---
title: "How Much Can I Borrow? The 3% Buffer, the DTI Cap and Why Two Banks Give You Different Numbers"
url: "https://agentfind.com.au/how-much-can-i-borrow-serviceability-buffer-dti-cap/"
markdown_url: "https://agentfind.com.au/how-much-can-i-borrow-serviceability-buffer-dti-cap.md"
type: "post"
date_published: "2026-09-16T04:24:40+00:00"
date_modified: "2026-09-16T10:31:19+00:00"
language: "en-US"
renderer_version: "3"
---

# How Much Can I Borrow? The 3% Buffer, the DTI Cap and Why Two Banks Give You Different Numbers

## Summary

Lenders assess you at three percentage points above the rate you'll actually pay, and from 1 February 2026 only 20% of a bank's new lending can sit at six times income or more. Here's how those two rules set your number — and why the answer differs by lender.

## Content

*By the AgentFind Editorial Team — Australian Property Professional Directory, Sydney*

 ![A calculator and a house key on a desk, representing home loan calculations](https://agentfind.com.au/wp-content/uploads/2026/09/photo-1724304406928-c43b01912fa1-1024x576.jpg)The number the calculator gives you is not the number the credit team will approve.

**No Australian lender assesses you on the interest rate you will actually pay. APRA confirmed on 28 May 2026 that the mortgage serviceability buffer “will remain at 3 percentage points”, so a loan priced at 6.5% is tested at 9.5%. On a thirty-year term, that single rule cuts the loan a given repayment can support by roughly a quarter. Layered on top of it, since 1 February 2026 an authorised deposit-taking institution may lend only “up to 20 per cent of their new mortgage lending at debt of six times income or more”. Between them, those two settings — not your income alone — determine your number.**

## Key Takeaways

**Your borrowing capacity is the lower of what the buffered repayment test allows and what the lender’s debt-to-income position allows. Both are regulatory constraints, both are applied differently by different lenders, and neither appears on a bank’s online calculator.**

- **The serviceability buffer is 3 percentage points**, confirmed by APRA on 28 May 2026 alongside a countercyclical capital buffer held at 1 per cent of risk-weighted assets.
- **On a 30-year loan, assessing at +3% reduces capacity by about 25%** for the same monthly repayment — the single largest factor in why approvals come back smaller than expected.
- **The DTI limit caps high-leverage lending at the bank, not at the borrower.** Up to 20% of new lending may sit at six times income or more, applied separately to owner-occupier and investor loans.
- **Bridging loans for owner-occupiers and loans to buy or build new dwellings are excluded** from the DTI limit — a genuine structural difference between buying new and buying established.

## What the Buffer Actually Costs You

**The buffer works on the repayment, not on the rate you pay. A lender takes the rate on your product, adds three percentage points, and asks whether your assessed income covers the repayment at that higher figure. Because repayments are non-linear in the rate, the effect on loan size is large.**

Take a thirty-year principal-and-interest loan. At an assumed actual rate of 6.5%, every $100,000 borrowed costs about $632 a month. Assessed at 9.5%, the same $100,000 costs about $841 a month. So a borrower whose surplus supports $4,000 a month of repayments can service roughly $633,000 at the real rate — but is assessed as able to borrow only about $476,000. The buffer removed around a quarter of the capacity, and nothing about the borrower changed.

That is the arithmetic behind the most common complaint in mortgage broking: the online calculator said $800,000 and the bank said $610,000. The calculator was not lying. It just was not applying the rule the credit team applies.

 Monthly repayment capacity Loan supported at 6.5% Loan supported when assessed at 9.5% $3,000 / month ≈ $475,000 ≈ $357,000 $4,000 / month ≈ $633,000 ≈ $476,000 $5,000 / month ≈ $791,000 ≈ $595,000 $6,000 / month ≈ $949,000 ≈ $714,000

Illustrative only, on a thirty-year principal-and-interest term at the rates shown, ignoring fees, lender-specific living expense benchmarks and any existing debts. Your own figures will differ; the proportional effect of the buffer is the point.

