Borrowing Power Calculator Australia 2026

How much can you borrow for a home loan in Australia (2026)?

Your borrowing power is the maximum a lender will let you borrow based on your income, living costs, existing debts and the deposit you bring. It is almost always lower than your income alone suggests, because Australian lenders don't assess you at today's interest rate — they stress-test you well above it. In 2026 two rules do most of the damage to your number: the APRA 3% serviceability buffer and the new debt-to-income (DTI) cap.

Current rates and the assessment rate

As of mid-2026, owner-occupier variable rates from the big four sit around 5.74%–5.99% p.a. for principal-and-interest loans under 80% LVR, while the market-wide average variable rate is closer to 6.84% (mid-2026 figure, when the cash rate was 4.35%; it rose to 4.60% on 30 September 2026). But lenders don't assess you at that rate. Under APRA's buffer they add 3 percentage points, so a 6.0% loan is assessed at roughly 9.0%. That buffered "assessment rate" — not your actual rate — is what sets your ceiling.

The new 2026 DTI cap — the change most calculators miss

From 1 February 2026, APRA limits each bank's new lending at a debt-to-income ratio of 6 or more to 20% of its new owner-occupier loans and 20% of its new investor loans. It is not a cap on any one borrower, but it makes loans above 6× income harder to get. For a household on $150,000 that threshold is $900,000 of total debt. Our calculator applies 6× income as a conservative ceiling, so it never shows more than that.

How lenders actually calculate your borrowing power

Every lender runs the same five-step logic; the calculator above models it:

1. Net income. Gross income is converted to after-tax income (roughly 72–78% take-home, depending on bracket).
2. Living expenses. Lenders use the higher of your declared expenses or the HEM benchmark (Household Expenditure Measure) for your income and household size — so understating spending doesn't help.
3. Existing commitments. Personal/car loans, HECS-HELP repayments, and credit cards are subtracted. Cards bite even at a $0 balance: lenders count ~3.8% of your total limit per month.
4. Surplus × assessment rate. Whatever's left is the surplus available to service a new loan, capitalised at the buffered (~9%) rate over the loan term.
5. DTI check. The result is then limited to 6× gross income as a conservative ceiling (APRA limits how much lending each bank does at 6× or more; it is not a per-borrower cap).

Worked example: a couple on $150,000 combined

Take a couple earning $150,000 gross combined, no kids, $10,000 in credit-card limits and no other debt, at a 6.25% rate. Our calculator takes about 72% of gross income as after-tax income (about $108,000), subtracts the HEM living-cost benchmark for their income (about $50,400 a year) and a small card allowance, and services the surplus at the 9.25% assessment rate over 30 years: about $580,000. That is below the 6× ceiling of $900,000, so serviceability is the binding constraint. Lenders using actual tax and their own expense and card rules may arrive at a materially different figure.

7 ways to increase your borrowing power in 2026

• Cut or close credit-card limits — each $10k removed ≈ +$45k–$55k borrowing power.
• Clear or reduce personal/car loans — repayments are dollar-for-dollar against your surplus.
• Make voluntary HECS-HELP repayments before applying to remove the liability.
• Get the lowest actual rate — a lower rate means a lower buffered assessment rate and more capacity.
• Add a co-borrower — a second income lifts both the serviceability and DTI ceilings.
• Extend the loan term to 30 years to lower assessed repayments (costs more interest long-term).
• Choose a lender whose HEM/policy suits you — capacity varies by tens of thousands between lenders for the same borrower.

That last point is where a broker earns their keep: borrowing power for the same applicant can swing $100k+ between lenders.