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- How much can I borrow?
How much can I afford to borrow?
Did you know you can find out your home loan eligibility with a calculator? By working out how much borrowing power you have, you can calculate the size of a home loan you can afford. Enter your income and expenses to estimate how much you could borrow for a home loan with RateCity's affordability calculator.
The result provided is an estimate only. Please read our for more information.
- Add up your total assessable income, including that of your joint borrowing partner (if applicable).
- Work out your total living expenses. You can manually enter your own expenses, including other home loans, personal loans and credit card credit limits. Alternatively, you can use an automatic estimate of minimum monthly expenses for singles or couples with different numbers of dependents, based on the latest Melbourne Institute - Poverty Lines: Australia report (see table).
- Set aside 15 per cent of your income as a buffer to cover any unforeseen circumstances.
- Work out how much money is left over in your budget to go towards your monthly mortgage repayments.
- Calculate your home loan repayments for a 30-year loan and an interest rate of 5.5 per cent. Fixed rates and variable rates are at historical lows, but lenders play it safe and assume they won't always be. The floor rates used vary between lenders, though 5 or 6 per cent is a common benchmark.
- Determine the maximum borrowing capacity (loan size) based on your assessable income left over after your total expenses, including loans, credit cards and 15 per cent buffer are factored in.
- Calculator does not account for upfront or ongoing fees or charges
- Interest is calculated by monthly compounding. Weekly or fortnightly repayments may result in different calculations, affecting your borrowing power.
- All months are assumed to be equal. In reality, many loans accrue on a daily basis which can lead to varying interest in different months.
- All calculations are estimates; they are not guarantees you'll be able to borrow a particular amount, and are not pre-qualifications or pre-approvals for borrowing.
- Calculations are only accurate for the values entered into the calculator, and assume that these will stay the same for a 30 year loan term. The calculator does not account for changes to interest rates or your cost of living over this time.
To work out how much a lender may choose to lend you, our Borrowing Power Calculator takes the following steps:
- Remember that this loan amount is just an estimate, and that each lender will look at your finances slightly differently when assessing your loan application. Your maximum borrowing amount may vary depending on which bank or mortgage lender you speak to.
- Based on the latest Melbourne Institute - Poverty Lines: Australia report.
- Lender serviceability assumptions can change at any time; this will affect how much you can borrow.
- Interest rates can change at any time. The calculator assumes a floor rate of 5.5 per cent, but you may want to consider a higher percentage if you believe rates may rise even higher in future.
- This calculator measures loan serviceability, which is only one factor used by lenders when deciding whether to offer you loan approval. Your credit history, financial situation, employment details and what property you are buying may also play a role in determining your eligibility for a home loan product.
- This calculator is for information purposes only. Any advice is general and has not taken into account your personal circumstances. Read our full disclaimer.
Default Monthly Household Expenses
| Number of dependents (kids I support) | Single (It's just me) | Joint (There's two of us) |
|---|---|---|
| 0 | $1729 | $2514 |
| 1 | $2375 | $3124 |
| 2 | $2985 | $3735 |
| 3 | $3596 | $4346 |
| 4 | $4207 | $4950 |
