Key Feature: APRA +3% Servicing Stress Test

Mortgage borrowing power (servicing) is assessed with a built-in stress test on the base rate, adding a +3% buffer to ensure loan serviceability under strict APRA regulations.

The STRESS TESTED APRA +3% buffer ensures the assessment is made safely against potential future rate rises.

Applicant Information

Single

Joint

Family Size

Annual Income

Gross Applicant 1

Gross Applicant 2

Other Income

Monthly Expenses & Liabilities

Living Expenses

Credit Card Limits

Personal Loans (Mo.)

Existing Mortgage Pmt

Loan Assumptions

Assumed Loan Term

Assumed Variable Rate

Calculated Borrowing Power Estimate

Estimated Borrowing Capacity

ⓘ APRA buffer tested

Net Monthly Income $0

Total Assessed Liabilities $0

Servicing Surplus / Deficit $0

Debt-to-Income Ratio (DTI)

0.0%

Mortgage Borrowing Power Calculator: APRA +3% Stress Test (2026)

💡 Expert Tip (The Credit Card Trap): Did you know that banks calculate your borrowing power based on your **Credit Card Limit**, not your balance? Even if your card is sitting in a drawer with a $0 balance, a $10,000 limit can slash your borrowing power by approximately $30,000 to $50,000! Before applying for a mortgage, consider closing unused cards or reducing your limits to the absolute minimum to instantly boost your loan capacity.

In the Australian property market, the most important question isn’t “How much does the house cost?” but “How much will the bank lend me?” Your Borrowing Power (also known as serviceability) is a measure of your financial capacity to repay a home loan without falling into “mortgage stress.” Our Mortgage Borrowing Power Calculator utilizes the latest APRA-mandated servicing buffers to give you a realistic estimate of your loan capacity in today’s economy.

Understanding the APRA +3% Serviceability Buffer

One of the biggest reasons borrowers are shocked by their low borrowing power is the Serviceability Buffer. As per the Australian Prudential Regulation Authority (APRA) guidelines, banks must assess your ability to repay a loan not at the current interest rate, but at a rate that is 3% higher. This is a “stress test” designed to ensure that if interest rates rise in the future, you can still afford your monthly repayments.

Actual Interest Rate: For example, if your bank offers you a rate of 6.00% p.a.
The Stress Test Rate: The bank will calculate your borrowing capacity as if the rate was 9.00% p.a. (6.00% + 3.00%).
The Result: This buffer reduces the total amount you can borrow but acts as a safety net for your long-term financial health.

*Disclaimer: Borrowing power estimates are based on general banking formulas. Every lender has a unique ‘servicing calculator’ and may treat certain income types or expenses differently. This tool provides an estimate only and does not constitute a loan approval.*

The 4 Pillars of Your Borrowing Capacity

When you submit a loan application, Australian lenders look at four primary factors to determine your servicing limit:

Gross Income: Your base salary is taken at 100%. However, most banks only take 80% of your bonuses, commissions, or overtime income to account for variability.
The HEM (Household Expenditure Measure): Banks use a standard benchmark to estimate your living costs. If your actual spending is higher than the HEM, the bank will use your actual figures, which further reduces your borrowing power.
Existing Debt Obligations: This includes car loans, personal loans, and HECS-HELP debts. Because HECS repayments are based on your total income, having a student loan can significantly reduce your net monthly cash flow.
Dependents: Every additional dependent (children or non-working spouse) adds to your estimated living costs, reducing the surplus cash available for mortgage repayments.

How to Increase Your Borrowing Power

If your borrowing capacity isn’t enough to buy your dream home, there are several strategic moves you can make to improve it. Aside from increasing your income or deposit, you can try:

Extending the loan term back to 30 years if you are currently looking at a 20 or 25-year term.
Consolidating or paying off high-interest debts like car loans or “Buy Now Pay Later” accounts.
Reducing the limits on your credit cards.
Switching from an Investment loan to an Owner-Occupier loan, as the latter usually carries lower interest rates and higher servicing capacity.

Frequently Asked Questions (Borrowing Power Guide)

1. Why is my borrowing power lower than what I calculated online?

Many simple online calculators do not account for the +3% APRA buffer or the HEM (living expense) benchmarks. Banks also ‘shade’ certain income types (like rental income) by 20-30% to account for management fees and vacancies, which lowers the final amount.

2. Does having a HECS-HELP debt affect how much I can borrow?

Yes, significantly. Because HECS repayments are deducted from your gross income, they reduce your net take-home pay. For high-income earners, a HECS debt can reduce borrowing capacity by $50,000 to $100,000.

3. Can I use my rental income to increase my borrowing power?

Yes. If you are buying an investment property, banks will count the estimated rent towards your income. However, most lenders only count 80% of the rent to allow for property management fees and potential vacancy periods.

4. What is the Debt-to-Income (DTI) ratio?

Lenders monitor your DTI ratio, which is your total debt divided by your gross annual income. A DTI ratio over 6 is considered “high risk” by APRA, and many banks may limit your borrowing power to stay below this threshold even if you can technically afford the repayments.

5. How does a joint application affect borrowing power?

Applying with a partner usually increases your borrowing power because you have two incomes to cover one set of household living expenses. However, if your partner has high debts or many dependents, it could potentially lower the total amount.

Mortgage Borrowing Power (Servicing) Calculator