How much can I borrow? Serviceability & the APRA buffer
Ask "how much can I borrow?" and you'll hear rules of thumb like "five times your income". Real lenders don't work that way. They run a serviceability test: can your after-tax income comfortably cover the repayments — plus a safety buffer — after your living costs and existing debts? Understanding that test tells you what actually moves your number.
The APRA serviceability buffer
Lenders don't test you at today's interest rate. Regulator APRA requires them to check you could still afford the loan if rates rose by at least 3 percentage points — so a 6% loan is assessed near 9%. That buffer has been 3% since October 2021 and was reaffirmed in 2025. It's the single biggest reason your capacity is lower than a simple repayment calculator suggests.
The HEM: why understating expenses won't help
Lenders take the greater of the living expenses you declare or a benchmark called the Household Expenditure Measure (HEM) — a minimum estimate of what a household your size and income realistically spends. So writing down a tiny grocery bill won't inflate your borrowing power; the HEM floor catches it.
What lifts — and lowers — your number
| Lifts borrowing power | Lowers it |
|---|---|
| Higher stable income | Credit-card limits (counted as debt, even at $0 owing) |
| Lower living expenses | Car loans, BNPL and personal loans |
| Fewer dependants | A HECS/HELP debt (an ongoing repayment) |
| A longer loan term | Higher interest rates (and the 3% buffer on top) |
Two quick wins people overlook: closing or reducing credit cards (the limit, not the balance, is what counts), and clearing small consumer debts before you apply.
Borrowing power vs deposit
They're different limits. Serviceability caps the loan your income can support; your deposit caps the price (loan + deposit) and, at 20%, avoids Lenders Mortgage Insurance. A bigger deposit lets you buy more, but it doesn't raise what your income can service — so both need to line up.
Treat any number as a starting point
Every lender has different policies — how they treat overtime, bonuses, rental income and casual work all vary — so two banks can quote very different figures for the same person. Use an estimate to set your search range, then get a real assessment or pre-approval before you bid.
Enter your income, expenses and commitments — assessed with the APRA 3% buffer, like a lender would.
Borrowing power calculator →Related: mortgage repayment calculator · first home buyer schemes. General information only, not financial advice or a lending offer — see ASIC MoneySmart and speak to a lender or broker.