**Insider Insight:** Close the credit cards and the buy-now-pay-later accounts you don’t use, before you apply. Lenders assess an undrawn credit limit as if it were drawn — typically at a monthly percentage of the limit — so a $15,000 card you never touch can quietly remove tens of thousands from your capacity. Reducing a limit is free and takes days. Fixing it after a declined application takes weeks you may not have.

## The DTI Limit: A Cap on the Bank, Not on You

**Since 1 February 2026, APRA has limited authorised deposit-taking institutions to lending “up to 20 per cent of their new mortgage lending at debt of six times income or more”, applied separately to owner-occupier and investor lending. Bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings are excluded.**

This matters for a reason most borrowers miss. The cap is a portfolio limit, so whether a particular lender will write your loan at six-plus times income depends on how much of its own 20% allowance it has already used this quarter. Two lenders looking at identical figures can reach different answers, and the same lender can reach different answers in March and in November.

APRA noted at announcement that the limit was not then binding and that only a small number of institutions were expected to be near it, with the greatest effect anticipated for investor borrowers, who typically borrow at higher debt-to-income ratios. But “not binding system-wide” and “not binding for the lender you walked into” are different statements.

The exclusion for new dwellings is worth holding on to. If you are buying or building new, that portfolio constraint does not apply to your loan — which can make a materially different borrowing capacity available for a new apartment or a house-and-land package than for the established house next door.

 ![House-shaped keyring beside charts representing property finance statistics](https://agentfind.com.au/wp-content/uploads/2026/09/photo-1732812608429-67bd0ff463ae-1024x683.jpg)Two of the three numbers that decide your loan size are set by the regulator, not the bank.

## Why the Same Borrower Gets Different Numbers

**Beyond the two regulatory settings, lenders differ in how they treat your income and your outgoings — and those differences are where a broker earns their fee. Overtime, bonuses, commission, rental income, self-employed income, HECS-HELP debt, existing credit limits and the living expense benchmark applied are all handled inconsistently across the market.**

Common examples: some lenders shade variable income harder than others; treatment of a second job or contract income varies with how long you have held it; rental income is discounted at different rates; and the assessed living expense floor is a lender-specific benchmark, not a national standard. None of this is visible from outside.

The RBA has held the cash rate target at 4.35 per cent — unchanged at its 11 August 2026 meeting, with the Board noting headline inflation “is still too high”. A flat rate environment means the buffer, not rate movement, is the dominant variable in most applications right now.

FEATURED CASE STUDY

## The Couple Who Gained $90,000 by Closing Two Cards

**A couple with combined gross income of about $165,000 were pre-approved at $680,000 — well under the $780,000 they had budgeted after using a bank’s online calculator.** They carried two credit cards with combined limits of $28,000, both close to zero balance, and a $9,000 car loan with fourteen months to run.

Assessed at three percentage points above the product rate, and with the undrawn card limits counted as though drawn, their surplus supported far less than the calculator’s figure.

They cancelled one card outright, reduced the second to $4,000, and paid out the car loan from savings. Reassessed six weeks later, the same lender approved about $770,000 — a shift of roughly $90,000 for no change in income.

The lesson is that the buffer amplifies everything else. Because capacity is tested at a higher rate, every dollar of assessed commitment you remove buys back more borrowing power than it would in an unbuffered world. *This is an illustrative scenario built from the typical figures above, not a specific client file.*

[Search Mortgage Brokers](https://agentfind.com.au/listings/?_listing_type=mortgage-broker)

## What to Do Before You Apply

**Reduce or close unused credit limits, clear or pay down short-term debts, hold your spending steady for three months of statements, and get an assessment from someone who knows which lenders treat your income type favourably. Do all four before an application, not after a decline.**

A few specifics. Lenders read three to six months of transaction history, so a sudden change in spending immediately before applying is visible and unhelpful. Multiple applications in quick succession leave marks on your credit file. If your income includes overtime, bonus, commission or contract work, the choice of lender can matter more than the choice of product. And if you are self-employed, expect the last two years of returns and a different assessment path entirely.

