How much can I borrow?

How much can I borrow for a home loan?

How much you can borrow is set by serviceability, the lender's test of whether you can repay, not by your deposit. Many borrowers land near five to six times gross household income, but living expenses, existing debts and dependants pull that down, and lenders test you at a rate well above the one you would pay.

That is why two people on the same salary can be approved for very different amounts. The reliable way to get your own number is to run a borrowing power calculation with your actual expenses and debts, then confirm it with a pre-approval, which is a lender's conditional commitment based on documented figures.

How do lenders calculate your borrowing power?

A lender starts with your net income after tax, subtracts your living expenses, subtracts the commitments on any existing debts, and treats the surplus as what is available to service a new loan. Two things make the result more conservative than borrowers expect. First, lenders measure living expenses against a benchmark, the Household Expenditure Measure, and use the higher of your declared expenses or that benchmark. Second, under APRA's serviceability guidance they do not test you at the actual rate: they add a buffer of around three percentage points on top and check that the repayment would still be affordable. APRA reconfirmed the 3 percentage point buffer as unchanged on 28 May 2026.

APRA also caps how much of a lender's new lending can go to heavily indebted borrowers. No more than 20% of a bank's new owner-occupier and investor lending can go to borrowers with a debt-to-income ratio of six times income or more, a portfolio-level limit in effect since 1 February 2026. It does not directly cap what you personally can borrow, but a high income-multiple application faces extra scrutiny once a lender is close to that ceiling, and it is the reason six times income is a practical upper marker rather than a target.

What reduces how much you can borrow?

Existing commitments cut borrowing power, often by more than people expect. A credit card is assessed on its limit rather than its balance, so an unused $20,000 card can remove tens of thousands from what a lender will approve.

• Credit card limits, assessed even where the balance is zero.
• Personal loans, car loans, and buy-now-pay-later commitments.
• HECS and HELP repayments, which reduce assessable income.
• Dependants and higher declared living expenses.
• Irregular income: casual, contract, bonus and self-employed income is often discounted or averaged.
• The interest rate buffer, which is applied to the new loan and to your existing debts as well.

How can I increase my borrowing power?

The fastest levers are usually on the debt side rather than the income side. Reducing or cancelling credit card limits, clearing small consumer debts, and tidying up discretionary spending in the months before applying each move the number materially, because each one feeds straight into the surplus the lender is measuring.

Borrowing power is a snapshot of your finances on the day you apply, not a fixed number. Small changes to debts and spending in the months beforehand can shift it by tens of thousands of dollars.

• Lower or close credit card and buy-now-pay-later limits you do not need.
• Pay down or consolidate car and personal loans.
• Trim discretionary spending for a few months before applying, since recent statements are what the lender reads.
• Increase the deposit, or apply with a co-borrower.
• Compare lenders: assessment policies differ, particularly on self-employed, bonus, overtime and rental income.

Borrowing power versus deposit: which one limits you?

You are capped by whichever is smaller: what a lender will approve on serviceability, or what your deposit allows at the loan to value ratio the lender accepts. A large deposit does not help if the repayment cannot be serviced, and strong serviceability does not help without the deposit and the purchase costs to complete. Work out both, then shop inside the lower of the two figures. The deposit guide covers the second half of that calculation, including what counts as genuine savings.

Income questions people ask

The three answers below use the rough five to six times gross household income marker, applied to the loan amount rather than the purchase price. It is arithmetic on a rule of thumb, not a lender assessment. Your own figure moves with your living expenses, your existing debts and the rate the lender tests you at, and the income required calculator works the same question backwards from a price and deposit with those inputs included. For where these loan sizes actually sit against the market, see the current average home loan size and lending figures.

What salary do you need for a $500,000 loan?

On the five to six times income marker, a $500,000 loan implies gross household income of roughly $83,000 to $100,000. Sitting near the lower end of that range assumes minimal other debt, modest living expenses and no dependants; credit card limits, a car loan or HECS repayments all push the required income higher. The deposit and purchase costs sit on top and are a separate test.

How much do you need to earn for a $700,000 mortgage?

The same marker puts a $700,000 loan at roughly $117,000 to $140,000 of gross household income. At that size the interest rate buffer does most of the work, because the lender tests the repayment at around three percentage points above the rate on the loan, so the assessed repayment is materially higher than the one you would actually make. Clearing consumer debt before applying is usually the fastest way to close a gap at this level.

How much income do I need for an $800,000 mortgage in Australia?

Roughly $133,000 to $160,000 of gross household income on the same five to six times marker. An $800,000 loan on a single income sits near or above six times income for most borrowers, which is where APRA's portfolio-level debt-to-income limit makes lenders more selective, so the application is more likely to hinge on which lender you approach and how your income type is assessed.

Does HECS or HELP debt reduce how much I can borrow?

Yes, while the compulsory repayment is still being deducted. Lenders treat it as a commitment against your income rather than as a debt to be paid out, so the effect scales with your salary. Where the balance is small enough to clear before applying, doing so removes the repayment from the assessment entirely, which is worth checking against the cash it takes to clear it.

How accurate is a borrowing power calculator?

It is an estimate built on the inputs you give it, and it will not match a lender exactly, because every lender uses its own living-expense benchmark, its own income shading rules and its own assessment rate. Use it to size the search and to test what clearing a debt would do. Then get a pre-approval, which is the point at which a lender applies its own policy to documented figures. Model the repayment on the amount you land on with the repayment calculator before committing to a price.

This information is general only and does not take into account your objectives, financial situation or needs. Consider whether it is appropriate for you before acting on it.