Borrowing Power Calculator

That’s usually the first question. And the honest answer is: it depends on more variables than most people realise. This calculator gives you a useful starting estimate based on your income and expenses. But understanding what sits behind that number is worth a few minutes of your time, because it directly affects how much house you can buy and what your repayments will look like.

How your borrowing power is calculated

Lenders don’t just look at your income. They take your gross income, subtract tax, then subtract your ongoing expenses and any existing financial commitments. What’s left is the amount they’re willing to lend against.

In practice, that means the following things all feed into the calculation.

Income: Your salary or wages are the main input. Lenders will also count rental income, investment income and some types of government payments, but usually at a discounted rate. If you’re self-employed, lenders typically want to see two years of tax returns and may assess your income more conservatively than an equivalent PAYG employee.
Living expenses: Lenders apply a benchmark figure for living costs based on household size, and they’ll use whichever is higher – your declared expenses or their benchmark. Under-declaring your expenses doesn’t help your application; lenders have access to bank statement analysis tools that can check.
Existing debts: Credit cards, personal loans and car finance all reduce your borrowing power, sometimes by more than you’d expect. A $10,000 credit card limit reduces your capacity by roughly $50,000 in most lenders’ models, even if the balance is zero. Closing unused credit cards before you apply can make a meaningful difference.
Interest rate buffers: Lenders are required to assess your ability to repay at a rate 3% above the current loan rate. So if you’re applying at 6%, they’re stress-testing your application at 9%. This is why the figure you can theoretically borrow is often lower than the repayment calculator might suggest.

What this calculator can and can’t tell you

The number this calculator produces is an estimate, not a guarantee. It uses a generalised model based on the inputs you provide. It can’t account for your specific lender, your credit history, the type of property you’re buying, or whether you’re buying as an owner-occupier or investor – lenders treat those last two quite differently, with investment loans typically assessed at lower borrowing limits.

Think of it the way you’d think of a step counter on your phone. It gives you a useful directional figure. But if you’re training for a race, you’d eventually get a proper assessment done.

For a precise borrowing capacity, a broker will run your situation through actual lender calculators – which vary significantly from bank to bank – and can tell you not just how much you can borrow, but from which lender and at what rate.

The LMI threshold worth knowing about

If you’re borrowing more than 80% of the purchase price, most lenders will require Lenders Mortgage Insurance. LMI protects the lender, not you, and it can add thousands to your upfront costs. On an $800,000 property with a 10% deposit, LMI can run to $15,000 or more depending on the lender.

There are a few ways around it. Some government schemes allow eligible first home buyers to buy with a 5% deposit and skip LMI entirely – you can read about those on our home loan grants and schemes page. Certain professions, including doctors and some other health workers, can also access LMI waivers through select lenders. And some borrowers use a guarantor arrangement to avoid it altogether.

If you want to understand LMI in more detail before you apply, we’ve written a plain-English breakdown in our guide to Lenders Mortgage Insurance.

Things that can improve your borrowing power

A few practical things genuinely move the needle.

Reducing your credit card limits before you apply is one of the fastest levers. You don’t need to close accounts if you use them, but right-sizing the limits to what you actually need can free up meaningful borrowing capacity. Similarly, paying down personal loans or car finance removes those commitments from the lender’s serviceability calculation.

Timing matters too. If you’re planning to buy in 12 months, there’s value in getting a picture of where you stand now so you know what to work on. Interest rate changes also shift borrowing power in both directions – when rates fall, lenders’ serviceability buffers ease and most people can borrow more. When rates rise, the reverse happens quickly.

Once you know your rough figure, the Mortgage Repayment Calculator is a useful next step. It lets you see what your monthly, fortnightly or weekly repayments would look like at different loan amounts and rates, so you can match what you can borrow against what you’re comfortable paying each month.

What happens next

A borrowing power estimate is a starting point. The next step – if you’re ready for it – is formal pre-approval, which gives you a lender-confirmed borrowing limit you can take to an auction or private sale with confidence.

If you want to talk through your numbers with someone who knows the Geelong and Bellarine market, our team offers a Free Lending Strategy Session at no cost. We’ll run your situation through our lender panel, tell you exactly what you could borrow and from whom, and map out any steps that could improve your position before you apply.

Other calculators that might help

Mortgage Repayment Calculator – estimate what your repayments would look like at different loan amounts and rates
Loan Comparison Tool – compare two loan scenarios side by side to see the real cost difference
Buying and Selling Costs Calculator – understand the full cost of buying, including stamp duty, legal fees and agent costs
Home Loan Guide – a practical walkthrough of the home buying process from start to finish

This calculator provides general estimates only and does not constitute financial advice. Borrowing capacity varies by lender and individual circumstances. Please speak with a licensed mortgage broker before making any borrowing decisions.