Borrowing Power Calculator (Net Income)
Understanding how much you can borrow is one of the first and most important steps in planning a property purchase. Your borrowing power determines your price range, loan options, and how comfortably you can manage repayments over time.
OurTop10 borrowing power calculator helps you calculate borrowing power based on your income, expenses, debt, and loan details, giving you a realistic estimate before you speak to a lender or make an offer.
Key factors that shape your borrowing power
Borrowing power refers to the maximum amount a lender may be willing to loan you for a home loan. It is designed to reflect what you can reasonably afford to repay, not just what you earn. For this reason, borrowing power is influenced by a combination of income, expenses, debts and lending rules rather than a single figure.
Lenders assess your financial position as a whole to determine how comfortably you could manage repayments over the life of the loan, including periods when interest rates may increase.
- Financial details lenders assess
When calculating borrowing power, lenders typically consider:
- Income, including salary, bonuses and other regular earnings. Some types of income may be averaged or partially counted, depending on stability and history.
- Living expenses, such as housing costs, utilities, transport and personal spending, alongside standard expense benchmarks used by banks.
- Existing debts, including personal loans, car loans and other liabilities that reduce available income.
- Credit card limits, not just balances, as lenders to be the full limit that could be used.
- Interest rates and lender buffers, which test whether repayments remain affordable if rates rise.
- Loan term and repayment type, as longer terms or interest-only periods, can affect serviceability calculations.
Each of these factors can influence borrowing power differently, which is why two borrowers with similar incomes may receive very different borrowing estimates.
The OurTop10 borrowing power calculator brings these factors together to give you an early estimate of your home loan borrowing power before applying. If you want a deeper explanation of how lenders assess each element.
Bank borrowing power calculations
Banks calculate borrowing power using serviceability assessments that are designed to test whether you can comfortably manage loan repayments over time. Rather than relying on current interest rates alone, lenders assess your ability to repay the loan if rates were higher, helping reduce the risk of financial stress.
What banks assess during serviceability checks
Most lenders apply:
- An interest rate buffer above the current rate to account for potential future increases
- Standardised living expense benchmarks alongside the expenses you declare
- Conservative treatment of variable income, such as bonuses, overtime or commission, which may be averaged or partially counted
These measures mean that borrowing power is often lower than what buyers expect based on income alone.
Because each bank applies its own rules, assumptions, and expense benchmarks, borrowing power results can vary between lenders. A home loan borrowing power calculator provides a helpful starting point for early planning. Buyers often use this alongside a home loan repayment calculator to understand how different loan amounts and interest rates translate into actual monthly repayments before applying.
Debt-to-income ratios and why they matter
Debt-to-income ratio, often referred to as DTI, compares your total existing debt to your gross annual income. It helps lenders assess how much of your income is already committed to repayments before considering a new home loan.
Many lenders use DTI as part of their risk assessment to understand whether your overall debt level is sustainable alongside a mortgage.
In general:
- Lower DTI ratios suggest a stronger financial position and lower lending risk
- Higher DTI ratios may reduce borrowing power or lead to tighter lending conditions
While DTI is not the only factor lenders consider, it can influence how much you can borrow, the interest rate offered and whether additional checks are required during assessment. Understanding your DTI can help explain why borrowing power results vary and highlight areas where capacity may be improved.
Ways to increase your borrowing capacity
If your borrowing power is lower than expected, there may be steps you can take to improve it before applying for a loan.
Common ways to increase borrowing capacity include:
- Reducing discretionary expenses through budgeting
- Paying down or closing existing debts
- Lowering credit card limits
- Saving a larger deposit to reduce the loan amount needed
- Improving credit history by making repayments on time
Assess borrowing power with the OurTop10 calculator
OurTop10 borrowing power calculator lets you adjust income, expenses and loan details to see how changes affect your borrowing estimate. This helps you plan realistically and avoid relying on assumptions.
For buyers who want a deeper understanding of lending options, working with a local mortgage broker can add clarity. You can explore our guides to the best mortgage brokers in Sydney and Brisbane for additional support when comparing lenders and loan structures.
Frequently Asked Questions about Borrowing Power
How is my borrowing power calculated?
Borrowing power is calculated by reviewing your income, living expenses, existing debts, interest rates, and loan term. Lenders look at how much you earn versus how much you spend to assess what you can reasonably afford to repay.
Banks also apply interest rate buffers and serviceability rules to check that you could still manage repayments if interest rates increase in the future. A borrow power calculator brings these inputs together to provide an estimate of how much you may be able to borrow based on your current financial position.
How can I increase my borrowing capacity?
You may be able to increase your borrowing power by shifting your financial position before applying for a loan. This can include reducing discretionary expenses, paying down existing debts or lowering credit card limits.
Saving a larger deposit can also improve borrowing capacity by reducing the loan amount required. Improving your credit history through consistent, on-time repayments and increasing stable income, where possible, may also help.
Does my credit card limit affect how much I can borrow?
Yes. Lenders assess your total credit card limits as potential debt, even if you do not carry a balance. This means higher limits can reduce borrowing power, as banks assume the full limit could be used.
Reducing or closing unused credit cards can improve borrowing capacity by lowering your overall debt exposure. This is often one of the simplest changes buyers can make to improve their borrowing power.
Do banks use my gross or net income for borrowing power?
Most lenders assess borrowing power using gross income. However, they account for tax, living expenses and other deductions when calculating serviceability and repayment capacity.
Some types of income, such as bonuses, overtime or casual earnings, may be partially counted or averaged depending on the lender’s policies. This means the income used.
Why is my bank’s borrowing figure different from this calculator?
Banks use their own assessment methods, interest rate buffers and expense benchmarks, which can differ from the assumptions used in a calculator. Each lender may also treat income types, debts and expenses differently.
A borrowing power calculator for a home loan provides an estimate to support early planning, not a guaranteed loan amount. Actual borrowing capacity can vary between lenders and may change after a full assessment of your financial details.