Get an estimate of how much you can borrow before you start your property search.
To use this calculator all you need to do is enter in your income, expenses and other financial commitments, as well as some loan details. If you're not sure about the loan details you can look at the loans table below the calculator and put in some estimates.
This calculator doesn't give a result based on your deposit size. This is because lenders decide how much to lend you based on a range of factors.
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How to use the home loan borrowing power calculator
Income details
One of the first factors your potential lender will look at when evaluating how much you can borrow, in addition to your deposit, is your income. Your income will dictate how much you can repay off your loan each month, so they'll want to know if your income can meet the repayments for the size of loan you want. To find out how much your repayments would be on a particular loan size use our repayment calculator.
Your potential lender will ask you the following types of questions in regards to your income:
- How much of your income have you been able to save?
- Has your income increased or decreased?
- What are your ongoing financial commitments?
If you're married or buying your home with your partner, the household income factor rises, and in turn so does the probable amount you can borrow. While this may seem great, remember there are still situations you must plan for, such as if one of you loses your job or if you decide to have children.
Proof of your ability to save is particularly important if you're buying your first home. If you're a first home buyer you may be entitled to the First Home Owners Grant (FHOG).
A good savings history will also tell a potential lender that you're likely to be able to keep up with regular repayments. If you already have a home loan and want to refinance, a savings pattern may not be so important because your potential lender will have your loan repayment history to assist them in their decision.
Before you go on, note that in addition to finding out how much you can borrow, you should work out how much you should borrow.
Debts and expenses
Your debts and what you spend each month are as important as your deposit, income and savings. When you want to work out how much to borrow you need to consider any financial commitments and debts you regularly put your income towards to find out if your income is still sufficient to make your repayments.
Before meeting with your lender to discuss how much you can borrow, make a determined attempt to get rid of all the outstanding debts that you can, and if possible get rid of any credit cards you don't need. Go into discussions with your potential lender with as little financial baggage as you can and you're likely to be rewarded with increased borrowing capacity.
Some debts or expenses may decrease the amount you can borrow or even cause your loan application to be rejected. In addition to what's been discussed above, these may include:
- Payment history: Do you pay on time? This is a determining factor in loan approval. Payment history includes credit cards, bills, car loans, mortgages and loans of all types. Bankruptcy is also taken into consideration.
- Outstanding debt: Most people have debt, but the lender wants to know how much you have. Outstanding balances for credit cards, personal loans, car loans and mortgages will determine a how much a lender thinks you should be able to borrow. It's important to note that your overall credit card limit will be used to asses your current level of outstanding debt - this is your entire credit limit, not just what you have used.
- Debt to income: The classic ratio of what you owe to what you make. This ratio is used to determine your ability to pay your current debt and possible future debt if you are approved for any loans or mortgages. Child care costs and children in general can sometimes reduce your borrowing power.
- Credit history: How long have you had credit? The length and usage of your accounts are taken into account. Not only does this show items like foreclosures and bankruptcies but also shows attempts at repaying debt. Loan processors use this to try and determine how reliable you are to pay back the loans.
- Applications for new credit: Each time you apply for credit it's noted in your credit history and lenders will look at this.
Get a free credit score check before you apply for a home loan
Loan type and term
The type of loan you choose, as well as the term you plan to keep it for, also has a bearing on your borrowing power.
A loan with minimal features, that has low fees and has a low interest rate might mean your repayments are lower and therefore could mean you can borrow more. If you plan to pay off your loan in 30 years as opposed to 25 years this will also lower your repayments.
On the other hand a shorter loan term could save you thousands of dollars in interest but increase your repayments. When you meet with your potential lender or mortgage broker make sure you discuss the different options available.
Before you apply for a home loan, get your finances in order. Being prepared not only increases your chances of being approved, but also of you borrowing the amount you want. Regardless of how much your lender decides to lend you, work out if the loan suits you and your situation, what features it offers you and if you could still comfortably afford your repayments if interest rates increased.
Deposit size - what is a loan-to-value ratio (LVR)?
While it's not in the calculator, your deposit will also make up a big part of how much you're able to borrow.
One of the ways a potential borrower can demonstrate their ability to make repayments is through their deposit size. A large deposit demonstrates you've been able to save regardless of your expenses. This means the amount a lender will let you borrow depends on how large your deposit is in relation to the value of the property, otherwise known as an LVR.
An LVR is shown as a percentage and is worked out by dividing the loan size you require by the value of the property. Look below to find out how to work out what your LVR would be.
LVR Example
Chad is looking at purchasing a $400,000 home. He's got a deposit of $40,000 saved up and is ready to go. To work out his LVR, he first needs to find out how much he'll need to borrow. To do this Chad needs to subtract the deposit he's saved from the value of the property he wishes to buy.
Next, he needs to divide this amount by the value of the property and then multiply it by 100.
This means Chad's LVR would likely be 90%.
Lenders generally set the maximum LVR at 95% or lower. That's the most they will lend out, unless you're able to get a family guarantee, in which case you can sometimes borrow as much as 100%. If you're self employed and want to take out a loan with low documentation requirements a lender may require an LVR of 60% – that is you need a deposit of 40% of the value of the property.
If you're not self employed, have a good credit history and opt to pay for lenders mortgage insurance (LMI), then you may be able to take out a loan with an LVR of 95%, meaning you only need a 5% deposit.
Remember that you also need to account for other costs when purchasing a home, which can include:
- Stamp duty
- Legal fees
- Building/pest inspections
- Home insurance
- Repair fees
- Maintenance fees
- Loan feature fees for facilities such as redraw
These may not make up your LVR but you should get acquainted with different types of fees and how much they may cost you.
