How do Australian lenders calculate borrowing capacity?

Australian lenders assess borrowing capacity against three separate limits — called ceilings — and apply whichever is lowest. Ceiling 1 is the deposit ceiling: how much you can borrow given your available savings after stamp duty, LMI, and fees. Ceiling 2 is the debt-to-income ceiling: total debt cannot exceed 6 times gross annual income. Ceiling 3 is the serviceability ceiling: your monthly net income minus all committed expenses must cover monthly repayments at your interest rate plus a 3% APRA buffer. GetReal calculates all three and shows which one is binding.

What is the maximum borrowing capacity in Australia?

There is no single maximum — it depends on income, savings, debts, expenses, property type, and state. As a rough guide, a single borrower on $100,000 gross income with no debts and a 20% deposit might borrow up to $550,000–$650,000 under the serviceability ceiling (stress-tested at approximately 9.49%). GetReal calculates your specific ceilings based on your actual inputs.

Which ceiling limits most Australian borrowers?

For most borrowers in capital cities, the serviceability ceiling (Ceiling 3) is the binding constraint — income relative to living costs and the stress-test rate is the most common limit. For first home buyers with small deposits, the deposit ceiling (Ceiling 1) often binds first. High-income borrowers with multiple existing debts may hit the debt-to-income ceiling (Ceiling 2).

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GetReal — Methodology

Borrowing capacity

v1.0 — August 2026

Australian lenders assess borrowing capacity against three separate limits. GetReal calculates all three and shows which one limits you — because optimising for the wrong ceiling is a common and costly mistake.

Most people think of borrowing capacity as a single number. It isn't. It's the lowest of three independent ceilings, each calculated differently and each affected by different inputs. Understanding which ceiling is binding tells you which lever actually matters.

Ceiling 1 — Deposit

How much can you buy given your savings? After stamp duty, LMI (if LVR > 80%), and transfer fees are deducted from your deposit, the remainder sets your maximum purchase price via the applicable LVR limit. This ceiling is entirely about savings — income doesn't help if you don't have the deposit.

Available deposit = savings − stamp_duty − fees − lmi_stamp_duty Max price = available_deposit ÷ (1 − max_LVR) // Solved iteratively — stamp duty and LMI are both price-dependent

→ See LVR limits, LMI calculation, Stamp duty

Ceiling 2 — Debt-to-income ratio

Total debt across all loans cannot exceed 6 times gross annual income. Credit card limits count in full regardless of balance. HECS/HELP is excluded since 30 September 2025. This ceiling is income-driven — adding a co-borrower's income can significantly increase it.

Max total debt = gross_annual_income × 6 Max new mortgage = max_total_debt − existing_debts − credit_card_limits

→ See Debt-to-income ratio

Ceiling 3 — Serviceability

The largest loan where monthly repayments at the stress-test rate (your rate + 3%) can be covered by your monthly income surplus after living costs and committed expenses. This is the most complex ceiling and the most common binding constraint for mid-to-high income earners in capital cities.

Monthly surplus = net_income − HEM − debts − hecs_repayment Max loan = annuity_solve(surplus, stress_rate, 360_months)

→ See Serviceability, Living expenses (HEM), HECS/HELP

Which ceiling binds?

Situation	Most likely binding ceiling
First home buyer, small deposit	Ceiling 1 — Deposit
Mid-income, no prior debt	Ceiling 3 — Serviceability
High-income, multiple debts	Ceiling 2 — DTI
Investor adding second property	Ceiling 2 — DTI or C3

Worked example — single borrower, $120,000 income, $150,000 savings, NSW house

C1 Deposit ceiling:
  Savings: $150,000 | Stamp duty (est. $800k): ~$31,090
  Available deposit: ~$118,910 at 90% LVR → max price ~$1,189,000
  At 80% LVR (no LMI): max price ~$594,500

C2 DTI ceiling:
  Income: $120,000 × 6 = $720,000 max debt (no existing debts)

C3 Serviceability ceiling:
  Net income: ~$6,650/month | HEM: $2,480 | Surplus: ~$4,170
  Stress rate: 9.49% | Max loan: ≈ $516,000

Binding ceiling: C3 — Serviceability at ~$516,000
      

Lender variation: Different lenders apply different HEM interpretations, expense floors, and appetite for high LVR. GetReal's ceilings are estimates based on mainstream lender practice.