How Much Can I Borrow for a Home Loan?
Your borrowing power, sometimes called borrowing capacity, is the maximum amount an Australian lender will lend you based on your income, living expenses, existing debts and the current interest rate plus a 3% APRA-mandated stress test buffer. As a very rough rule of thumb, most borrowers land at 4 to 5.5 times their gross annual income (a little higher on clean high incomes), and since February 2026 APRA also limits how much lending banks can write above 6 times income, so treat 6 times as the practical ceiling. Where you land inside that range moves dramatically with your specific financial situation.
Most first home buyers are surprised to learn that borrowing power varies between lenders by $50,000 to $100,000 for the same person. Each lender uses a different expense benchmark (HEM vs actuals), different income shading rules for bonuses and overtime, and different credit policies for HECS, casual income and rental income. Using an independent borrowing power calculator gives you a baseline number before you speak to any lender.
For a deeper dive, read our guide on how much you can really borrow. It covers the gap between calculator estimates, bank maximums, and what you can comfortably afford to repay. And if you are right at the start, how buying your first home works walks the whole journey in eight steps.
What Affects Your Borrowing Power?
Base salary plus shaded bonus and overtime
Full limit counts as debt, not the balance
Scales with your income, not the balance
Higher assessed living costs under HEM
The higher of your actuals or the benchmark
A 0.5% rate change or 25 vs 30 years moves it
Same person, different lender can mean a $50,000 to $100,000 difference. Each bank uses its own expense benchmark, income shading and HECS treatment, which is exactly why a broker can often unlock more than going direct to your own bank.
Income
Lenders assess your gross income: base salary, regular overtime, bonuses, commission, rental income and certain government payments. Irregular income (bonuses, commission, overtime) is usually shaded, meaning discounted by 20 to 50% depending on the lender. Self-employed borrowers need two years of tax returns in most cases. PAYG employees with stable income get the most favourable assessment.
Existing debts and credit cards
Every dollar of existing debt reduces your borrowing power. Credit cards are the biggest hidden killer, because lenders count the full credit limit as a liability, not the balance. A $10,000 limit you never use can cut $30,000 to $50,000 from your borrowing power. Car loans, personal loans and Afterpay or Zip accounts all count. Read our guide on how credit cards kill borrowing power for the full breakdown.
HECS-HELP debt
HECS is not counted as a traditional debt, but the compulsory salary repayment reduces your assessable income and therefore your borrowing capacity. Since July 2025 repayments work like tax brackets: you repay 15 cents per dollar of income above the threshold ($69,528 for 2026-27), so a $90,000 salary repays roughly $3,070 a year, which costs about $31,000 in borrowing power on our engine. The hit scales with your income rather than your balance: closer to $16,000 on an $80,000 salary, and more like $47,000 on $100,000. Balances were also cut by a one-off 20% in 2025 under the student debt reduction legislation, applied automatically by the ATO. Following regulator guidance in 2025, some lenders will now disregard a HELP debt entirely if it will be paid off within about a year. Treatment still varies widely between banks. See our detailed guide on how HECS debt affects your home loan.
Credit card limits (not balances)
This is the single most common surprise for first home buyers. Banks assume you could max out your credit card tomorrow, so they assess your ability to service the full limit at around 3 to 4% of the limit each month, most commonly 3.8%. At 3.8%, a $15,000 limit turns into an assessed $570 per month commitment, even if your balance is zero. Before you apply, reduce or cancel every card you do not actively need.
Number of dependants
Each dependant increases your assessed living expenses under the Household Expenditure Measure (HEM). On our engine each child costs roughly $60,000 of capacity, so a couple with no children typically has around $120,000 more borrowing power than the same couple with two children, all else equal.
Living expenses
Lenders use the higher of your declared expenses or the HEM benchmark for your household size and postcode. Being frugal does not always help: if your declared number is below HEM, the lender uses HEM anyway. But if your actual expenses are higher (private school fees, car payments, gym memberships, streaming subscriptions), the higher number applies and reduces capacity further.
Loan term and interest rate
A 30-year loan term lifts capacity compared to 25 years because the assessed monthly repayment is smaller. The interest rate matters even more: a 0.5% lower rate can lift your borrowing power by $20,000 to $40,000 on a typical first home buyer loan. A broker compares 30 or more lenders to find the rate and the most favourable serviceability model.
