A standard serviceability approximation: your net income, minus what you spend and owe, assessed at your expected rate plus a regulatory-style buffer. Lenders each run their own version of this with different treatments — which is why the same household gets different answers from different banks.
The assumptions, in full
Assessment rate = your entered rate + 3 percentage points — the serviceability buffer APRA expects lenders to apply (APRA, System Risk Outlook May 2026).
30-year principal-and-interest term; your whole monthly surplus is treated as available for repayments.
Credit card limits are counted at 3.8% of the limit per month as a stand-in for minimum repayments — a proxy pending confirmation against lender treatments.
Your entered living expenses are used as-is. Lenders may substitute a higher household-expenditure benchmark floor if your figure looks low — this tool does not apply a floor yet, so treat low expense entries as optimistic.
We ask for after-tax income directly rather than estimating your tax — one less approximation between you and a real number.
Borrowing power isn't a judgment about what you can afford in real life — it's the lender's answer to a narrower question: on our rules, what loan does this household's surplus service if rates were meaningfully higher than today? Three inputs drive nearly all of it: what reliably comes in, what reliably goes out, and what you already owe. Everything else is treatment detail — and treatment detail is where the differences between lenders live.
The buffer, and why your "real" capacity looks lower
Since 2021, APRA has expected lenders to assess new borrowers at 3 percentage points above the loan rate — the source is quoted in our assumptions above. Enter a 6% rate here and the model assesses you at 9%. That single rule explains most of the gap between what a repayment calculator says you could pay and what a bank will actually lend: you're being tested against a stress scenario, not the sticker rate.
A worked hypothetical: the credit card effect
Round numbers, invented for illustration. A household with $150,000 after-tax income and $4,000/month of living costs, no other debts, entering a 6% rate, models out to roughly $1,056,396 of capacity at the 9% assessment rate. Give that same household $30,000 of credit card limits — not debt, just limits — and capacity drops to roughly $914,715. That's the cost of plastic you may never use, and it's why tidying limits before applying is standard preparation.
What genuinely moves the number
Closing or cutting unused credit limits — the cleanest quick win, as the example above shows.
Clearing short-term debts — car loans and buy-now-pay-later commitments consume surplus dollar-for-dollar.
Documenting expenses honestly — lenders benchmark low declarations anyway; clean statements in the months before applying help your real figure stand.
Choosing the right lender for your income shape — bonuses, overtime, rental income and self-employed earnings are treated differently everywhere. Same household, different lender, different answer. Self-employed borrowers feel this most.
When you're ready to turn an estimate into a number you can bid with, that's pre-approval — and it's the point where a conversation with us earns its keep. Buying costs sit on top: check stamp duty and LMI while you're here.
Borrowing power questions, answered
How do lenders work out how much I can borrow?
Broadly: your after-tax income, minus your declared living expenses (or the lender's benchmark floor if it's higher), minus commitments on existing debts, leaves a monthly surplus. The lender then asks what loan that surplus could service — not at today's rate, but at a buffered assessment rate. Every lender runs a version of this; the treatments differ, which is why the answers differ.
Why is a buffer added to the interest rate?
The regulator expects lenders to test that you could still repay if rates rise. APRA has set the serviceability buffer at 3 percentage points above the loan rate since 2021 — so a 6% loan is assessed as if it cost 9%. It's a resilience test, not a prediction.
Why do different lenders give such different numbers?
Policy. One lender counts 80% of rental income where another counts less; overtime, bonuses, and self-employed income get very different treatments; expense benchmarks differ; some are conservative on credit card limits. The spread between the tightest and most generous lender on the same household can be six figures — finding the right fit is most of what a broker does.
Do credit card limits really reduce my borrowing power?
Yes — limits, not balances. Lenders assume you could max every card tomorrow, so they count a monthly commitment against the full limit even if you pay it off. Closing or reducing unused limits before applying is one of the few genuinely quick wins.
Is this calculator the same as pre-approval?
No. This is an estimate from a standard method with visible assumptions. Pre-approval is a lender actually assessing your documents and conditionally agreeing to lend — it's the number you can make offers with. Use this to set expectations, then get pre-approved before you shop seriously.
Will using this calculator affect my credit score?
No. Everything runs in your browser — nothing is submitted, no lender is contacted, and no credit enquiry is made. Your inputs aren't even sent to us.
Talk to a broker in under a minute
Three quick taps, then your details — a real broker replies within one business day.