Hello, I had a quick question on how to use this calculator. Can you please clarify what should be included in “other loans” under expenses? I currently do not have any other loans, but obviously, I have monthly expenses on food, groceries, utilities, etc. Should those be included under other loans? Please advise.
Hi Yogaesh,
Thanks for getting in touch with Finder. It’s nice to know that you’re interested in using our free calculator.
Regarding your question, your monthly expenses such as food, groceries, and utilities are not part of the “Other loans.” “Other loans” refer to other loans that you may have such as home loans, car loans, and personal loans.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
Hi im on centrelink and i want to buy a house , how much deposit do i need and how much can i borrow and which bank can offer me a home loan?
Hi Jennifer,
Thanks for reaching out.
You can definitely apply for a home loan while receiving Centrelink.
You can check this page on HOME LOANS for Centrelink recipients. You can find information on how a mortgage works for Centrelink payments, benefits and risks, and a quick guide on how to apply for one. You can also utilize the box provided where you can enter your information to help the loans expert assess the loan that will work for you.
Hope this was helpful. Feel free to message us should you have further questions.
Cheers,
Nikki
Hi I was looking at getting a personal loan with my credit score which would be the best bank to go through
Hi Francesco,
Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?
There are different types of personal loans you can choose from and you can see it on this page.
Different personal loans will require different documents to apply. Generally, these are the kind of documents that they will want to see:
Personal details. You will need to provide your name, contact information and proof of your identity using a drivers license, passport, etc.
Employment information. This includes where you work, what your income is, and the name and contact information of your employer.
Details of your assets. This includes any properties or vehicles you own as well as any savings you have accumulated.
Details of your liabilities. Liabilities refer to any open credit accounts, active credit and store cards and any debts you have owing on your mortgage or other loans.
Turnaround time will be vary depending on the loan you’re applying for and for which lender you’re borrowing money from. Traditionally, an approval can take a few days up to a week, if you apply online, the process can be faster.
Make sure the check all the eligibility criteria needed to apply for a personal loan to ensure of a 100% approval.
Hope this helps! Feel free to message us anytime should you have further questions.Happy hunting!
Cheers,
Nikki
I want to borrow $260,000 to buy a house. I am an existing home owner who will be using equity.
Hi Cho,
Thanks for your inquiry. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.
You can also have a look on these pages to compare your options:
https://www.finder.com.au/home-loans/line-of-credit-equity-loans
https://www.finder.com.au/home-equity-loan-calculator
Please click the name of your preferred lender to find out the details and the minimum eligibility. You may then click the green “Go to Site” button to submit your loan application online.
Best regards,
Rench
I have ignorantly applied for lots of credit cards which offer enticements like frequent flyer bonus points not realising that this has affected my once excellent credit rating.how can i restore it.? I did not know by doing what i did was to be detrimental as have never not fulfilled my payment obligations nor been behind or bankrupt etc..it seems so unfair.please help!!
Hi Denice,
Thanks for getting in touch.
I’m sorry to hear about the enquiries on your file. Unfortunately, several enquiries on your file made by a credit provider can negatively impact your credit rating and that will stay on your credit file for five years. Basically, the only details or enquiries that can be removed from your credit file are those that are incorrect or erroneous.
On this page, you can find a step by step guide on how you can possibly remove those enquiries that you think are incorrect.
Hope this helps.
Cheers,
May
lets assume that my gross income is $450 usd and i want to borrow some money or get a loan of which i have a minimum of 3 dependents how much do you advise me to borrow ?
Hi Mymbo,
Thanks for your question.
Please note that the borrowing calculator above is applicable to Australian residents.
Moreover, we can’t give an estimate as to how much you should or you could borrow because the lenders normally decide how much to lend based on a number of factors and not just your gross income.
You may check and compare personal loans on this page. When you click the ‘go to site’ button, you’ll be redirected to the lender’s website where you can request for a quote.
Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision and consider whether the product is right for you.
Cheers,
Anndy
If my limit on my loan is 110k, redraw amount 60k and balance 50k. repayments based on 110k. can i use redraw to pay balance of 50k
Hi Adele,
Thanks for your question.
Usually, you are allowed to access your redraw facility in the case of an emergency. I would suggest that you contact your lender if they would allow you to use the funds on your redraw for paying off your $50,000 loan balance.
Cheers,
May
Does my age play a part in my borrowing ability im 53
Hi Nev46,
Thank you for your question. You’ve reached finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.
In Australia, lenders are not actually allowed to discriminate borrowers based on age. Australia’s anti-discrimination legislation, i.e. Age Discrimination Act 2004 and National Consumer Credit Protection Act 2009, prevents lenders from discriminating against mortgage applicants due to their age.
However, lenders would also like to make sure that you meet the general lending criteria, that is you can comfortably afford to repay the loan without having financial difficulties. So, the older you are, the more it might be difficult for you get a mortgage approval. Usually, lenders would limit the age requirements from 65 to 75 years.
Cheers,
May
a has 1000000 savings deposit with the phil. national bank. One day a borrowed 200000 from the bank. without asking permission from a, the bank subtracted the 200000 from a’s account , leaving a balance of 800000 in a’s favor. Is the bank’s action proper?
Hi Shaina,
Thanks for your question.
Please note that we are an Australian financial comparison and information website. As such, we can’t provide specific advice for your situation.
If the terms and conditions of the loan clearly state that the bank can deduct the balance of the loan from their client’s existing account, then the bank’s action is acceptable. It would be best if the person concerned will directly get in touch with the bank and confirm this.
Cheers,
Anndy
Very useful! With this calculator, I can do the entire math in just some minutes. Brilliant!
I’m glad you found it useful Franco! We’ve got many more calculators here if you’re interested.