How much could you borrow?

Borrowing capacity — what lenders call serviceability — is the ceiling at which a bank believes you can repay a new loan without financial stress. The number above is that ceiling, calculated under our assumptions. Two lenders looking at the same income and the same liabilities will rarely produce the same figure.

Every bank starts from your net income, adds verifiable additional income (rent, bonus, secondary work), applies their own haircut to anything that isn't PAYG salary, and subtracts your living expenses, existing loan repayments, and the proposed new repayment calculated at a buffered rate. APRA requires lenders to assess at the contracted rate plus a 3.00% buffer; some apply more. What's left is your monthly surplus. If it's positive, the loan services.

Three factors do most of the work. First, the HEM benchmark — the assumed minimum living expense for your household size and postcode — varies by lender and by your declared spending. Second, the haircut on non-base income: one lender takes 100% of rental, another 80%, another 70%. Third, the treatment of liabilities: an unused $20,000 credit card limit is assessed as if fully drawn at one lender, at three per cent at another. Self-employed income is its own category, and where the differences widen further.

This estimate is useful as an order-of-magnitude check before a serious conversation. It is not a pre-approval, and lenders do not honour numbers produced by a calculator. A real assessment will pull your income evidence, your liabilities, and run your file through a specific lender's policy — which is where the realistic number lives.