Find out what the bank will actually lend you
Your borrowing power is the ceiling on what you can buy. Based on your income, debts, expenses, and the bank's assessment rate — understand your limit before you start looking, not after you find the perfect property.
How this is different
Bank calculators are deliberately conservative — they use buffer rates and HEM benchmarks that may not reflect your actual situation. Presm models serviceability the way lenders actually assess it, including existing debts, dependants, and living expenses, so you get a realistic number — not a marketing number.
What the calculator covers
Income analysis
Salary, rental income, bonuses, overtime — modelled with the shading banks actually apply to each income type.
Existing debt impact
Credit cards, car loans, HECS, existing mortgages. See exactly how each liability reduces your borrowing capacity.
Expense assessment
Banks use HEM or your declared expenses — whichever is higher. Understand how your spending profile affects your limit.
Property-specific
Borrowing power changes depending on whether you are buying a home or an investment. We model both scenarios.
What Affects Your Borrowing Power?
Banks assess a handful of key factors. Understanding them gives you a better shot at maximising capacity before you submit an application.
- Income. Gross salary, rental income, bonuses, commissions, overtime. The more consistent and documented, the more the bank counts. Self-employed borrowers typically need two years of tax returns.
- Living expenses. Banks use the Household Expenditure Measure (HEM) as a baseline, but if your actual spending is higher, they use that instead. Transaction history gets scrutinised.
- Existing debts. Every loan, credit card limit (not just the balance), HECS/HELP debt, car finance, and buy-now-pay-later commitment reduces capacity. Even a zero-balance card counts at its full limit.
- Dependants. Each dependant increases assumed living expenses. Going from zero to one can knock tens of thousands off your borrowing capacity.
- Interest rate buffer (APRA 3%). Banks must assess repayments at a rate 3% above your actual loan rate. If rates are 6.2%, the bank tests you at 9.2%. This single rule takes a massive chunk out of what most people can borrow.
- Property type. Some lenders restrict LVR for studio apartments, high-density buildings, rural properties, or sub-40sqm units. A standard three-bedroom house in a metro area gives you the most flexibility.
Typical Borrowing Capacity Examples
Ballpark figures based on current average lending criteria across major Australian banks. Your actual borrowing power could differ depending on circumstances, lender choice, and property type.
Gross income: $80,000
~$450,000
Minimal debts, no dependants
Gross income: $100,000
~$600,000
Minimal debts, no dependants
Gross income: $130,000
~$750,000
One dependant, low debts
Gross income: $150,000
~$850,000
Combined income, no dependants
Gross income: $200,000
~$1,100,000
Combined income, one dependant
Gross income: $250,000
~$1,350,000
Combined income, existing rental income
Estimates only. Based on P&I repayments, 30 year loan term, and average variable rates as at early 2026. Assumes standard living expenses and no unusual liabilities.
How Banks Assess Investment Property Loans
Banks run a detailed serviceability assessment — not just your salary times six. They calculate whether you can afford repayments after accounting for every financial commitment you have.
Serviceability assessment. Total income minus living expenses, existing loan repayments (at the buffered rate), credit card limits, HECS repayments, and other commitments. The remainder determines how much new debt you can service. Different banks model this differently — borrowing power can vary by $50,000+ between lenders.
Rental income shading. Expected rent from the property gets added to your income, but at 80% (some lenders 70%). If expected rent is $600/week, the bank might count $480. This accounts for vacancy, management fees, and maintenance.
Impact of existing debt. Every current loan gets re-tested at the buffered rate. Your home loan at 6% is tested at 9%. Multiple investment properties compound this effect, reducing room for new borrowing.
The bank's version of what you can afford is always more conservative than your own calculation. That is by design — regulators want a margin of safety if rates rise.
Tips to increase your borrowing power
Reduce discretionary spending
Banks review 3-6 months of statements. Trimming non-essential spending shows lower living expenses, which directly increases capacity.
Close unnecessary debts
Cancel unused credit cards, clear personal loans, and pay off buy-now-pay-later balances. Closing a $10,000 card you never use can add $30,000+ to borrowing power.
Document all income
Recent pay rise? Get an updated payslip. Overtime, bonuses, commissions — keep 12 months of records so the bank can include them. Self-employed? Ensure your taxable income reflects earning capacity.
Choose the right structure
Interest-only loans have lower repayments, improving serviceability. Extending the term or choosing a lender with a more favourable assessment model can help. A broker who knows the nuances makes a real difference.
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Frequently asked questions
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On a $100,000 salary with minimal debts and average living expenses, most Australian lenders will approve somewhere between $550,000 and $650,000 for an investment property loan. The exact figure depends on your existing commitments, the lender's serviceability model, and whether you have other rental income. A couple earning $100K combined will typically get less than a single applicant earning $100K because the bank assumes higher household expenses.
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Yes, rental income does increase your borrowing power, but banks don't count the full amount. Most lenders apply a shading factor of around 80%, which means they only use 80% of the gross rental income in their serviceability assessment. So if a property earns $500 per week in rent, the bank will treat it as $400 per week for borrowing purposes. This shading accounts for vacancy periods and property expenses.
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The 3% interest rate buffer is a rule set by APRA (the Australian Prudential Regulation Authority) that requires banks to assess whether you can still afford your loan repayments if interest rates rise by at least 3 percentage points above the rate you're actually paying. For example, if your loan rate is 6.2%, the bank will test your ability to repay at 9.2%. This buffer significantly reduces the amount most people can borrow compared to what the actual repayments would be.
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It depends on the situation. Investment loans typically carry slightly higher interest rates, which reduces borrowing power. However, the rental income from the investment property gets added to your income assessment (at around 80% shading), which can offset or even exceed the impact of the higher rate. Tax deductions like negative gearing can also help. In many cases, borrowers with existing rental income can actually borrow more for an investment property than they could for an owner-occupied home.
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Existing investment properties affect your borrowing in two ways. On the positive side, the rental income they generate is added to your assessable income (usually at 80%). On the negative side, the loan repayments, rates, insurance, strata fees, and other holding costs all count as expenses. The bank runs the numbers on every property you own and looks at the net position. If your existing properties are positively geared or close to it, the impact on borrowing power is minimal. If they're heavily negatively geared, they will reduce how much you can borrow for the next one.
Find out how much you can borrow
Income, debts, expenses, assessment rates — all factored in. Get your number in seconds.