In short: A single person on a $100,000 salary with no debts, no dependants and modest living costs can typically borrow somewhere around $500,000 in 2026, because lenders assess you at your actual rate plus a 3 percentage point buffer. A couple earning $150,000 combined lands closer to $800,000. Credit card limits, HECS, car loans and children each shave tens of thousands off those figures.
Key takeaways
- Lenders assess repayments at your rate plus 3 percentage points, so a 6.00% loan is tested at 9.00%.
- On our illustrative assumptions a single on $100,000 borrows around $500,000; on $150,000 around $845,000.
- Couples pay less tax on the same combined income but carry higher living expenses, so the result is not simply double.
- A $10,000 credit card limit costs roughly $47,000 of borrowing power even if you never use the card.
- The gap between lenders on the same file can be $50,000 to $100,000, which is the main reason to compare before you apply.
The question "how much can I borrow" is the first one almost every client asks, and the honest answer is "it depends on the lender", which is unsatisfying. So this post shows you the actual arithmetic lenders use, runs it across four salary levels, and then lists the things that cut the result. The figures are illustrative. Your pre-approval will be based on your real payslips and statements, and every lender's calculator gives a slightly different answer, which is exactly why a broker compares several.
How lenders actually calculate borrowing power
Every lender runs the same basic test. They take your after-tax income, subtract your living expenses and any existing commitments, and the surplus is what can go towards a mortgage. They then work out the biggest loan that surplus supports at the assessment rate, which under the prudential regulator's serviceability rule is your product rate plus 3 percentage points. Lender rates move with the RBA cash rate, so the assessment rate moves too.
For illustration, at 6.00% p.a. the assessment rate is 9.00% p.a. A 30-year principal-and-interest loan at 9.00% costs about $8.05 a month for every $1,000 borrowed. Divide your monthly surplus by that figure and you have your approximate ceiling.
Our assumptions for the table below:
- 2026–27 resident tax rates plus the 2% Medicare levy, no HECS.
- Living expenses of $2,400 a month for a single person and $3,600 a month for a couple with no children. Lenders use their own minimum expense benchmarks and will use your declared figure if it is higher.
- No credit cards, no car loans, no dependants, rent stops at settlement.
- 30-year term, principal and interest, assessed at 9.00%.
Borrowing power at $80k, $100k, $120k and $150k
| Household | Gross income | Approx. net income per month | Surplus after living costs | Approx. borrowing power |
|---|---|---|---|---|
| Single | $80,000 | $5,323 | $2,923 | $363,000 |
| Single | $100,000 | $6,457 | $4,057 | $504,000 |
| Single | $120,000 | $7,590 | $5,190 | $645,000 |
| Single | $150,000 | $9,203 | $6,803 | $845,000 |
| Couple ($50k + $50k) | $100,000 | $7,247 | $3,647 | $453,000 |
| Couple ($90k + $60k) | $150,000 | $10,080 | $6,480 | $805,000 |
| Couple ($120k + $80k) | $200,000 | $12,913 | $9,313 | $1,157,000 |
Two things jump out. First, borrowing power is not linear. Going from $100,000 to $120,000 adds about $140,000 of capacity because every extra dollar above the living-expense floor goes straight to servicing. Second, a couple on $100,000 combined borrows less than a single on $100,000, despite paying less income tax, because two people cost more to feed and insure than one. Once the combined income rises the couple pulls ahead again.
Run your own numbers in the borrowing power calculator, then check what the repayments look like at your actual rate with the repayment calculator. On a $504,000 loan at 6.00% the monthly repayment is around $3,022, well under the $4,057 the lender tested you at. That gap is the buffer working as intended.
What quietly cuts your borrowing power
The table assumes a clean file. Real files are rarely clean. Here is what each common item costs at a 9.00% assessment rate.
