Jul 17th, 2025

How Borrowing Power Calculators Work in Australia

Borrowing Power Calculators in Australia

Borrowing power calculators are indispensable for prospective home buyers in Australia. By inputting your income, expenses and existing debts, these online tools estimate the maximum loan you could secure. Major banks like NAB, ANZ, Westpac and CommBank offer their own versions, helping you set realistic borrowing expectations.

Key Components of Borrowing Power Calculators

Income: Gross or net salary, bonuses, rental income and sometimes dividends. Irregular earnings may be discounted or excluded.
Expenses: Monthly living costs and debt repayments. Many calculators benchmark these against the Household Expenditure Measure (HEM) to avoid underestimating outgoings.
Existing Liabilities: Credit card limits, car loans and personal loans reduce your borrowing capacity.
Loan Preferences: Loan term, interest rate (fixed or variable) and repayment type (principal & interest vs. interest-only).
Dependents: More dependents increase assumed expenses, lowering estimated borrowing power.

How the Calculation Works

Lenders determine your borrowing capacity by subtracting your costs from your income, then stress-testing the result. Typically, they add about 3% to the current interest rate to simulate potential rate rises.

Assumptions & Limitations

Estimates Only: These calculators guide, but don’t guarantee, loan approval.
No Fees Included: Stamp duty, Lenders Mortgage Insurance (LMI) and other charges are generally excluded.
Different Models: Each bank uses its own assumptions, so results can vary.

Enhancing Your Borrowing Power

Boost your income and savings
Pay down existing debts
Maintain a strong credit score
Increase your deposit

Recommended Tools

Borrowing power calculators are a helpful starting point for your home loan journey. For tailored advice and a thorough assessment based on your full financial profile, consult a mortgage broker or financial adviser. For a comprehensive analysis and personalized borrowing potential consultation, explore our platform.

@
Retire without working another decade? Property makes it possible. Rents rise. Debt shrinks. Equity stacks. Play it smart — and let your assets do the heavy lifting. #creatorsearchinsights #retireearl...

@
Snowcation? Smart investors see more than powder and pine trees. They’re buying in high-demand holiday towns—where tourists pay top dollar and properties work year-round. Think: • High nightly Air...

@
Luxury property isn’t just a dream — it’s a strategy. While others save, the wealthy structure deals, leverage assets, and stack equity. Comment ‘masterplan’ to get the blueprint they don’t teach you....

← Previous Article Real-Life Story: Buying Property Through an SMSF

Next Article → Sample Borrowing Power Estimate for Dual-Income Co...

Sample Borrowing Power Estimate for Dual-Income Couple in Victoria

You may also like

Blog

Which Property Would You Buy? A Real Estate Investment Breakdown

Which Property Would You Buy? A Real Estate Investment Analysis Australia's property market has experienced its ups and downs since 2021, yet real estate remains one of the most effective routes to building wealth. With numerous investment choices available – from luxury apartments to townhouses, house and land packages, and...

May 2nd, 2025
4 months ago

Blog

The Smart Investor’s Guide to New Apartment & Duplex Developments in Australia

A Smart Investor’s Roadmap to Australia’s New Apartment and Duplex Projects Are you on the hunt for the most effective property investment techniques in Australia? Whether you’re stepping into the market for the first time or are a seasoned investor, newly launched apartment and duplex developments present some of the...

Mar 23rd, 2025
6 months ago

Blog

Sample Borrowing Power Estimate for Dual-Income Couple in Victoria

Estimating Borrowing Power for Dual-Income Homebuyers in Victoria Estimating your borrowing capacity is a critical first step when you’re planning to purchase a home. For dual‐income couples in Victoria, leveraging both salaries and existing equity can significantly boost your buying power. Below is an illustrative scenario for a couple with...

Jul 18th, 2025
2 months ago

Straightforward process

Ready to take control of your financial future?

Discovery Q&A:

We begin with a personalized discovery Q&A to understand your goals, risk tolerance, and financial situation.

Custom Strategy:

Based on your needs, we craft a strategic investment or financial plan tailored just for you.

Ongoing Support:

We help you track progress, optimize decisions, and adjust your plan as your life and markets evolve.

Financial Freedom:

With a clear roadmap and expert guidance, you move confidently toward long-term wealth and peace of mind.

Chat With Investor IQ

Build Wealth with Confidence.

Smart Financial Advice for a Prosperous Future

Get Expert Investment Guidance

Plan Your Investment Strategy

Understand your goals and build a tailored strategy—whether you're focused on cashflow, capital growth, or long-term wealth creation.

Access the Right Opportunities

Explore high-growth areas, new builds, house & land packages, or SMSF-ready properties matched to your financial profile.

Build Long-Term Wealth

Leverage tax advantages, depreciation, and smart lending strategies to maximise returns and grow your portfolio sustainably.

Start Your Investment Journey

Smart Property Investing Starts Here

Whether you're a first-time investor or growing your portfolio, we provide the guidance, tools, and insights you need to make informed decisions and secure high-performing properties. Let us help you turn property into prosperity.

Chat to Investor IQ