Borrowing Power Calculator

How Borrowing Capacity is Estimated

Borrowing capacity is the loan supported by the monthly income left after your entered expenses and commitments. The calculator converts this repayment capacity into a principal-and-interest loan.

The formula is P = A × (1 − (1 + r)⁻ⁿ) ÷ r. A is monthly repayment capacity, r is the annual assessment rate divided by 1,200 and n is months. At zero interest, P = A × n. A negative surplus gives zero loan capacity.

The starting example uses $8,000 net monthly income, $3,500 living expenses, $700 existing commitments and $300 assumed card commitments. That leaves $3,500 monthly. At 9% over 360 months, estimated capacity is $434,986.53.

Moneysmart's mortgage calculator explains the constant-rate principal-and-interest model. This tool reverses that repayment calculation after applying your entered cash-flow assumptions.

Income Needed for a Mortgage

Required income covers the target loan's repayment plus entered expenses and commitments, after deducting adjusted rent. The annual net figure excludes rent so you can compare it with other income.

For a $500,000 target at the starting 9% assessment rate, the monthly repayment is $4,023.11. Required annual net income is $102,277.36. Dividing by 80% gives $127,846.70 gross under the example's 20% effective tax assumption.

The flat tax percentage is your assumption, not a marginal tax schedule. In net-income mode it affects only the reverse gross estimate. Actual tax, deductions and income verification require separate calculations.

First-Home, Refinance and Other Loan Scenarios

For a first-home purchase, enter your cash deposit and purchase costs to see capacity plus available funds. The result excludes lender deposit requirements and loan-to-value limits.

For refinance, exclude the old loan's repayment when the new loan will replace it. Keep repayments on debts that continue. Enter usable equity only when you can access it, and include any extra debt repayment needed to release it.

For personal, car or business loans, use the relevant net income and ongoing costs. Adjust the rate and term to the scenario. This simple repayment-capacity model excludes balloon payments and lender underwriting.

Serviceability and Lender Calculators

NAB, ANZ, CBA, Westpac, ING, Bankwest and St.George can produce different borrowing limits because their income acceptance, expense floors and assessment policies differ. This calculator uses your inputs and does not reproduce their servicing engines.

APRA's residential mortgage lending guidance describes net-income-surplus assessments, expense checks and debt commitments. The loan serviceability guide explains the assessment process and evidence a broker needs.

Pre-approval also depends on lender checks. Self-employed income, variable earnings and adverse credit need their own assessment. A positive result here establishes only that the entered cash flow supports the modelled repayment.

Debt-to-Income Ratio

Debt-to-income ratio divides the total debt you enter by annual gross income. The starting $480,000 debt divided by $120,000 gross income gives 4 times income.

The ratio is separate from monthly repayment capacity. Enter proposed total debt and the gross income you want to assess on the same basis. It does not automatically add this calculator's loan capacity or rental income.

A ratio alone does not determine approval. Lender portfolio restrictions and individual lending policies are separate from this arithmetic. Zero gross income leaves the ratio undefined, and SMSF mode omits the personal ratio.

Rental Income and Card-Limit Assumptions

Adjusted annual rent equals rent per period multiplied by the periods per year, then reduced by vacancy and the entered acceptance percentage. Weekly rent uses 52 periods, fortnightly rent 26 and monthly rent 12.

For example, $500 weekly rent gives $26,000 annually. A 10% vacancy allowance leaves $23,400. At 80% acceptance, the model adds $18,720 per year, or $1,560 per month. Include rental tax and property costs in expenses.

A $10,000 card limit assessed at 3% creates a $300 monthly commitment. The result also shows capacity without that commitment. APRA gives 3% as an example assessment approach. Enter the percentage you intend to model.

SMSF Borrowing Scenarios

SMSF mode estimates a property loan from the fund's adjusted rent and verified recurring contributions, less fund expenses and existing commitments. It uses the same surplus-to-repayment formula.

Only cash available to the fund belongs in this scenario. Contributions must be entered after contribution tax. Include remaining fund taxes and property expenses in fund expenses. Member salary and personal card limits do not enter the calculation.

The required annual net-income result becomes the recurring contributions needed after contribution tax, in addition to adjusted rent. This model does not calculate contribution eligibility or certify a limited recourse borrowing arrangement's compliance.

Moneysmart's SMSF property guidance explains the risks and borrowing restrictions. Read the SMSF borrowing-capacity guide before treating available fund cash flow as evidence that a proposed arrangement is permitted.