Australian lenders determine your borrowing power through a serviceability assessment. They calculate the maximum loan where repayments — tested at the interest rate plus a 3% APRA buffer — don't exceed a percentage of your gross income (typically 30-35%), after subtracting your existing debts and living expenses.

The APRA 3% Buffer

Since November 2021, APRA requires all banks to assess your repayment ability at 3% above the actual loan rate. If rates are 6.5%, you're tested at 9.5%. This significantly reduces how much you can borrow but protects you if rates rise after settlement. At a $100,000 income, the buffer typically reduces capacity by $80,000–$120,000 compared to assessment at the actual rate.

Credit Cards Matter

Lenders count 3% of your total credit card limits as a monthly commitment — regardless of your actual balance. A $10,000 credit card limit reduces your borrowing power by roughly $20,000–$30,000. Closing unused cards before applying is one of the quickest ways to boost your capacity.

This calculator provides an estimate. Actual borrowing power varies between lenders and depends on your full financial situation. For a formal pre-approval, speak with a licensed mortgage broker.