Free Tool · Mortgage Affordability
Mortgage Stress Test Calculator
Find out if your mortgage repayments are sustainable — and how much buffer you have against interest rate rises.
Find out if your mortgage repayments are sustainable — and how much buffer you have against interest rate rises.
Last reviewed 12 July 2026 · rates and thresholds verified against official FY2026-27 sources.
In Australia, a household is generally said to be in mortgage stress when its home-loan repayments consume more than 30% of gross (before-tax) household income. The "30% rule" is a long-standing rule of thumb used by housing researchers, community organisations and the Reserve Bank of Australia (RBA) to flag households with little breathing room left for food, utilities, transport, childcare and the inevitable surprise bill. Severe mortgage stress is usually defined as repayments above 50% of gross income — at that point even a modest income shock can force missed payments.
The 30% figure is deliberately blunt. It says nothing about how much you actually earn: a household on $250,000 spending 35% on a mortgage may still have ample surplus, while a household on $80,000 spending 28% can be squeezed hard because a larger share of a smaller income is already locked into non-negotiable essentials. That is why this calculator also reports your monthly surplus in dollars and a total debt-servicing ratio that folds in your other debts, rather than relying on the headline percentage alone.
Why does this matter so much in Australia? Most Australian mortgages are variable rate, so repayments move almost immediately when the RBA changes the cash rate. Between 2022 and 2023 the cash rate rose sharply over a short period, and many borrowers who comfortably serviced a loan at very low rates suddenly faced repayments hundreds of dollars higher each month. A household that was "fine" at 2% can be in genuine stress at 6% — which is exactly what a stress test is meant to expose before it happens.
This tool runs three connected calculations.
1. The repayment. For a principal-and-interest (P&I) loan, the monthly repayment uses the standard amortisation formula: Repayment = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments (years × 12). For an interest-only (IO) loan, the repayment is simply P × r — you pay the interest but the balance doesn't fall.
2. The stress test. The calculator repeats the repayment formula using your interest rate plus the chosen buffer (the default is +3%, which matches the buffer the Australian Prudential Regulation Authority, APRA, expects lenders to use). This "stressed repayment" shows what you would pay if rates climbed to that higher level.
3. The stress ratios. Each repayment is divided by your gross monthly income to give a repayment-to-income ratio. Anything above 30% lands in the stress zone. The total debt-servicing ratio (DSR) adds your other monthly debt commitments — car loans, personal loans, credit-card minimums, HECS-HELP, buy-now-pay-later — on top of the mortgage, because lenders assess your whole debt picture, not the home loan in isolation. Finally, monthly surplus is your gross income minus the stressed repayment and other debts, giving a dollar figure for the cushion you'd have left if rates rose.
Assume a household with a $580,000 loan over a 30-year term on a P&I basis, a current variable rate of 6.25%, gross monthly household income of $12,500, and $800 of other monthly debt (a car loan). We'll apply the standard +3% APRA buffer for the stress test.
The takeaway: this household looks fine today but would feel real pressure if rates rose by 3%. Note the surplus is calculated on gross income — once income tax and ordinary living expenses are deducted, the genuine buffer is far smaller. These figures are illustrative; your own result depends on the inputs you enter.
APRA requires authorised deposit-taking institutions (banks, credit unions and building societies) to assess whether you could still afford a loan at an interest rate above the rate you're actually offered. Since late 2021 the expected buffer has been 3 percentage points (raised from 2.5%). So if a bank quotes you 6%, it tests your budget at 9%. This is why your borrowing capacity can feel lower than you expect — and why running your own +3% stress test mirrors what the lender already does behind the scenes.
The buffer exists because Australian repayments track the RBA cash rate so closely. When the RBA's monthly board meeting moves the cash rate, variable-rate borrowers usually see the change passed through within weeks. Stress testing at +3% (or even +4% if you want to be conservative) is simply acknowledging that the rate on your loan today is not guaranteed for the life of a 25- or 30-year mortgage.
Separate from the repayment ratios above, lenders watch your debt-to-income (DTI) ratio — total debt divided by gross annual income. APRA monitors banks' exposure to high-DTI lending, and most lenders apply extra scrutiny above 6×.
| DTI ratio | Risk level |
|---|---|
| Below 4× | Low risk — comfortable serviceability |
| 4× – 6× | Moderate — manageable for stable incomes |
| Above 6× | High — scrutinised by lenders and APRA |
The single most effective defence against mortgage stress is a cash buffer you control. Practical ways to build one:
This tool gives a quick, indicative read on repayment affordability and rate-rise resilience. It estimates repayments from the loan amount, rate, term and loan type, then tests them against a buffer and your income. It does not account for income tax (it works in gross income), nor for the detailed living-expense benchmarks lenders apply, such as the Household Expenditure Measure (HEM). It doesn't include lenders mortgage insurance, fees, redraw or offset balances, fixed-rate splits, or how your income might change over time. Treat the result as a starting point for a conversation, not a lending decision.
The widely used threshold is repayments above 30% of gross household income, with severe stress above 50%. It's a rule of thumb rather than a legal definition, so use it alongside your actual dollar surplus and your total debt commitments.
This calculator uses gross (before-tax) income because that's the basis for the traditional 30% rule and how lenders frame serviceability. For your own household budgeting it's wise to also check the repayment against your net (take-home) pay, since that's the money actually available — the stress will look more pronounced.
Because APRA expects lenders to assess loans at roughly 3 percentage points above the offered rate, and because most Australian mortgages are variable and move with the RBA cash rate. A +3% test shows whether you could still cope if rates rose to levels seen in recent cycles.
A fixed rate gives certainty for the fixed period (commonly one to five years), which can be valuable if you're worried about rises. But fixed loans often limit extra repayments and offset features, and you face the prevailing rate when the fixed term ends — so it manages risk for a window rather than removing it.
This page is general information only and is not personal financial advice. Figures such as the APRA buffer and prevailing rates can change — confirm current details with the RBA, APRA or ASIC's Moneysmart, and seek advice from a licensed mortgage broker or financial adviser before making decisions.