How our borrowing capacity calculator works
Most borrowing calculators give you one number. Ours gives you the spread across 63 lenders, because that's the real shape of the market. Here's exactly how the calculation runs.
The five-step calculation
For each lender on our panel we run the same five-step process, using that lender's published policy figures, not generic averages. The lender with the best policy fit for your situation sits at the top of your results.
Shade your income to that lender's rules
Base salary by employment type. PAYG and self-employed base income counts at 100%. Casual is shaded harder — 70-80% at most lenders, 60-65% at conservative credit unions. Contract sits between (80-95%). The shading factor differs by lender type, so the spread between best-fit and worst-fit lenders for casual workers is one of the widest in the market.
Variable income. Bonus and commission is shaded by lender type (banks 80%, non-banks 100%) and by frequency: regular bonuses get full credit, annual bonuses get 85%, one-off bonuses drop to zero. Rental income is shaded by each lender's rule (most use 75-85% of gross rent). Other income (allowances, government payments) is taken at face value.
For self-employed borrowers we use your declared figure as a starting point — if you have a multi-entity structure or add-backs, the real spread between lenders is wider than this calculator shows. That's what Calculator 2 (Self-employed Borrowing Capacity) is for.
Calculate liability servicing
Standard industry treatment of consumer debt:
- Credit cards: 3.8% of the limit per month, regardless of balance. Cancelling unused cards is the single fastest way to lift borrowing capacity.
- HECS / HELP: imputed against gross income brackets (simplified for this MVP — the September 2025 changes mean some lenders treat HECS more leniently than others, which we'll surface in v2).
- Personal loans & car loans: amortised at the lender's own assessment rate over the remaining term (5 years default).
- BNPL (Afterpay, Zip, Klarna): treated as a 12-month payoff obligation — the outstanding balance becomes annual servicing. Some lenders refuse outright if any BNPL account is active; we'll flag that at deal stage.
Apply HEM (the household expense floor)
Lenders use the higher of your declared monthly living expenses and a benchmark called HEM (the Household Expenditure Measure). Single, no dependants: ~$24k/year. Couple, two kids: ~$48k/year. Some lenders apply a graduated HEM that rises with gross income. We use the household-composition floor for now — declared expenses override the floor when higher.
Reverse-amortise to maximum principal
What's left after income minus liabilities minus expenses is your monthly servicing surplus. Each lender assesses it at their own assessment rate (revert rate plus their buffer — APRA banks must use 3% buffer; non-banks typically 2-2.75%). We invert the standard mortgage formula:
P = M × (1 - (1 + r)-n) / r
where P is principal, M is your monthly
surplus, r is the lender's assessment rate divided
by 12, and n is the loan term in months.
Apply the lender's DTI cap and postcode rules
Even if your servicing supports more, each lender has a debt-to-income (DTI) ceiling — typically 6.0× to 8.0× of gross household income. The lower of "servicing-driven" and "DTI-driven" is what you can borrow there. Some lenders also restrict by postcode (high-rise apartments, mining towns, regional areas). Postcode policy isn't fully imported yet — flagged as a v2 item.
Why the bank calculator shows a different number
Bank-supplied calculators use a single conservative assessment rate and simplified income treatment. They're optimised to give a number the bank is confident lending against — not to surface the difference between their policy and the lender across the street. The "Big-4 bank tier" figure on your results screen is the median of the most conservative third of our panel. Empirically the big four cluster there.
How the self-employed calculator differs
Bank tools treat self-employed income as if it were PAYG — they ask for "your salary" and ignore the structure of your business. Three things actually drive borrowing capacity for the self-employed, and the spread between best-fit and worst-fit lenders can exceed 50% on the same numbers:
- Depreciation acceptance varies from 0% to 100%. Bank Australia rejects depreciation entirely. AMP accepts 50%. BCU caps it at 30% of net profit before tax. Firstmac and Firefighters Mutual cap at 20%. Bank of Melbourne, CBA, and most non-bank lenders accept 100%. We apply each lender's actual rule to your declared depreciation figure.
- Income averaging methodology. Most lenders take the lower of FY24 and FY25. Auswide and Beyond Bank average the two. Macquarie and Bank of Melbourne use the most recent year only. CBA's "one-year verification method" uses 90% of the latest year. Auswide, Firefighters, and Health Pro Bank cap the latest year at 120% of the previous year (to stop people leveraging a single bumper year).
- ABN history thresholds. 24 months is standard. Specialist lenders (Pepper, Resimac, Liberty) accept 6-12 months via low-doc / alt-doc products. We filter the panel by your ABN history before running capacity, so lenders that can't help you get an actionable disqualify reason ("requires 24 months, you have 12") rather than just a low number.
What we don't do yet: the wizard asks for total add-backs and the depreciation portion separately. Other categories (interest on refinanced debt, super in excess of SGC, director's salary, non-recurring expenses) are applied at 100% across the panel — most lenders accept these without specific caps. The handful that flag them as case-by-case ("refer BDM" lenders like Bankwest, Funding, GMCU) are computed conservatively on your behalf.
The honest caveats
- Panel data refreshes quarterly, not in real time. Lender rates and policies move between refreshes. The result page always shows the data refresh date so you know how fresh the numbers are.
- Postcode policy and HECS treatment are simplified in v1 — both have a 5-15% impact on your real number for affected borrowers, and both are on the v2 roadmap.
- Multi-entity structures (group companies, trusts holding operating entities) require human review. The calculator handles the entity acceptance filter; the income side benefits from a broker walking through the structure.
- This is not personal advice. Comparative intelligence based on each lender's published policies. Final figures are confirmed against the lender's own servicing calculator at deal stage.
Want the real number for your scenario?
If you've run the calculator and want to convert the spread into a deal-binding number, that's the broker's job. We'll run the actual lender's servicing calculator (the same tool the credit assessor uses), check policy fine print on your specific situation, and give you a number you can act on.