Borrowing Capacity Calculator
Find out how much you could borrow for a home loan in minutes. Our borrowing capacity calculator estimates how much a lender may be willing to lend based on your income, expenses, debts and deposit.
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Explore your options after estimating your borrowing capacity
What determines your borrowing capacity?
Lenders don't decide how much you can borrow based on your income alone. They assess your overall financial position, including your income, living expenses, existing debts, deposit, credit history and their own lending criteria.
While every lender uses a different credit policy, these are some common factors that have the biggest impact on your borrowing capacity.
1. Income
Your income is the starting point for every borrowing assessment. In general, the higher and more stable your income, the more you may be able to borrow. Lenders also assess how reliable that income is, so bonuses, overtime and self-employed income may be treated differently.
Example: Two borrowers with identical expenses but different incomes are likely to have different borrowing capacities.
2. Living expenses
Lenders don't just look at what you earn—they also look at what you spend. Higher ongoing living expenses reduce the income available to service a home loan, which can lower your borrowing capacity.
Example: Two households earning the same income may be able to borrow different amounts if one spends significantly more each month.
3. Existing debts
Current financial commitments reduce the amount you may be able to borrow. This includes home loans, personal loans, car finance, HECS-HELP debt and even unused credit card limits.
Example: Paying off a personal loan or reducing your credit card limit may increase your borrowing capacity.
4. Deposit
A larger deposit won't always increase how much you can borrow, but it can improve your loan options. It lowers your Loan-to-Value Ratio (LVR), may help you avoid Lenders Mortgage Insurance (LMI), and can make your application less risky from a lender's perspective.
Example: A borrower with a 20% deposit will usually have access to more loan options than someone with a 5% deposit.
5. Credit history
Lenders review your credit history to understand how you've managed credit in the past. Missed repayments, defaults or multiple recent credit applications may affect your ability to borrow.
Example: A strong repayment history supports your application, while a poor credit history may reduce your borrowing capacity or result in your application being declined.
Your borrowing capacity also depends on which lender you apply with, as every bank uses its own assessment criteria.
Why is my borrowing capacity different at every bank?
It's common for two lenders to give the same borrower very different borrowing limits.
That's because every lender has its own credit policy, risk appetite and assessment criteria. While all lenders consider your income, expenses and existing debts, they don't assess them in exactly the same way.
Some of the biggest differences include:
Assessment interest rates
Lenders don't assess your application using today's interest rate. Instead, they test whether you could still afford the loan if rates were higher. The assessment rate varies between lenders and directly affects your borrowing capacity.
Income policies
Not every lender treats income the same way. Some may count 100% of overtime or bonuses, while others only include part of it. The same applies to rental income, casual income and self-employed earnings.
Living expense assessments
Lenders compare your declared living expenses against their own benchmarks. Some lenders apply more conservative assumptions than others, which can reduce how much they'll lend.
Existing debts
The way lenders assess credit cards, personal loans, HECS-HELP debt and Buy Now Pay Later facilities also differs. Even small differences in policy can affect your borrowing limit.
Credit policy
Each lender has its own appetite for different borrower types. One lender may be more comfortable lending to self-employed borrowers, while another may be more flexible with higher debt-to-income ratios.
The takeaway: Your borrowing capacity isn't a fixed number. It's the amount a particular lender is willing to lend based on its own credit policy. That's why comparing lenders can sometimes increase your borrowing capacity without anything about your financial situation changing.
How to improve your borrowing capacity
While some factors like interest rates or lender policies are outside your control, there are several practical steps you can take to improve your borrowing capacity before applying for a home loan.
Reduce your existing debts
Lenders assess all of your financial commitments, not just your proposed home loan. Paying off personal loans, car finance or Buy Now Pay Later balances can increase the income available to service a mortgage.
Lower your credit card limits
Even if you pay your credit card off in full each month, lenders assess the approved credit limit rather than the outstanding balance. Reducing unused credit limits can improve your borrowing capacity.
Save a larger deposit
A larger deposit reduces your LVR, which may give you access to more lenders and lower borrowing costs. While it won't always increase how much you can borrow, it can strengthen your application and reduce the amount you need to finance.
Review your living expenses
Lenders look closely at your ongoing household spending. Reducing discretionary expenses before applying may improve your borrowing capacity, particularly if your declared expenses are significantly higher than lender benchmarks.
Compare multiple lenders
Borrowing capacity isn't the same everywhere. Because lenders use different assessment rates, income policies and servicing rules, comparing multiple lenders can sometimes result in a higher borrowing limit without any change to your financial situation.
Apply with a co-borrower
If appropriate, applying jointly combines two incomes, which can increase your borrowing capacity. Both applicants' income, expenses and financial commitments will be assessed.
Check your credit report
Before applying, review your credit report for any errors or missed repayments that could affect your credit score. Correcting inaccuracies early may help avoid unnecessary issues during the application process.
Pravin Mahajan
Founder @ Bheja.ai | Mortgage Broker | Ex-CTO RateCity & CIMET
Pravin Mahajan is the Founder of Bheja.ai and an accredited Mortgage Broker (Credit Rep. 570637). Based in Sydney, he sits at the unique intersection of financial regulation and enterprise technology.
With over 30 years of experience, Pravin has architected the consumer platforms that millions of Australians rely on for daily financial and purchasing decisions. His career is defined by building high-scale systems that simplify complex choices:
- RateCity (Acquired by Canstar): As Chief Product & Technology Officer, Pravin led the tech transformation that culminated in the company's acquisition. He orchestrated "Australia’s First Home Loan Sale," a digital initiative that reached over 12 million people.
- CIMET: As CPTO, he built enterprise-grade infrastructure for energy and broadband comparison, scaling operations to support major B2B partners.
- Salmat (Lasoo): He architected digital catalogue systems used by 5.7 million monthly users, digitising the retail experience for brands like Target and Myer.
- Woolworths: Designed the real-time, secure "Pay at Pump" transaction infrastructure deployed Australia-wide.
Today, at Bheja.ai, Pravin combines this deep technical background with his Certificate IV in Finance and Mortgage Broking to build AI agents that don't just compare loans, but help Australians actively secure their financial future.
Frequently Asked Questions (FAQs)
A borrowing capacity calculator is a tool that helps you figure out how much money you can borrow for a home loan based on your income, expenses, and credit score. It gives you an idea of your limits so you can plan your finances better.
