If you're thinking about buying a home, the first question on your mind is probably: how much can I actually borrow? The answer isn't as simple as a multiple of your salary — Australian lenders look at a range of factors, and the number can vary significantly between banks.
This guide explains exactly how lenders calculate borrowing power, what affects it, and what you can do to get a higher figure.
As a rough starting point, most Australian borrowers can borrow somewhere between 5 and 6 times their gross annual income — but this is just a ballpark. Your actual borrowing power depends on your expenses, debts, credit history, and the lender's specific policies.
| Annual Income | Rough Borrowing Range | Estimated Property Budget* |
|---|---|---|
| $70,000 | $350,000 – $420,000 | $430,000 – $500,000 |
| $100,000 | $500,000 – $600,000 | $580,000 – $680,000 |
| $130,000 | $650,000 – $780,000 | $730,000 – $860,000 |
| $160,000 | $800,000 – $960,000 | $880,000 – $1,040,000 |
| $200,000 | $1,000,000 – $1,200,000 | $1,080,000 – $1,280,000 |
*Assumes $80,000 deposit. Figures are indicative only.
Banks don't just look at your salary and multiply it. They run what's called a serviceability assessment — essentially checking whether you can comfortably make repayments even if interest rates rise. Here's what they assess:
Lenders start with your gross income, deduct tax, and arrive at your take-home pay. They typically count 100% of base salary. They may count only 80% of overtime, bonuses, or rental income — so if a chunk of your income comes from these sources, your borrowing power may be lower than you expect.
Every lender uses a benchmark called the Household Expenditure Measure (HEM) — a minimum estimate of what it costs to live in Australia based on your location and family size. If your declared expenses are below HEM, the lender will use HEM anyway. If they're above it, they'll use your actual expenses.
Credit cards, car loans, personal loans, HECS/HELP debt — all of these reduce what you can borrow. Crucially, credit card limits count against you, not just your current balance. A $15,000 credit card limit you never use can reduce your borrowing power by $50,000–$80,000.
APRA (Australia's banking regulator) requires lenders to assess your ability to repay at the loan rate plus 3%. So if your actual rate is 6%, they test whether you can afford repayments at 9%. This is why you can often borrow less than you'd expect.
💡 Quick tip: The single fastest way to increase your borrowing power is to cancel unused credit cards before applying. It costs nothing and can add tens of thousands to your limit.
Two incomes make a significant difference — not just because of the combined salary, but because shared living expenses are lower relative to income. A couple earning $150,000 combined can typically borrow more than twice what a single person on $75,000 can, because their combined surplus after expenses is proportionally much higher.
| Situation | Combined Income | Typical Borrowing Range |
|---|---|---|
| Single borrower | $80,000 | $380,000 – $460,000 |
| Single borrower | $120,000 | $580,000 – $700,000 |
| Couple (joint) | $150,000 | $800,000 – $960,000 |
| Couple (joint) | $200,000 | $1,050,000 – $1,250,000 |
Indicative only. Assumes moderate expenses and no existing debts. Actual figures vary significantly by lender.
Your deposit affects how much you can buy (purchase price = loan + deposit), but it doesn't directly affect your borrowing power. The exception is Lenders Mortgage Insurance (LMI): if your deposit is less than 20% of the property value, most lenders will charge LMI, which can add $10,000–$30,000 to your loan cost. Some lenders will capitalise this into the loan, which slightly reduces your effective purchasing power.
Government schemes like the First Home Guarantee allow eligible first home buyers to purchase with as little as 5% deposit without paying LMI — effectively extending your purchasing power without a larger deposit. Places are limited each financial year.
This is where people are often surprised — borrowing power varies significantly between lenders. Two people with identical finances might be offered $620,000 by one bank and $780,000 by another, simply because of different HEM benchmarks, how they treat rental income, or how they assess self-employed applicants.
This is one of the core reasons a mortgage broker adds value — they know which lenders assess your profile most favourably, and they can match you to the right one before you apply. Submitting to the wrong lender doesn't just waste time — a declined application damages your credit file.
Not all income is treated equally. Here's how different types affect your assessed borrowing power:
Beyond income, these factors reduce the amount lenders will offer:
Before you apply, these actions can meaningfully increase what lenders will offer:
Our calculator gives you a rough estimate — a broker gives you the real number based on your actual finances and the best lender for your profile.
Yes. Lenders treat HECS/HELP repayments as a committed expense, which reduces your disposable income and therefore your borrowing power. On a $60,000 HECS balance with $100,000 income, the annual repayment is around $7,500 — which lenders deduct from your assessed income. The impact on borrowing capacity is typically $50,000–$80,000 less than someone without HECS on the same salary.
Being self-employed doesn't prevent you from borrowing, but lenders assess your income differently. Most require two years of tax returns and will average your net profit — or use the lower of the two years if your income has varied. A broker who specialises in self-employed applications knows which lenders are most generous with ABN income and how to present your financials in the most favourable (and accurate) way.
The most effective steps are: cancel unused credit cards, close BNPL accounts, pay down personal loans and car loans, declare accurate (not padded) living expenses, and consider applying with a co-borrower. A broker can also match you to lenders with more generous serviceability assessment criteria for your specific income and expense profile.
Yes — often dramatically. The difference between the most and least generous lender for the same borrower profile can be $100,000–$200,000 or more. This is because each lender sets their own HEM benchmarks, discount rates for variable income, and policies around credit card limits and HECS debt. A broker who has run hundreds of serviceability calculations knows where to look for your specific situation.
Yes, under current APRA guidelines. The 3% serviceability buffer has been in place since late 2021. APRA reviews it periodically — if the cash rate environment changes significantly, the buffer rate may be adjusted. But for now, all lenders must assess your ability to repay at your actual rate plus 3%.