This is one of the first questions anyone asks when they start thinking about buying property. The honest answer: it varies significantly from person to person, and the number a lender gives you can differ quite a bit from what an online calculator shows. Here's what actually determines how much you can borrow for a home loan in Australia.

What Lenders Actually Look At

Lenders assess your borrowing capacity based on your ability to service the loan, not just your gross income. The main factors are:

  • Income. All sources count: salary, self-employment income, rental income, and some government payments. Lenders verify this, they don't just take your word for it.
  • Expenses. Your regular living costs, including rent, groceries, utilities, insurance, and discretionary spending. Lenders use declared expenses and may apply their own minimum floor if your declared costs seem low.
  • Existing debts. Credit cards, personal loans, car loans, HECS/HELP debt, and other commitments all reduce your borrowing capacity. Importantly, it's not just the balances that matter: lenders assess the credit limit on any open credit cards, even ones you rarely use.
  • Number of dependants. Each additional dependant increases your estimated living expenses in the lender's calculation.
  • Loan term and interest rate. Longer terms reduce the monthly repayment figure and increase capacity; shorter terms do the opposite.

The Assessment Rate Buffer

Lenders don't assess your ability to repay at the actual interest rate you'll receive. They add a buffer on top, typically 3% above the loan's interest rate, to test whether you could still make repayments if rates rose significantly.

This buffer is set by APRA (the banking regulator) and applies across all lenders. It's the single biggest reason why your actual borrowing capacity is often lower than online calculators suggest, since many calculators use the advertised rate rather than the assessed rate.

How APRA's DTI Limits Affect Borrowing in 2026

From 1 February 2026, APRA introduced debt-to-income (DTI) limits on mortgage lending. Lenders can now only write up to 20% of new home loans at a DTI ratio of 6 or above. In practical terms, a DTI of 6 means your total debt (the new home loan plus any existing debts) can't exceed six times your gross annual income.

For most borrowers, this won't change anything. The limit mainly affects people who are already borrowing at the higher end of their capacity. But if you have significant existing debt, it's worth understanding how your DTI looks before you apply.

Why the Same Income Can Produce Very Different Results

Two people earning the same salary can have very different borrowing capacities. Someone with no credit card debt, no HECS liability, and low living expenses might borrow significantly more than someone with a car loan, a $20,000 credit card limit, and higher regular commitments, even if their salaries are identical.

This is also why comparing your capacity to a friend's or using a generic calculator can be misleading. Your actual number depends on your specific financial picture.

Rate Hikes Are Shrinking Borrowing Capacity

Each 0.25% increase in the cash rate reduces borrowing capacity by roughly $12,000 to $15,000 for an average income earner. The February 2026 rate hike has already had this effect. If a second hike follows in May, capacity will shrink further.

This matters if you're actively looking to buy: the amount you could borrow three months ago may not be the same amount you can borrow today. Getting a clear current figure before you start making offers is important.

Find Out What You Can Borrow

The most accurate way to understand your borrowing capacity is to have a broker assess it properly, taking into account your actual income, expenses, debts, and the lenders most likely to give you the best outcome.

At Swish, we work through your numbers before you start the property search so you know exactly where you stand and can look at the right price range from the start. Book a free call with Swish and we'll give you a real assessment, not an estimate.