Does HECS/HELP debt affect my borrowing power?

Yes — HECS-HELP debt is a significant factor that many borrowers underestimate. Lenders deduct your HECS repayment obligation directly from your usable income before calculating borrowing capacity. A $50,000 HECS debt repaid at ~4% of income = approximately $3,000–$4,000 per year deducted, which can reduce your borrowing capacity by $60,000–$80,000 at current rates.

How do credit card limits affect borrowing power?

Lenders assess your credit card limit — not your outstanding balance — as a liability. A $10,000 credit card limit is treated as though you owe approximately 3.8% of the limit ($380/month) regardless of whether it is paid off in full each month. Reducing your credit card limits before applying can meaningfully increase your borrowing capacity. Once you know your borrowing capacity, use the Mortgage Repayment Calculator to check your monthly repayments.

Can I increase my borrowing power?

Yes — the most effective ways to increase borrowing capacity are: (1) Pay down and cancel unused credit cards; (2) Reduce or pay out personal loans and car finance; (3) Increase your income or include a partner's income; (4) Reduce declared living expenses where legitimate; (5) Increase your deposit to reduce the required loan size; (6) Choose a lender with a more generous assessment rate — different lenders use different buffers and HEM benchmarks. A broker can identify the lender most likely to maximise your borrowing capacity for your specific profile. Also check if you need LMI or qualify for any first home buyer schemes.

Borrowing Power Calculator 2026

Q: How do banks calculate how much I can borrow?

Australian lenders assess borrowing capacity using a stressed interest rate — typically 3% above the actual loan rate, and never below 9% (the APRA serviceability buffer). They calculate the maximum monthly repayment you could afford at that stressed rate while keeping your total debt obligations below roughly 35% of your gross income, after deducting living expenses (using the Household Expenditure Measure or your declared expenses, whichever is higher) and existing debt commitments.

Q: What is the APRA serviceability buffer?

The APRA (Australian Prudential Regulation Authority) serviceability buffer requires lenders to assess borrowers at an interest rate at least 3% above the loan's actual rate. This means if you apply for a loan at 6%, the bank stress-tests your repayments at 9%. The buffer was introduced and maintained to ensure borrowers can still service their loan if interest rates rise. It is the main reason you can often borrow less than you might expect at current market rates.

💰 Income

Your Gross Annual Income (before tax)

Partner's Gross Annual Income (leave 0 if single)

Rental Income (annual) (lenders use 80% of this)

Employment Type

🏠 Loan Details

Loan Purpose

Preferred Interest Rate % p.a.

Loan Term

Number of Dependants

💸 Monthly Living Expenses

Monthly Living Expenses (lenders use higher of declared or HEM)

🏦 Existing Debts

Credit Card Limits (total) (lenders use 3.8% of limit/mo)

Personal / Car Loan Repayments (monthly)

HECS / HELP Debt Balance (lenders deduct ~4% of income)

Existing Mortgage Repayments (monthly, if any)

Your details are used only to deliver your result and connect you with a broker.

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Your Estimated Borrowing Power

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Based on your income, expenses and debts

Conservative estimate
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Central estimate
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Best-case estimate
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How We Calculated This

Gross combined income—

Usable rental income (80%)—

HECS / HELP repayment deducted—

Net income for serviceability—

Monthly living expenses used—

Credit card commitment (3.8% of limit)—

Other loan repayments—

Existing mortgage repayments—

Monthly surplus for new loan—

Assessment rate (actual + 3% buffer)—

Estimated borrowing capacity—

Income Utilisation

Living expenses—

Existing debt commitments—

New loan repayment—

Remaining buffer—

Ways to Increase Your Borrowing Power

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How Lenders Calculate Borrowing Power in Australia

Australian lenders use a standardised but nuanced serviceability assessment. Here's exactly what goes into it — and why you may be able to borrow more than this calculator suggests.

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APRA 3% Stress Buffer

All lenders must assess your ability to repay at a rate at least 3% above the actual loan rate (e.g. if applying at 6.09%, they test at 9.09%). This is set by APRA and is the single biggest limiter on borrowing capacity.

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HEM Benchmarks

The Household Expenditure Measure (HEM) is a minimum living expense benchmark. Lenders use the higher of your declared expenses or HEM — so declaring very low expenses doesn't work. HEM varies by location, household size and income level.

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Credit Card Assessment

Lenders count 3.8% of your total credit card limits as a monthly commitment — regardless of whether you pay them off in full. A $20,000 total limit = $760/month deducted from your usable income. Cancel unused cards before applying.

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HECS / HELP Debt

HECS repayments are calculated as a percentage of your gross income (between 1–10% depending on income) and deducted before serviceability is assessed. A $60,000 HECS balance can reduce your borrowing power by $60,000–$90,000.

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Lender Variation

Different lenders apply different HEM benchmarks, income shading policies and assessment rates. Your borrowing capacity can vary by $100,000–$200,000 between lenders for the same income profile. A broker identifies which lender maximises your capacity.

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Self-Employed Assessment

Self-employed borrowers typically need 2 years of tax returns. Lenders average your net profit (after add-backs for depreciation and one-off expenses). Some lenders are more generous than others — your broker selects the most favourable.

Borrowing Power FAQs

How do banks calculate how much I can borrow?+

Lenders assess borrowing capacity using a stressed interest rate — typically 3% above the actual loan rate (e.g. applying at 6% → assessed at 9%). They calculate the maximum monthly repayment at that stressed rate while keeping your total obligations below roughly 35% of gross income, after deducting living expenses (the higher of your declared amount or HEM benchmarks) and all existing debt commitments including credit cards, personal loans and HECS.

What is the APRA serviceability buffer?+

APRA (Australian Prudential Regulation Authority) requires all regulated lenders to test loan serviceability at a rate at least 3% above the actual loan rate, with a minimum floor. This means regardless of the market rate, you are assessed at a significantly higher rate to ensure you could still repay if rates rise. This buffer is the main reason many borrowers can afford existing loans but can't qualify for larger ones at the same income.

Does HECS/HELP debt reduce my borrowing power?+

Yes — significantly. Lenders deduct your HECS repayment obligation directly from your assessable income. At $120,000 gross income, the ATO repayment rate is approximately 4.5% = $5,400/year ($450/month). This reduces your usable income for loan serviceability, and can lower borrowing capacity by $60,000–$90,000 depending on your income level. The effect is more pronounced at lower incomes.

Why does my credit card limit affect my borrowing power?+

Lenders assess your credit card limit — not your outstanding balance — as a potential debt. They calculate 3.8% of your total limit as a committed monthly obligation, regardless of whether you pay it off monthly. A $15,000 credit card limit counts as $570/month against your capacity. Cancelling unused credit cards before applying for a loan can meaningfully increase your maximum borrowing amount.

Can different lenders give me different borrowing amounts?+

Yes — borrowing capacity can vary by $100,000–$200,000 between lenders for the same borrower profile. This is because different lenders apply different HEM benchmarks, income shading policies (how much of rental, bonus or casual income they include), and some use assessment rates closer to 3% above current rates rather than higher floors. A mortgage broker's job is to identify which lender will maximise your borrowing capacity for your specific situation.