Borrowing capacity is not one universal number. Lenders can use different assessment rates, expense benchmarks, income treatments and liability calculations, the same household can get a materially different maximum loan figure from two different lenders. The tool below makes the mechanism visible using one transparent, fully editable formula, so you can see how income, dependents, living expenses and existing debts interact, not to hand you a fixed universal figure for what a child or a car loan “costs” you, because no single figure like that is actually true across lenders.
Borrowing capacity is not one universal number. Lenders can use different assessment rates, expense benchmarks, income treatments and liability rules. This tool shows how the main inputs interact using an editable illustration. It is not a lender quote or pre-approval.
Editable illustration. Actual lender expense benchmarks can differ by household and lender.
Credit-card limits can reduce borrowing capacity even when the balance is low. This percentage is an editable illustration, not a universal lender rule.
Lenders assess repayments at a higher assessment rate than the actual rate. The exact method is set by the lender’s current requirements.
Calculated at the assessment rate (your rate + buffer), for the term above, using your net income less living expenses and existing debt commitments as the available surplus.
Each row isolates one input while holding the other assumptions constant. The result is recalculated from the numbers above and is not a lender quote.
Illustrative only. Actual borrowing capacity depends on the lender and the full application. Assessment rates, expenses, income and debts are assessed under the lender’s current requirements. Scenario Lens explains the main details that may change lender fit.
What can legitimately improve your position before applying
These are real, lawful factors, not ways to game a servicing calculator:
- Reduce unused credit card limits where appropriate, many lenders assess the limit, not your balance, so an unused $20,000 limit can cost more capacity than a $5,000 limit you actually use
- Pay down consumer debt where appropriate, car loans, personal loans and BNPL commitments all reduce monthly surplus
- Have complete evidence ready, see the Scenario Lens for what evidence your specific employment/income type may need
- Understand whether stable overtime, bonus or second-job income can be evidenced, some of it may count, subject to lender policy
- Correct inaccurate liability information, a closed account still showing as open, or an incorrect limit, can unfairly reduce your assessed capacity
- Avoid taking on new debt shortly before applying
- Consider the loan term and structure that’s actually being proposed, see the Calculator Lab
- Research lender fit before applying, rather than after a decline
What this does not mean: hiding expenses, misstating liabilities, or presenting an inaccurate picture of your finances. Lenders verify against bank statements and credit files, an inaccurate application creates real problems later, not a better outcome now.