Interest rate (actual)
3%10%
The machinery banks hide, shown
Borrowing Power Calculator - the honest version
Banks don't assess you at your interest rate. They add a 3% buffer, apply a living-expenses floor, deduct your HECS-HELP repayment, shade your extra income, re-assess your existing loans at the buffered rate and cap total debt against income. This calculator does all of it - and shows you each step.
Estimated borrowing power
capped by surplus$680,000
Repayments at your actual rate
$4,073 /mo
Your deposit and maximum property value
Your deposit
$170,000
20% of property value, 80% LVR
Maximum property value
$850,000
loan + deposit, before stamp duty and costs
What the bank actually did
- Assessment rate (your rate + 3% buffer)
- 8.99%
- P&I term capacity was solved over
- 30 yrs
- Net monthly income (after tax, Medicare, HELP)
- $7,568
- Living expenses used - HEM floor applied
- $2,100/mo
- Monthly surplus available for repayments
- $5,468
- Debt-to-income ceiling (6x gross, less existing debt)
- $720,000
Borrowing power sets your ceiling. The full audit judges whether a deal under it is worth doing.
Deal Auditor - in build, not yet available
Buffer per APRA guidance, HELP repayment rates per ATO thresholds. HEM figures are indicative floors - each lender uses its own tables. General information, not credit advice.
Why bank calculators flatter you
The number a lender will actually approve is built from mechanisms most public calculators skip. First, the serviceability buffer: APRA guidance has lenders assess repayments at your rate plus 3%, so a 5.99% loan is tested at 8.99%. Second, the HEM floor: declare expenses below the benchmark for your household type and the benchmark is used instead. Third, income shading: only around 80% of bonus, overtime and other income counts, and around 90% of rent - all of it then taxed. Fourth, the HECS-HELP deduction: your compulsory repayment comes straight off net income. Fifth, existing-debt re-assessment: your current home loans are tested as P&I at their rate plus the buffer, and credit card limits cost you about 3.8% a month whether used or not. Finally, the debt-to-income ceiling: total debt above roughly six times gross income triggers scrutiny regardless of surplus.
For investors the interplay matters: an interest-only structure lowers capacity because banks assess the P&I repayment over the shorter remaining term, while rental income helps but arrives shaded and taxed. This calculator tells you which constraint bound. Once you know your ceiling, the real question is whether the deal itself stacks up: run it through the Deal Auditor with your buy box.
Frequently asked questions
Why is my real borrowing power lower than most online calculators say?
Because banks assess you at a buffered rate - your actual rate plus a 3% serviceability buffer per APRA guidance - and apply a living-expenses floor (HEM) even if you declare less. Many calculators quietly skip both. This one shows the buffered assessment rate, the expense floor, the HECS-HELP deduction and the debt-to-income ceiling it applied, so the number matches what a lender actually produces.
Does a HECS-HELP debt reduce borrowing power?
Yes, materially. Lenders deduct your compulsory HELP repayment from net income. Under the marginal system, 2026-27 repayments are nil to $69,528 of repayment income, then 15c per dollar to $129,717 and 17c per dollar above that (a flat 10% of income above $186,050). On a $100,000 income that is about $4,571 a year of lost servicing - roughly $45,000 of capacity at current assessment rates.
Does rental income count towards borrowing power?
Yes, but shaded: lenders typically count around 90% of rent to allow for vacancy and costs, and it is then taxed like other income. Bonus, overtime and other supplementary income are usually shaded to about 80%. A shaded dollar of bonus is worth less to your capacity than a dollar of base salary.
How are my existing loans assessed?
Not at what you actually pay. Existing home loans are re-assessed as principal-and-interest repayments at their rate plus the 3% buffer over the remaining term - interest-only loans over the shorter period left after the IO term. Credit cards cost about 3.8% of the total limit per month whether used or not, and loan balances also come off your debt-to-income ceiling.
What is the HEM floor?
The Household Expenditure Measure - a benchmark of typical living costs by household type that lenders use as a minimum. If you declare monthly expenses below the HEM for your situation, the bank assesses you at the HEM anyway. Declaring $500 a month does not increase your capacity.
Is this what a bank will actually lend me?
It is a realistic estimate of the mechanics lenders use, but each bank has its own HEM tables, shading rules, income treatments and policy overlays. Treat this as a planning figure, and confirm with a broker or lender. It is general information, not credit advice.