It’s important to plan for any large decision in life. Making a large purchase – a home, investment or car/boat etc – requires research, preparation and forecasting. And, unless you’ve saved the whole amount, you may need a loan to help make it happen.

Calculating your borrowing power before you start searching for your next big thing gives you the ability to know how much you can spend.

How do I calculate my borrowing power?

On a basic level, borrowing power is:

Income (your salary and other income such as overtime, rental income etc) less Tax less Expenses (living expenses and existing financial commitments such as credit cards, loans etc).

Other considerations include whether you have any dependents and whether you’re looking to purchase a home to live in or an investment property. You may also be able to borrow more as a joint borrower with your spouse’s income included.

Of course, it varies from financial institution to financial institution (and a buffer is likely to be applied), but some version of this calculation is used to work out whether you have any leftover surplus each month. If you don’t have any extra in the tank, it’s unlikely you’ll be able to add in loan repayments.

Hopefully, though, you do have a bit leftover each month. If you had $2,000 leftover, this may be roughly equivalent to your ‘Borrowing Power’. In other words, you may have the ability to pay off a loan by $2,000 every month.

The more you have leftover, the higher your ‘Borrowing Power’ is likely be.

Save yourself the time trying to calculate it yourself though. Most financial institutions – us included – have a few very handy calculators on their websites. It makes calculating your ‘Borrowing Power’ simple and is likely to take into account any unique criteria relevant to that financial institution’s decision-making process.

What information do I need?

It depends on what type of loan you’re applying for (i.e. home loan, personal loan, credit card etc), whether it is a secured or unsecured loan and whether you’re borrowing as a single or joint applicant.

Before you sit down with our ‘Borrowing Power’ calculator, it’s best to gather together:

  • Your gross or net salary details, as well as your partner’s (as well as any other income you may have)
  • Your existing loan repayments, credit card limits and the total of your other living expenses
  • Basic details of what type of loan you’d like, including interest rate and term

How do I calculate my borrowing power?

Once you know your rough borrowing power, you can start considering whether you’d like to apply for a loan. Feel free to call us on 1300 747 747 to speak with one of our home loan specialists.



Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305.

Loans are subject to approval. Normal lending criteria, terms and conditions and fees and charges apply. Qudos Bank’s Borrowing Power Calculator is not an offer of credit. If you wish to apply for a loan please call us on 1300 747 747.

The information in this article is of a general nature and has been prepared without considering your objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances.

 Published November 2018