Mortgage Borrowing Power Calculator
Get an estimate of how much you might be able to borrow for a home loan based on your income, expenses, and existing debts. This helps you understand your budget before you start house hunting.
Include car loans, credit card limits, etc.
How to Use This Calculator
1. Enter your annual income – Include your gross salary before tax.
2. Add partner income (optional) – If applying jointly, include their income.
3. Enter monthly expenses – Include regular bills, groceries, transport, and lifestyle costs.
4. Add existing debts – Include car loans, personal loans, and credit card limits.
5. Set the interest rate – Use current market rates for accuracy.
FAQs
Borrowing Power Questions
How do lenders calculate my borrowing power?
Lenders assess your income (including salary, bonuses, and rental income), subtract your living expenses and existing debt repayments, then apply a buffer rate (usually 2-3% above the actual rate) to ensure you can afford repayments if rates rise. Different lenders have different policies, so your borrowing power varies between them.
Why is my borrowing power lower than I expected?
Several factors reduce borrowing power: high living expenses, existing debts (including HECS/HELP, car loans, credit card limits), dependents, and the type of income you earn. Lenders use conservative assessments to protect both you and themselves from overcommitment.
Does my credit card limit affect my borrowing power?
Yes, even if you pay your credit card in full each month. Lenders assume you could max out your card at any time, so they factor in the potential repayment on your full credit limit. Reducing or closing unused credit cards can increase your borrowing capacity.
Can I borrow more with a partner?
Usually yes. Combined incomes typically allow higher borrowing, though combined expenses and debts are also considered. Two incomes provide more security for lenders, which can improve your overall borrowing position.
What's the difference between borrowing power and pre-approval?
Borrowing power is an estimate based on general criteria. Pre-approval is a conditional commitment from a specific lender after they've reviewed your actual financial documents. Pre-approval gives you confidence when house hunting, though it's not a guarantee of final approval.