Credit card limits
Lenders assess a card at a percentage of its limit, not its balance, commonly around 3.8% a month. A $10,000 limit becomes a $380 monthly commitment, which removes about $47,000 of borrowing power. Two cards totalling $25,000 removes roughly $118,000. Cancelling or reducing limits before you apply is the fastest fix there is, and we cover it in detail in how credit card limits cut your borrowing power.
HECS-HELP
A HELP debt is repaid through your tax at a percentage of your income, and lenders treat that deduction as a reduction in net pay. If your compulsory repayment works out at $500 a month, that is roughly $62,000 less you can borrow. Paying HELP off early rarely makes sense financially, but it is worth knowing the effect.
Car loans and personal loans
A $600 a month car repayment costs about $75,000 of borrowing power. If the loan has under a year to run, some lenders will let you pay it out from savings before settlement. Our debt consolidation service exists partly for this reason.
Dependants
Each child lifts the living-expense benchmark. Couples with two children on $150,000 combined will often see $80,000 to $120,000 less capacity than the childless couple in the table, depending on the lender's expense model and childcare costs.
Income type
Base salary counts at 100%. Overtime, bonuses, commission and casual income are often "shaded" to 80% or need a two-year history. Self-employed income has its own rules, covered in the self-employed home loan guide.
Buy-now-pay-later and small debts
BNPL accounts, store cards and a forgotten $2,000 personal loan all appear on statements and credit files. They are small individually but they signal spending patterns, and the credit officer reads them. See credit scores and home loans.
Worked example: a Craigieburn couple
Take a couple in Craigieburn earning $90,000 and $60,000. From the table, a clean file gives roughly $805,000. Now add reality: a $15,000 credit card limit ($570 a month, about $71,000 off), a $450 car repayment (about $56,000 off) and one child (say $700 a month of extra expenses, about $87,000 off). Their borrowing power falls to around $590,000.
If they close the card and pay out the car loan from savings, they get back roughly $127,000 of capacity, taking them to about $717,000. That is the difference between a townhouse and a house in the same suburb, and it took two phone calls.
Borrowing power versus what you should borrow
Lenders give you a maximum. You do not have to take it. A loan at your ceiling means you are already stretched at the assessment rate and any drop in income bites hard. We generally encourage clients to leave headroom, keep savings in an offset account after settlement, and stress-test their budget at a rate 1 to 2 percentage points above today's, whatever the cash rate is doing.
The 3% buffer is also why timing matters. If rates move, the assessment rate moves with them and your capacity shifts. The RBA cash rate guide explains how that flows through. For the official position on the serviceability buffer and how lenders assess applications, MoneySmart's borrowing guidance is the plain-English source.
Frequently asked questions
Can I borrow more if I go with a different lender?
Often, yes. Lenders differ in how they treat overtime, rental income, HECS, expenses and the rate they assess at, so the same file can return answers $50,000 to $100,000 apart. That is the practical value of a broker: we run your numbers through multiple lender calculators before you apply anywhere.
Does a bigger deposit increase my borrowing power?
Not directly. Borrowing power is about servicing, which is income versus expenses. A bigger deposit increases your purchase price by adding to the loan rather than raising the loan itself, and it can avoid LMI and unlock sharper rates, which slightly improves servicing. See how much deposit do I need.
How much can I borrow on $100k with the First Home Guarantee?
The Guarantee changes your deposit, not your servicing. A single on $100,000 could still borrow around $500,000 on our assumptions, and with a 5% deposit and no LMI could buy up to about $525,000. Check the First Home Guarantee eligibility calculator for the scheme rules.
Will a lender count my partner's income if they are not on the title?
Generally the borrower and the owner need to be the same people, or the partner must be a co-borrower. There are structures involving guarantors and joint ownership, and each has legal consequences worth understanding, which we set out in buying property with a partner.
Talk to GNT Finance
Gorakh Timilsina spent years as a senior credit officer applying exactly these calculations, and now applies them for you across dozens of lenders from our Mickleham office. If you want a real borrowing figure rather than a website estimate, book a free consultation or call 0426 403 703. There is no cost to you for our home-loan service in most cases.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.