How to Increase Your Borrowing Power
If your borrowing power estimate is lower than you hoped, here are the six proven strategies that actually move the number:
- Cancel unused credit cards. Even a $0 balance card counts at full limit. Cut a single $10,000 card and add roughly $30,000 to $50,000 in capacity.
- Pay down personal loans and car loans. Every $200 a month of committed repayments freed up adds roughly $25,000 in borrowing power.
- Reduce discretionary spending for 3 months before applying. Cancel subscriptions, pause Afterpay, review insurance premiums. Lenders look at 3 months of bank statements.
- Apply jointly with a partner. A partner's income is fully included in the assessment. Two modest incomes often beat one large one because expenses do not double.
- Choose a 30-year loan term. Longer term means a lower assessed repayment and more capacity. You can always pay it off faster later with extra repayments.
- Use a mortgage broker. Different lenders have different appetites and policies. A good broker finds the lender that gives you the highest capacity for your specific income mix, debts and expenses. Match with a free broker
You can also use our mortgage repayment calculator to see how different loan amounts and terms translate into monthly repayments, and the stamp duty calculator to plan the upfront costs that sit on top of your deposit.
Once you are close to an offer, budget $450 to $900 for a building and pest inspection before you commit. It is the cheapest way to catch $10,000+ problems before they become yours. See our full building and pest inspection guide for what is covered and how to read the report.
If you are considering building a new home rather than buying an established one, construction loans work differently: the lender draws down funds in stages as the build progresses, and you only pay interest on what has been drawn so far. This usually means lower borrowing costs during the build than a standard home loan of the same amount. Our guide to building a house in Australia covers 2026 build costs, the 5 progress payment stages, and how to size a construction loan correctly.
Borrowing Power by Salary: a Quick Guide
These figures come from the same engine that powers the calculator above, so what you read here matches what the tool will show you. Assumptions: no debts or credit cards, no dependants, benchmark (HEM) living costs, a 30-year term and a 9.2% assessment rate (a typical 6.2% offered variable rate plus APRA's 3% serviceability buffer). The comfortable column is the assessed maximum with a deliberate cushion, which is the number we lead with in your results.
| Annual salary | Comfortable estimate | Assessed maximum |
|---|---|---|
| $60,000 | $188,000 | $241,000 |
| $80,000 | $296,000 | $379,000 |
| $100,000 | $403,000 | $517,000 |
| $120,000 | $511,000 | $655,000 |
| $150,000 | $665,000 | $852,000 |
| Couple: $150,000 combined | $575,000 | $737,000 |
| Couple: $200,000 combined | $845,000 | $1,083,000 |
These are estimates only. Actual borrowing power varies by lender, expenses, debts and credit history, and can differ by $70,000 or more between banks. Use the calculator above for a personalised estimate.
A Worked Example
Here is how the numbers stack up for a typical single first home buyer on our engine: $90,000 salary, no children, no debts, 30-year loan.
Add a $10,000 credit card limit and it falls to about $401,000; add $30,000 of HECS on top and it lands near $370,000. Run your own numbers in the calculator above.
Borrowing Power vs Your Deposit
Borrowing power sets your loan ceiling; your deposit decides how much of the price you cover yourself. Roughly, the property price you can target is your borrowing power plus your deposit (before stamp duty and costs). Here is how a $450,000 borrowing power (our worked example, rounded) plays out as your deposit grows:
| Deposit | Property price you can target | LMI? |
|---|---|---|
| $30,000 | about $480,000 | Yes, unless 5% scheme |
| $50,000 | about $500,000 | Yes (about 10% deposit) |
| $90,000 | about $540,000 | Yes (about 17% deposit) |
| $145,000 | about $595,000 | No (about 24% deposit) |
Figures assume $450,000 of borrowing power and exclude stamp duty and buying costs. A 20% deposit avoids LMI; first home buyers can get in with 5% and no LMI through the 5% Deposit Scheme. Estimate the upfront costs with our stamp duty calculator.
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Borrowing Power: Frequently Asked Questions
How much can I borrow on a $80,000 salary?
On the same engine that powers the calculator above (a 9.2% assessment rate and benchmark living costs), a single borrower on $80,000 with no dependants, no debts and no credit cards shows an assessed maximum near $380,000, with a comfortable estimate around $296,000. A couple on $80,000 combined lands lower, near $250,000, because two people cost more to run than one. Add a $10,000 credit card limit and borrowing power drops by $30,000 to $50,000, and a HECS-HELP debt takes a further slice. Every lender assesses differently, so the result can span $70,000 or more between banks, which is why using a broker often unlocks a higher approval.
