Here's a fun experiment. Ask five people what they can borrow and four will quote a number from a pre-approval that expired last year.
That number is dead. Here's why.
Borrowing power is not a fixed thing
Your borrowing capacity is recalculated by lenders every time you apply, based on rates, your income, your expenses, and their serviceability buffer, which adds around 3 percent to the actual rate when they stress test you.
Which means every RBA move rewrites your number. And the RBA moved three times this year, taking the cash rate to 4.35 percent.
Rough maths: each 0.25 percent rise trims capacity by around 2 to 3 percent. Three rises stacked means many borrowers are down 7 to 9 percent on last year. A $900k capacity might now be $820k. Same job, same income, smaller number.
The other things quietly eating your capacity
Rates get the headlines, but lenders also count things people forget.
HECS debt reduces capacity meaningfully. Credit card limits count against you even at zero balance, because lenders assess the limit, not the balance. Car loans, buy now pay later accounts, and your declared living expenses all get scrutinised harder than they did a few years ago.
The upside is that these are levers. Cancelling an unused $20k credit card limit can add tens of thousands to your borrowing power. Cheap wins, if you know they exist before you apply.
Why knowing your number early matters
Buyers who shop before knowing their real capacity make one of two mistakes. They fall in love with properties they can't finance, or they shop a bracket below what they could actually do and buy something they'll outgrow in three years.
Both are expensive. Both are avoidable with ten minutes of maths.
Get your estimate now
Our borrowing power calculator gives you a realistic figure at today's rates, not last year's.
Run it, then pressure test it against a rate rise or two, because economists are split on whether another hike lands this year. Buying at your absolute ceiling in this rate environment is how people end up house-poor. Once you have that number, our mortgage repayment calculator shows what it actually costs you every month.
Then make the budget count
Once you know your true ceiling, the game is extracting maximum property for it. In a market where everyone's budget shrank, the buyers doing best are the ones not wasting a dollar of theirs on an overpay.
Converta matches you with a vetted buyer's agent who knows what things actually sell for in your target market. Free, no obligation, first call within 24 hours.
Sources: RBA, 2026.