How much can I borrow for a home loan?
MakeMyLoan Editorial4 May 20265 min read
Reviewed by Pratik Chauhan — Finance & Mortgage BrokerUpdated 14 July 2026
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"How much can I borrow?" is usually the first question anyone asks about a home loan, and the honest answer is: it depends on how a lender reads your whole financial position, not just your salary. Two people on identical incomes can have very different borrowing power once expenses, debts and family circumstances are factored in. This guide walks through the levers that actually move the number, so the estimate you get from our borrowing capacity calculator makes sense — and so you know what a lender will look at when it counts.
Lenders in Australia must lend responsibly under the National Consumer Credit Protection Act (NCCP). In practice that means they run a serviceability assessment: can you comfortably afford the repayments on the loan you are asking for, even if rates rise? They start with your income, subtract your living expenses and existing debt commitments, apply a buffer to the proposed repayments, and see what is left over. If the surplus is positive with room to spare, the loan services. The maximum loan is simply the largest amount that still passes that test.
Your base salary is the anchor, but lenders treat different income types differently:
Because each lender has its own policy on all of this, the same payslip can support quite different loan sizes at different lenders. That policy variation is one of the main reasons a broker can help.
Lenders compare your declared living expenses against a benchmark — most use a version of the Household Expenditure Measure (HEM), which estimates typical spending for a household of your size, location and income. They then use the higher of your declared expenses or the benchmark. You cannot borrow more by understating your spending; if your bank statements show higher outgoings than you declared, the lender will question it. Dependants matter here too: each child increases the benchmark, which directly reduces borrowing power.
Every existing commitment reduces what is left to service a home loan:
Closing an unused card or paying out a small personal loan before applying can lift your capacity more than people expect.
Free, instant, and no details required — see roughly what lenders could approve for you.
Lenders do not assess your repayments at the actual interest rate you will pay. Under regulator guidance they add a serviceability buffer — typically around 3 percentage points above your actual rate. So if your loan is offered at one rate, the lender tests whether you could still afford repayments at a rate roughly 3 points higher. This is a deliberate safety margin against rate rises and life changes, and it is the single biggest reason your borrowing power is lower than a back-of-envelope calculation suggests. The buffer applies to your existing loans too when you refinance or buy again.
If you have tried three bank calculators and got three numbers, nothing is wrong with you. Calculators differ because each one bakes in different assumptions: the buffer rate used, how expenses are estimated, whether bonus income is shaded, how credit card limits are treated. Bank calculators also tend to be simplified marketing tools — the real assessment happens in the lender's credit engine with your verified documents. Treat any calculator, including our borrowing capacity calculator, as a well-informed estimate that tells you the ballpark, not a pre-approval. If you want to understand your result in detail, see our guide to reading borrowing power results.
Some levers are genuinely within your control:
What does not help: understating expenses, hiding debts, or inflating income. Lenders verify, and discrepancies damage the application. Our guide to common application mistakes covers what to avoid.
A calculator gives you a starting point; a broker can tell you which lender's policy actually suits your income and situation, and what number you can realistically plan around. Get in touch for a no-obligation chat about your borrowing power.
Online calculators use simplified assumptions. The real assessment applies a serviceability buffer of around 3 percentage points above your actual rate, uses the higher of your declared expenses or the HEM benchmark, and shades variable income like bonuses and overtime. Each of those steps tends to reduce the number compared with a marketing calculator.
Yes. Lenders assess credit cards on the limit, not the balance, because you could draw the full limit at any time. Reducing or closing unused cards before you apply is one of the simplest ways to lift borrowing capacity.
It does. Compulsory HECS/HELP repayments come out of your pay, so lenders treat them as reducing your net income available for loan repayments. The larger your income, the higher the repayment percentage, so the effect can be significant for higher earners.
No. Lenders differ on how they treat overtime, bonuses, casual income, rental income, HECS and living expenses. The same applicant can see materially different maximums across lenders, which is why comparing policies — not just rates — matters.
No. An estimate is an unverified calculation. Pre-approval means a lender has actually assessed your documents and credit file and indicated conditional support for a loan amount. If you are getting serious about buying, pre-approval is the next step.
This article is general information only and doesn't consider your personal objectives, financial situation or needs — it isn't personal credit advice, and lending criteria, rates, fees and government schemes change. Before acting, speak with a licensed MakeMyLoan broker or credit representative who will assess your circumstances and provide a credit guide before any credit assistance is given.