Borrowing Capacity & LVR Calculator
Estimate how much an Australian lender will let you borrow — and what LMI you may need to pay — using the standard APRA serviceability methodology. Includes the 3% assessment buffer, indicative HEM living expense benchmarks, credit card haircuts, and 2025-26 ATO tax brackets.
Your details
Estimated borrowing capacity
How to use this calculator
Tab 1 — Borrowing capacity
- Enter the gross annual income for each applicant (before tax, before super). Use $0 for Applicant 2 if applying alone.
- Select the number of dependants. This determines the HEM living expense benchmark — more dependants means a higher floor, which reduces borrowing capacity.
- Enter the combined credit card limit across all cards (not the balance). Lenders assess 3.8% of the total limit as a monthly commitment, regardless of whether you carry a balance.
- Enter actual monthly repayments for any personal loans, car loans, or similar debts.
- Set the interest rate to the product rate you expect to be offered. The calculator applies the 3% APRA buffer automatically when determining maximum loan size.
- The net income surplus (NIS) is the amount available each month after tax, HEM and existing debts — this is what funds the new mortgage repayment at the assessed rate.
Tab 2 — LVR + LMI
- Enter the property purchase price and your deposit. You can enter the deposit as a dollar amount or as a percentage — both fields are linked.
- The LVR bar gives a visual read on where you sit relative to the 80% LMI threshold and the 95% maximum for standard LMI.
- If LVR exceeds 80%, the LMI estimate uses an indicative rate card based on publicly disclosed Helia/QBE rates.
- The stamp duty estimate uses NSW general rates. For other states, use the Calcula stamp duty calculator.
- If you are a first home buyer with LVR above 80%, the calculator notes First Home Guarantee eligibility, which may allow you to purchase with a 5% deposit and no LMI.
Key assumptions
- APRA buffer: 3.0 percentage points. Confirmed by APRA in November 2024 and July 2025. The assessment rate equals your entered interest rate plus 3.0 pp. Source: APRA macroprudential update, November 2024.
- Tax: 2025-26 ATO resident brackets. Includes LITO and the standard 2% Medicare levy. No HECS deduction is applied — if you have a HECS debt, your actual take-home pay (and therefore borrowing capacity) will be lower. The Calcula HECS calculator can help you estimate the impact.
- HEM is indicative only. The actual Household Expenditure Measure is commercially licensed from the Melbourne Institute and applied with varying calibrations by individual lenders. This calculator uses mid-point approximations derived from publicly available broker disclosures. Your actual HEM may be higher or lower. Higher incomes attract higher HEM values; the income bands used are: below $60,000 (low), $60,000–$120,000 (medium), and above $120,000 (high).
- Credit cards: 3.8% of limit per month. Consistent with APRA APG 223 guidance and standard lender practice. A $10,000 credit limit reduces monthly surplus by $380, which reduces maximum loan by approximately $47,000–$55,000 depending on the rate and term.
- Income: PAYG, fully assessable at 100%. Self-employed, overtime, bonus, rental, or other non-salary income types typically attract a 20% or greater haircut per APRA APG 223. This calculator assumes standard PAYG permanent employment. Using this calculator for other income types will overstate borrowing capacity.
- Loan type: principal and interest, 30-year default. Interest-only loans have lower initial repayments but lenders still assess serviceability on P&I basis.
- No offset, redraws, or rate changes. The calculation assumes a flat rate for the full term. If rates fall, actual capacity may increase.
- LMI rates: indicative Helia/QBE owner-occupier P&I rate card. Investment loans typically attract 10–30% higher LMI premiums. NSW stamp duty on LMI (9%) is included in the total. Other states: QLD 9%; SA 11%; VIC, WA, TAS, NT 10%; ACT nil.
- Stamp duty: NSW general rate (non-FHOG). For other states or FHOG concessions, use the stamp duty calculator.
- DTI cap (from 1 February 2026). APRA restricts high-DTI lending — no more than 20% of new housing loans may have a DTI ratio at or above 6×. The calculator flags this where relevant.
Frequently asked questions
How do banks calculate my borrowing capacity?
Australian authorised deposit-taking institutions (ADIs) use a Net Income Surplus (NIS) model endorsed by APRA. The process is:
- Sum assessable income from all applicants and apply any income haircuts (e.g., 20% for rental income).
- Deduct income tax, Medicare levy, and compulsory HECS repayments.
