Start With Your Budget. The Right Loan Amount Follows.

You know what you can afford. Now find the right loan.

Compare personal loan rates from Australian lenders based on your borrowing amount and purpose — rates updated daily from 30+ lenders.

How this Affordability Calculator works

Traditional loan calculators ask you to choose an amount first, then show you the repayment. This calculator reverses that logic entirely. It starts with your budget and works backwards to determine how much you can borrow — using the same standard amortisation mathematics, applied in reverse with the present-value-of-annuity formula.

Step 1: determine your available monthly repayment. The calculator takes your monthly take-home income, applies the percentage you've allocated to this loan (e.g. 20%), and subtracts any existing loan or card repayments. The result is the most you should direct toward a new loan without exceeding your own budget threshold. This figure is self-reported and budget-based, not a lender's assessment.

Step 2: the reverse amortisation formula. Given a fixed monthly payment (PMT), an interest rate (r per month, = annual rate / 12 / 100), and a term in months (n), the maximum loan you can fully repay is:

P = PMT × (1 − (1 + r)⁻ⁿ) / r

This is the present-value-of-annuity formula — it tells you the largest principal that can be fully paid off by making that fixed payment, over that term, at that rate. The result is rounded down to the nearest $100 and displayed as your estimated borrowing capacity.

Step 3: budget health via DSR. The rating uses the Debt Service Ratio — total monthly debt repayments (existing plus the proposed new loan) divided by monthly income. DSRs under 20% are considered comfortable; 20–30% manageable; 30–40% stretched; above 40% is flagged as risky by most Australian lenders and financial advisers, broadly consistent with APRA serviceability expectations.

Step 4: purpose context. Rather than just showing "$18,500 borrowing capacity", the calculator contextualises that figure against typical Australian costs for your stated purpose — average renovation costs, average wedding spend, average car prices — drawn from widely reported industry statistics as of May 2026. These are reference points, not budgets.

How to interpret your results

• Comfortable (DSR under 20%) — ideal borrowing territory. Significant headroom. You can absorb the repayment without changing your lifestyle, with a buffer for unexpected costs. Lenders will view your application favourably. You may also have capacity to make extra repayments and clear the loan ahead of schedule.
• Manageable (20–30%) — acceptable but watch the margins. Workable under normal circumstances, but the buffer is thinner. Avoid taking on additional debt without reassessing, and maintain an emergency fund of at least 2–3 months' expenses.
• Stretched (30–40%) — reconsider the parameters. Approaching the upper limits of comfortable debt servicing. Before proceeding, consider extending the term, reducing the borrowing amount, or waiting until income increases. Some lenders also scrutinise applications more carefully here — approval is not guaranteed.
• Risky (over 40%) — act with caution. Both planners and lenders flag this level as high risk. Very little breathing room if income drops or expenses increase. Strongly consider reducing the borrowed amount, extending the term, or deferring the purchase. Missing one repayment at this level could start a debt spiral.
• Borrowing capacity vs purpose cost — the gap is information. If your capacity is well below the typical cost of your purpose (e.g. you can borrow $10,000 but the average renovation costs $40,000), the calculator is telling you that financing the full cost via a personal loan at these settings isn't realistic. Save more, reduce scope, combine the loan with savings, extend the term, or reconsider the product.

How to find repayments that fit

• Be honest about essential expenses. The single biggest distortion in this calculator is underestimating expenses. Pull up your bank statements for the last 3 months and add up actual outflows. The total usually surprises people.
• Test different budget allocations. Move the "Maximum % of income" slider between 10% and 30% and watch how borrowing capacity changes. If your capacity swings dramatically with small changes, your position is fragile — the conservative end of that range is your safer bet.
• Use a longer term to increase capacity, then compare the interest cost. Switching from 3 to 5 years significantly increases borrowing capacity — but you pay more total interest. Use the Interest Timeline Calculator to visualise the cost before committing.
• Improve your rate tier before applying. Moving from Average (14.99%) to Good (9.99%) often unlocks $3,000–$7,000 more borrowing capacity at the same repayment level on a 3-year loan. Pay down debt, fix credit-file errors, and avoid new credit applications for 3–6 months.
• Combine savings with borrowing where possible. If your capacity is $12,000 and you need $20,000, save $8,000 first and borrow the difference. Borrowing only what you can't save is always cheaper than borrowing everything.
• Account for HECS/HELP and BNPL commitments. Lenders treat HECS/HELP repayments as a debt commitment. If your input income is gross, add the monthly HECS/HELP amount to "Existing repayments". The same applies to BNPL minimums — increasingly scrutinised by lenders.

The win is not finding the maximum amount a lender will approve. The win is borrowing comfortably within a budget you'll still be satisfied with 18 months from now, when the renovation is done or the wedding is over and you're still making repayments.

Example Affordability Calculations in Australia

Five borrower scenarios showing how income, purpose, and budget allocation interact. All examples use indicative May 2026 market rates.

Calculator assumptions

This calculator estimates your borrowing capacity based on self-reported income and expenses — it does not verify your figures or assess your creditworthiness. The result is a budget ceiling, not a lender approval. Your actual approved loan amount may be higher or lower depending on the lender's credit assessment, income verification, use of Household Expenditure Measure (HEM) benchmarks, existing liabilities identified through credit bureau data, and the lender's own serviceability buffer (typically 2–3% above the loan rate under APRA guidelines). Purpose benchmarks (e.g. average Australian wedding $36,000; average used car $34,000; average solar system $8,000–$15,000) are drawn from widely reported industry statistics as at May 2026 — reference points, not prescriptive targets. Reviewed by the LoanGorilla editorial team — last updated May 2026.