Calculate Your Borrowing Power
Frequently Asked Questions
What is borrowing power?
Your borrowing power (also called borrowing capacity) is the maximum amount a lender will loan you based on your income, expenses, existing debts, and number of dependants. It's one of the first numbers you need before starting your property search.
How do lenders calculate borrowing power in Australia?
Australian lenders use a Household Expenditure Measure (HEM) benchmark alongside your actual declared expenses and take the higher of the two. They then assess your ability to repay at a "buffer rate" — usually 3% above the standard variable rate — to ensure you can afford repayments if rates rise.
How can I increase my borrowing power?
The most effective ways are: paying off existing debts (especially credit cards and personal loans), reducing living expenses, increasing your income, and saving a larger deposit. Cancelling unused credit cards also helps as lenders count your full credit limit, not just your balance.
Does borrowing power change with interest rates?
Yes — when the RBA raises rates, lenders' assessment rates also rise, which reduces your borrowing power. Conversely, rate cuts increase your capacity. Always get a fresh calculation before making an offer on a property.