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 is higher after expenses.
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.
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.
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. The impact depends on your income level and the size of your debt, but it's typically $20,000–$60,000 less than someone without HECS.
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 income — or take the lower of the two years. A broker who specialises in self-employed applications can make a big difference here.
The most effective steps are: cancel unused credit cards, pay down personal loans and car loans, reduce declared expenses to accurate (not padded) levels, and consider applying with a co-borrower. A broker can also guide you to lenders with more generous assessment criteria for your specific situation.