How much can I borrow?
One of the first questions every borrower asks is: “How much will a bank actually lend me?” It’s a fair question — and the honest answer is that it depends on more than just your income. Lenders assess your borrowing capacity, which looks at your whole financial picture, not just your salary.
Here’s how it actually works, and how to get a realistic figure before you start house hunting.
It Starts With Your Net Income
Lenders begin with your gross income, then work out what actually lands in your pocket after tax.
This includes:
PAYG salary or wages
Regular overtime, bonuses or commissions (usually assessed at a discounted rate, often 80%, since lenders want to see it’s reliable)
Rental income from investment properties (typically shaded to around 75–80% to allow for vacancies and costs)
Self-employed income, assessed from tax returns over the last one to two years
Then Lenders Subtract Your Living Expenses
This is the part that surprises a lot of people. Lenders don’t use a flat estimate of your expenses — they look at your actual spending (usually pulled from bank statements) and compare it against the Household Expenditure Measure (HEM), a benchmark based on your income, location and family size. They’ll use whichever figure is higher.
Since responsible lending obligations under the National Consumer Credit Protection Act 2009 require lenders to verify your expenses rather than simply take your word for it, being upfront and accurate here matters — both for your application and to make sure any loan is genuinely suitable for you.
Your Existing Debts Count Too
Credit cards, car loans, personal loans, buy-now-pay-later accounts, and even undrawn credit card limits all reduce how much you can borrow — because lenders assume you could use the full limit, not just your current balance. If you’re planning to buy, it’s often worth reducing credit card limits or paying out small debts before you apply.
The Interest Rate Buffer
Lenders don’t assess your ability to repay a loan at today’s interest rate — they add a serviceability buffer, currently a minimum of 3 percentage points on top of the actual loan rate, as required under APRA’s prudential guidance. This protects you from over-borrowing if rates rise after settlement, and it’s a key reason your “borrowing power” is usually lower than a simple back-of-envelope calculation might suggest.
A Rough Example
As a general guide only, a single applicant on $95,000 a year with no dependants and minimal debt might have a borrowing capacity in the vicinity of $500,000–$550,000, depending on their expenses and the lender’s individual policy. A couple on a combined $170,000 with one car loan and two young children could see a materially different number once expenses and buffers are applied. This is exactly why two lenders can offer very different maximum loan amounts for the same person — every lender weights income, expenses and debt slightly differently.
Why This Isn’t a “Google It” Number
Every lender on our panel calculates serviceability differently. Some are more generous with overtime income, others are stricter on investment debt, and some have more favourable treatment of HECS/HELP debt or novated leases. This is where a broker earns their keep — rather than getting knocked back by one lender’s policy, we compare your position across 60+ lenders to find where you’ll actually get a strong outcome.
Ready to Get a Real Number?
An online calculator can give you a ballpark. A proper assessment — one that accounts for your real expenses, your goals, and which lenders will actually say yes — takes a conversation.
Get Started and we’ll work out your borrowing power together, at no cost to you.
This article is general information only and does not take into account your personal financial situation, needs or objectives. It is not personal financial or credit advice. Lending criteria, buffers and policies vary between lenders and change over time — figures above are illustrative examples, not a guarantee of any loan amount. Before making a decision, speak with your broker about your individual circumstances. The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only. Spitfire Finance Pty Ltd ABN 70 700 362 956, ACN 700 362 956 is authorised under LMG Broker Services Pty Ltd ACN 632 405 504 Australian Credit Licence 517192.