Borrowing Power Calculator

Category: Mortgage and Real Estate
- September 29, 2025
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Calculate your home loan borrowing power based on your income, expenses, and current financial situation. This calculator provides an estimate of how much you might be able to borrow for a mortgage.

Income Details

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$

Loan Details

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years
%
Lenders typically assess your borrowing capacity at a higher rate to ensure you can handle future rate increases.

Existing Financial Commitments

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Existing Debts

1
$
$

Additional Options

%
Maximum percentage of gross income that should go toward mortgage repayments.
%
Maximum loan amount as a percentage of the property value (lower ratio may avoid Lenders Mortgage Insurance).

About Borrowing Power

Borrowing power refers to the maximum amount a lender may be willing to lend you based on your financial situation. Understanding your borrowing power helps set realistic expectations for your property search and ensures you don't overextend yourself financially.

Factors That Affect Your Borrowing Power
  • Income: Your total household income, including salary, investments, and other sources.
  • Expenses: Your regular living expenses, which lenders estimate based on household size.
  • Existing Debts: Credit cards, personal loans, car loans, and other financial commitments.
  • Interest Rates: Current rates plus a buffer to ensure you can handle future rate increases.
  • Loan Term: The length of your mortgage affects your monthly payments.
  • Credit Score: A higher credit score may increase your borrowing power.
  • Employment Stability: Steady employment history improves your borrowing potential.
How Lenders Assess Borrowing Power
  1. Income Assessment: Lenders verify your income through pay slips, tax returns, or bank statements.
  2. Expense Calculation: Your living expenses are assessed based on declared expenses or standard benchmarks.
  3. Debt Serviceability: Lenders check if you can comfortably meet repayments at a higher "assessment rate."
  4. Debt-to-Income Ratio: Lenders examine your total debt obligations relative to your income.
  5. Loan-to-Value Ratio (LVR): The loan amount compared to the property value, affecting whether you need LMI.
Important Notes
  • This calculator provides an estimate only. Actual loan approvals depend on lender-specific criteria.
  • Different lenders have different policies and may offer varying loan amounts.
  • Consider seeking pre-approval from a lender to get a more accurate assessment.
  • Just because you can borrow a certain amount doesn't mean you should. Consider your comfort level with repayments.
  • Remember to account for additional costs like stamp duty, legal fees, and moving expenses.

Understanding the Borrowing Power Calculator

The Borrowing Power Calculator helps you estimate how much you can borrow for a home loan. It takes into account various factors like your income, expenses, and any existing debts. With this calculator, you can gain insights into your Financial situation and make informed decisions about buying a property.

Why is Borrowing Power Important?

Your borrowing power defines the maximum amount a lender is willing to give you. Knowing this figure helps set realistic expectations when searching for a home. It’s essential to find a balance between what you can borrow and what you’re comfortable repaying each month.

Key Inputs for the Calculator

To use the Borrowing Power Calculator, you’ll need to provide some details:

  • Annual gross income and any additional income sources.
  • Loan details like interest rate and loan term.
  • Current monthly expenses and the number of dependents.

How Does the Calculator Work?

The calculator takes your inputs and runs calculations based on a formula that considers your income and debts. It assesses your debt service ratio and Other financial commitments to provide an estimated borrowing capacity. This helps you see how much you can afford to borrow without overstretching your budget.

Factors Impacting Your Borrowing Power

Your borrowing power isn’t just about income. Here are some factors that can influence it:

  • Your monthly living expenses and lifestyle choices.
  • Existing debts, like credit cards and personal loans.
  • The interest rate, which can change based on the market.
  • Your credit score, which can affect loan terms.
  • Employment stability that lenders often look for.

Getting Realistic Results

The estimates generated by the Borrowing Power Calculator are just that—estimates. Actual loan amounts may vary depending on lender policies and your overall financial Health. Always consider consulting with a financial advisor or lender to get a clearer picture of your borrowing options.

Managing Your Finances Wisely

Once you know your borrowing power, you can plan your finances better. It’s vital to budget for your mortgage repayments and other living costs. Make sure you’re comfortable with the amount you’re borrowing, as this will help ensure you don’t face financial strain in the future.

Next Steps After Using the Calculator

After using the Borrowing Power Calculator, you can start your property search with more confidence. Armed with your borrowing estimate, you can explore homes within your price range. Plus, consider seeking pre-approval from a lender to strengthen your position when making offers on properties.