- Deduct the higher of declared living expenses or the HEM benchmark for the household type and income level.
- Deduct all committed monthly debts: credit cards at 3.8% of total limit, personal loan repayments, car loans, and BNPL obligations.
- The remaining amount is the NIS — the maximum affordable monthly mortgage repayment at the assessment rate.
- The maximum loan is the present value of that monthly payment over the loan term at the assessment rate (actual rate + 3% APRA buffer).
Source: APRA APG 223 (June 2025); RBA Box B — NIS methodology.
What is the APRA serviceability buffer?
Under Attachment C of Prudential Standard APS 220, all Australian ADIs must assess a borrower's repayment ability at the actual product rate plus at least 3.0 percentage points. If the loan rate is 6.10%, the bank must test serviceability at 9.10%.
The buffer has been held at 3.00 pp since October 2021. APRA confirmed it would not be reduced in November 2024 and again in July 2025, despite significant industry lobbying for a 0.5 pp reduction. The 3 pp buffer is designed to ensure borrowers can still meet repayments if rates rise after they take out the loan.
What is HEM and how does it affect my borrowing capacity?
The Household Expenditure Measure (HEM) is a quarterly benchmark developed by the Melbourne Institute at the University of Melbourne. It is built from ABS Household Expenditure Survey data and represents median spending on basic necessities and 25th-percentile spending on discretionary basics — an intentionally modest but realistic household spending level.
Lenders must use the higher of your declared living expenses or the HEM figure for your household type and income band. Higher-income households attract a higher HEM (since higher earners demonstrably spend more on essentials), and more dependants increase the benchmark. The actual HEM data is commercially licensed and not publicly disclosed; lenders calibrate their own tables.
If you declare living expenses below HEM, the bank uses HEM. If you declare higher expenses, the bank uses your declared amount — so being honest about spending does not necessarily hurt you, but it does when your actual expenditure is above HEM.
Source: Compare the Market HEM explainer; Home Loan Experts HEM guide.
When does LMI apply on an Australian home loan?
Lenders Mortgage Insurance (LMI) is required when your LVR exceeds 80% — that is, when your deposit is less than 20% of the property value. LMI is an insurance policy taken out by the lender to protect itself if you default and the property sale does not cover the outstanding loan. Despite being the lender's policy, the premium cost is passed on to the borrower.
The two primary LMI providers in Australia are Helia (formerly Genworth) and QBE LMI. Some major lenders (CBA, Westpac, ANZ, Macquarie) operate internal low deposit premium products. LMI premiums increase significantly above 85%, 90% and 95% LVR.
LMI can be paid upfront or capitalised into the loan (added to the loan balance), which increases the total loan and effective LVR slightly.
How can I avoid paying LMI?
- Save a 20% deposit: The simplest route. Keeping LVR at or below 80% means no LMI is required.
- First Home Guarantee: From 1 October 2025, this scheme has unlimited places and no income cap. Eligible first home buyers can purchase with as little as a 5% deposit, with the government guaranteeing up to 15% of the property value so the lender does not require LMI. Property price caps apply by location (up to $1.5M for NSW capital city). See Housing Australia's announcement.
- Guarantor loan: A family member (typically a parent) offers equity in their property as additional security. This can eliminate the LMI requirement even with a small deposit.
- Professional packages: Some lenders waive LMI for specific occupations (doctors, lawyers, accountants) borrowing up to 90% LVR, subject to income and employment criteria.
- Family Home Guarantee: Single parents or guardians with at least one dependent child can purchase with as little as a 2% deposit under this scheme, with no LMI.
Disclaimer: This calculator provides general estimates only and does not constitute financial or credit advice. Results are based on the information you enter and standard industry benchmarks — they do not account for your personal circumstances, individual lender policies, or current credit assessment criteria. Using this calculator does not constitute a loan application or pre-approval. You should seek advice from a licensed mortgage broker or financial adviser before making any borrowing decision; actual loan offers are subject to each lender's own credit assessment and responsible lending obligations under the National Consumer Credit Protection Act 2009. LMI figures are indicative estimates based on representative rate cards; actual premiums should be obtained from Helia or QBE directly or via your lender's LMI estimator. Stamp duty figures are an approximation of NSW general rates only.
Related calculators: Mortgage repayment calculator · Stamp duty calculator · HECS/HELP calculator · Income tax calculator