Home loans
Borrowing power calculator
On a household income of $140,000 with $3,500 a month in living expenses, an indicative capacity is around $600,903. That is assessed at 9.49%, not the 6.49% you would actually pay, because lenders must add a buffer.
Read this before you trust the number
Every public borrowing power calculator, including this one, is an approximation — and the reason is worth knowing. Lenders assess you against the Household Expenditure Measure, a benchmark licensed from the Melbourne Institute and not published. They take the higher of your declared expenses and that benchmark, then apply their own income shading rules on top.
We use the expenses you enter, and we say so. A real lender will very likely assess you on more. Treat this as an upper bound for orientation, not an answer.
Indicative capacity
$600,903
assessed at 9.49%
| Net monthly income | $8,548.33 |
|---|---|
| Expenses and commitments | −$3,500.00 |
| Monthly surplus | $5,048.33 |
| Repayment at 6.49% | $3,794.16 |
Why the assessment rate is higher than the rate you pay
Lenders must check you could still afford the loan if rates rose. Under the prudential standard, an authorised lender adds a buffer of at least 3 percentage points over the product rate, and applies its own minimum floor rate as well. Whichever is higher binds.
| Rate used | Value | Monthly repayment on $600,903 |
|---|---|---|
| The rate you actually pay | 6.49% | $3,794.16 |
| Assessment rate (rate + 3.00 buffer) | 9.49% | $5,048.33 |
At today's rates the buffer binds rather than the floor, which is why capacity is far lower than the repayment you could visibly afford. The difference here is $1,254.17 a month of headroom the lender insists on.
The debt-to-income limit
From February 2026, authorised lenders may write no more than 20% of new mortgage lending at a debt-to-income ratio of 6 or above, measured quarterly and applied separately to owner-occupier and investor lending.
That does not ban high-DTI loans, but it rations them. If your ratio is at or above 6 you are competing for a limited quota, which in practice means fewer lenders, more conditions, and a slower process. Loans for new dwellings and owner-occupier bridging finance are exempt.
What this does not do
- It does not apply the Household Expenditure Measure, because that benchmark is licensed and not public.
- It does not shade your income the way a lender will — typically 80% of rent, overtime, bonuses and commissions.
- It does not account for dependants, HECS-HELP repayments, or lenders mortgage insurance.
- It assumes a 30-year principal-and-interest term.
- It is not a pre-approval, and no lender is bound by it.
Estimate only, not financial advice. This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product; consider obtaining advice from a licensed financial services provider or a mortgage broker. See our methodology.