Do credit cards affect borrowing power in Australia?
Yes, significantly. Lenders count the full credit card limit as a liability, not the balance. A $10,000 credit card limit that you never use still reduces your borrowing power by approximately $30,000 to $50,000 because the lender assumes you could max it out. Cancelling unused credit cards is one of the fastest ways to increase borrowing power before you apply. If you keep a card, ask your bank to reduce the limit to the minimum you need, because every $1,000 of reduced limit adds roughly $3,000 to $5,000 of borrowing capacity.
Does HECS-HELP debt affect how much I can borrow?
Yes, though less than it used to. The compulsory repayment deducted from your salary reduces your net income, which reduces your borrowing capacity. Since July 2025 repayments are marginal: you pay 15 cents per dollar of income above the threshold, which is $69,528 for 2026-27, so on a $90,000 salary the repayment is roughly $3,070 a year, costing about $31,000 in borrowing power on that salary. The hit scales with your income rather than your balance, so it is smaller on lower salaries and larger on higher ones. Regulators also cleared lenders in 2025 to ignore a HELP debt that will be paid off within about a year. Treatment varies a lot between banks, and a broker knows which lenders are most generous with HECS-HELP.
How do I increase my borrowing power?
The six proven ways to increase borrowing power before applying: (1) cancel unused credit cards, because even a $0 balance counts against you at full limit; (2) pay down or clear personal loans and car loans; (3) reduce discretionary spending for 3 months before applying so the bank sees lower expense patterns on your statements; (4) apply jointly with a partner, whose income is fully included; (5) choose a 30-year loan term instead of 25, which reduces the assessed repayment and lifts capacity; (6) use a broker who can match you to the lender with the most favourable serviceability model for your situation.
How much deposit do I need to buy a first home in Australia?
First home buyers can buy with as little as 5% deposit using the Australian Government 5% Deposit Scheme (formerly the First Home Guarantee), which also waives Lenders Mortgage Insurance (LMI). Without the scheme, most lenders require at least 10%, and anything under 20% triggers LMI which can add $10,000 to $30,000 to your upfront costs. A 20% deposit gives you the widest choice of lenders and the best interest rates. You also need to budget up to 5% of the purchase price on top for stamp duty, conveyancing and inspections, though first home buyers under their state's concession caps often pay well under 1% because the stamp duty falls away.
How much can I borrow on a $100,000 salary?
On the same engine that powers the calculator above, a single borrower on $100,000 with no dependants and no debts shows an assessed maximum near $517,000 and a comfortable estimate around $403,000, which supports a purchase around $645,000 with a 20% deposit. A $10,000 credit card limit trims $30,000 to $50,000, and a HECS-HELP debt on that salary takes roughly another $47,000 because the repayment scales with income. A couple earning $100,000 combined usually lands a little lower per dollar because living expenses do not halve, but two incomes still beat one. Lenders vary by $70,000 or more, so it pays to compare.
How much can I borrow if I am self-employed?
You can borrow while self-employed, but the assessment is stricter. Most lenders want two years of tax returns and financials and use the lower (or an average) of your last two years of net profit, sometimes adding back depreciation. Businesses under two years old have fewer options, though some lenders accept one year or a low-doc loan with a larger deposit. Self-employed borrowing power often sits $50,000 to $150,000 below a PAYG employee on the same headline income because the income is shaded harder. A broker who specialises in self-employed lending matters more here than anywhere.
How much can I borrow with a $50,000 deposit?
Your deposit does not set your borrowing power, your income, expenses and debts do, but it sets how much of the price you cover yourself. With a $50,000 deposit and, say, $450,000 of borrowing power, you could target a property around $500,000 before costs. Under a 20% deposit you will usually pay Lenders Mortgage Insurance, unless you use the 5% Deposit Scheme (5% deposit, no LMI). Remember that stamp duty and buying costs come out of your deposit too, so budget up to 5% of the price on top, or much less if you qualify for your state's first home buyer duty concessions.
How accurate is an online borrowing power calculator?
A well-built borrowing power calculator using current Australian lending rules (including the 3% APRA serviceability buffer) will typically get you within 10 to 15% of what a lender will formally approve. The variation comes from lender-specific credit policy: different banks use different expense benchmarks (HEM vs actuals), different income shading rules for bonuses and overtime, and different appetites for HECS or casual income. For an exact approval figure, speak to a broker or lender for pre-approval. The calculator is a starting point, not a guarantee.