Loan Serviceability Calculator

How mortgage serviceability works in Australia

Australian banks assess serviceability — your ability to repay the loan — using strict lending criteria. They typically use a 3% interest rate buffer when assessing your ability to repay, regardless of the actual rate.

Key serviceability metrics

• Debt-to-income ratio: Banks typically limit total debt repayments to 40–50% of gross income.
• Living expense allowances: Banks apply minimum living expense guidelines ($2,600–$3,500/month for individuals) to ensure you can meet other obligations.
• Interest rate buffer: Most banks assume a 3% buffer above the current rate for repayment capacity.
• Loan-to-value (LVR): Typically limited to 80–90% depending on loan type and circumstances.

What can affect your borrowing capacity?

• Income stability and type (employment vs. self-employed)
• Credit history and existing debts
• Deposit size and LVR
• Interest rate environment
• Employment in key sectors (some lenders restrict mining, defence, etc.)
• Age of applicants

Next steps

Use this estimate to understand your rough borrowing capacity, then get pre-approved by a lender for an exact amount. Mortgage brokers can shop multiple lenders and often get better rates.