lowest interest rates. You may be able to apply for a home loan with a deposit of 10 per cent or even 5 per cent of the property’s value. However, having a deposit lower than 20 per cent means you’ll likely need to pay for a Lenders Mortgage Insurance (LMI) policy. This covers your lender (and not you) against the risk that you’ll default on your monthly repayments.
Most banks and mortgage lenders pass the cost of LMI on to borrowers – the lower your deposit, the more your LMI may cost. This could add tens of thousands of dollars to your loan’s upfront costs. It’s sometimes possible to add these extra costs onto your mortgage to pay off over your loan term, though the extra interest repayments over time may ultimately cost you more money.
It’s often important to show that most of your home loan deposit is made up of savings from money earned at your job. This savings history can demonstrate your financial responsibility to potential lenders, which may help improve your chances of seeing your mortgage application approved.
Which bank will let me borrow the most for my home loan?
There are a wide variety of banks and mortgage lenders to choose from when applying for a home loan. These range from the “Big Four” banks (ANZ, Commonwealth Bank, NAB and Westpac) to non-bank lenders such as mutual banks (e.g. G&C Mutual) and online-only lenders (e.g. Athena).
Each of these lenders uses different criteria to assess home loan applications. This means your borrowing power could vary between lenders.
Before you apply for a mortgage, consider comparing its eligibility requirements to your financial situation. You can use a mortgage repayment calculator to estimate the home loan’s cost. If you’re not sure which lender may be the best choice for you, consider contacting a mortgage broker for personal financial advice.
Personal Finance Writer
Alex is a personal finance writer and PR professional at RateCity, and has been writing about finance for over three years. She is passionate about closing the gender pay and superannuation gap, and aims to help young Aussies to overcome their financial apathy and better manage their finances. Alex has been published in numerous print and online outlets, including Money Magazine, Lifehacker Australia, and Business Insider.