The exact amount you can borrow depends on your income, expenses, deposit, and the APRA 3% serviceability buffer. This guide explains how lenders calculate borrowing capacity with worked examples at multiple income levels.
When you apply for a home loan, Australian lenders use a serviceability assessment to determine how much they are willing to lend. This is not simply "how much can you afford today" — it is a stress-tested calculation designed to ensure you could still meet repayments if your circumstances changed.
The core calculation works like this: take your gross income, subtract your living expenses (using the higher of your declared expenses or the bank's minimum benchmark called the HEM — Household Expenditure Measure), subtract existing debt repayments, subtract credit card obligations, and determine what monthly mortgage repayment you could sustain. That repayment capacity is then reverse-engineered into a maximum loan amount — but at a higher rate than current market rates.
Every Australian lender regulated by APRA (the banking regulator) is required to assess your loan application at the current interest rate plus 3%. This is called the serviceability buffer.
As of June 2026, with the RBA cash rate at 4.35% following three increases in 2026, typical variable rates are approximately 6.3–7.0% p.a. This means banks assess whether you can afford repayments at approximately 9.3–10.0%. The buffer exists to ensure borrowers are not stretched to their absolute limit at current rates — because rates can and do rise further.
The following examples use typical bank assessment criteria as of June 2026: 6.5% variable rate + 3% buffer = 9.5% assessment rate, 30-year loan term, HEM living expenses benchmark, no other debts unless noted.
| Gross Annual Income | Estimated Borrowing Capacity | Monthly Repayment (at 6.5%) |
|---|---|---|
| $60,000 | ~$280,000 – $340,000 | ~$1,770 – $2,150 |
| $80,000 | ~$390,000 – $460,000 | ~$2,465 – $2,910 |
| $100,000 | ~$500,000 – $590,000 | ~$3,160 – $3,730 |
| $120,000 | ~$610,000 – $720,000 | ~$3,860 – $4,555 |
| $150,000 | ~$780,000 – $920,000 | ~$4,935 – $5,820 |
| Combined Gross Income | Estimated Borrowing Capacity | Monthly Repayment (at 6.5%) |
|---|---|---|
| $120,000 | ~$560,000 – $660,000 | ~$3,540 – $4,175 |
| $160,000 | ~$760,000 – $900,000 | ~$4,810 – $5,695 |
| $200,000 | ~$970,000 – $1,140,000 | ~$6,135 – $7,210 |
Enter your income, expenses, and deposit to see your personalised borrowing capacity estimate.
Open Borrowing Power Calculator →Banks treat 3% of your total credit card limit as a monthly repayment commitment — regardless of your actual balance. A $30,000 total credit card limit (across all cards) reduces your assessed borrowing capacity by approximately $60,000–$80,000, simply because the bank assumes you could spend up to that limit at any time. This is one of the most overlooked and fixable factors.
HECS repayments are compulsory deductions from take-home pay that lenders factor into affordability. On a $100,000 salary, a $60,000 HECS debt triggers approximately $3,150 per year in compulsory repayments — reducing your assessed net income and therefore your borrowing capacity. Unlike other debts, you cannot pay HECS off strategically before applying (beyond making voluntary repayments), but it is worth knowing the impact.
Every $1,000 per month in existing loan repayments reduces your borrowing capacity by roughly $120,000–$150,000, because that $1,000 per month can no longer be directed to mortgage repayments in the bank's assessment model.
If your declared living expenses are below the bank's HEM benchmark for your income and family size, the bank uses HEM regardless. HEM is based on research into typical household spending patterns. You cannot improve your borrowing position by understating expenses, but genuinely reducing discretionary spending in the 3 months before application does help.
Each dependent child increases the bank's estimate of your minimum living expenses, reducing the surplus available for mortgage repayments. Each additional dependant typically reduces borrowing capacity by $30,000–$60,000 depending on the lender and income level.
How much can I borrow on a $100,000 salary in Australia?
On a $100,000 salary with typical expenses and no existing debts, most Australian lenders will allow borrowing of approximately $500,000 to $590,000 in 2026. The APRA 3% buffer means you are assessed at roughly 9.5% even if current rates are around 6.5%. Adding existing debts, HECS, or credit card limits will reduce this range.
Does the APRA buffer reduce how much I can borrow compared to the actual repayment?
Yes, significantly. At 6.5% on a $600,000 loan, the actual monthly repayment is approximately $3,792. But the bank assesses whether you can afford repayments at 9.5%, which would be approximately $5,044 per month for the same loan. This higher assessment rate is what limits how much you can actually borrow.
Does HECS debt reduce how much I can borrow?
Yes. HECS repayments are compulsory income-based deductions that reduce your assessed net income. On a $90,000 salary with a $50,000 HECS debt, you will have approximately $2,800 per year in compulsory repayments that lenders subtract from usable income before calculating your borrowing capacity.
Can I get pre-approval before I find a property?
Yes. Pre-approval (also called conditional approval or approval in principle) is a lender's written assessment that, subject to finding a suitable property, you would be approved for up to a specified loan amount. It typically lasts 90 days and gives you confidence when making offers at auction or through private sale. Pre-approval is not a guarantee of final approval.
Do single applicants have the same access to borrowing as couples?
Single applicants can absolutely borrow to buy — but with only one income assessed, the borrowing capacity is lower than a dual-income couple at the same combined income level, because lenders use higher per-person HEM benchmarks for singles compared to couples. Single applicants may also face more competition at higher price points in major capital city markets.