Above all, do not treat a calculator figure as a budget. Get the number from a lender or a broker who has applied the actual rules, then shop for property against that.

## Frequently Asked Questions

 ➕ What is the mortgage serviceability buffer?

An APRA expectation that lenders assess a borrower’s ability to repay at an interest rate above the rate actually charged. APRA confirmed on 28 May 2026 that the buffer “will remain at 3 percentage points”, so a loan priced at 6.5% is assessed at 9.5%. ➕ How much does the buffer reduce my borrowing capacity?

On a thirty-year principal-and-interest loan, assessing at three percentage points above an assumed 6.5% rate reduces the loan a given repayment can support by roughly 25%. The exact figure depends on the rate and term, but the order of magnitude holds. ➕ What is the debt-to-income limit?

From 1 February 2026, APRA limits authorised deposit-taking institutions to lending up to 20 per cent of their new mortgage lending at debt of six times income or more, applied separately to owner-occupier and investor lending. It is a limit on the lender’s book, not a prohibition on any individual borrower. ➕ Are any loans excluded from the DTI limit?

Yes. APRA’s announcement excludes bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings. That can make more capacity available for a new build or off-the-plan purchase than for an established property. ➕ Why do two lenders give me different borrowing limits?

Because the regulatory settings are common but their application is not. Lenders differ in how they treat overtime, bonuses, commission, contract and rental income, what living expense benchmark they apply, how they count HECS-HELP and credit card limits, and how much of their own high-DTI allowance they have already used. ➕ Do unused credit cards reduce what I can borrow?

Yes, materially. Lenders generally assess an undrawn credit limit as if it were fully drawn, so a card you never use still consumes capacity. Reducing or closing limits before you apply is one of the cheapest ways to increase an approval. ➕ What is the cash rate now, and does it change my capacity?

The RBA left the cash rate target unchanged at 4.35 per cent at its meeting on 11 August 2026. Because the buffer is applied on top of your product rate, a stable cash rate means the buffer rather than rate movement is currently the dominant constraint on capacity. ➕ Should I apply to several lenders to compare?

Not simultaneously. Multiple credit applications in a short window are visible on your credit file and can work against you. Have a broker assess your position against several lenders’ policies first, then make one application to the lender whose policy fits.

## Check the Reviews Before You Pick Up the Phone

Broker quality shows up as the difference between a first-time approval and a declined application on your credit file. Every professional listed on AgentFind shows their verified Google rating and review count on their profile, pulled from their own Google Business Profile rather than written for them.

Verified ratings across the AgentFind directory

4.6/ 5

Average Google rating
across rated listings

54,000+

Google reviews behind
the listed professionals

262

Listings rated
4.5 stars or higher

433

Property professionals
listed nationally

Ratings and review counts are sourced from each firm’s public Google Business Profile and refreshed periodically; 341 of 433 listings currently carry a Google rating. AgentFind does not write, edit or solicit these reviews.

**Got a number that surprised you?** Tell us in the comments what the calculator said and what the lender approved. Buyers about to set a budget this weekend will find that more useful than any estimate.

**About AgentFind**
AgentFind is an Australian directory of property professionals — selling agents, buyer’s agents, mortgage brokers, conveyancers and strata managers — searchable by location and speciality. Listings are not exclusive by area, so more than one professional can appear in the same suburb and you see the full field rather than a single paid name. Enquiries go directly to the professional you contact, and AgentFind takes no commission on any resulting sale.

Get a Real Number Before You Set a Budget

A broker can tell you which lenders treat your income type favourably and what the buffer does to your figure — before an application touches your credit file.

[Search Mortgage Brokers](https://agentfind.com.au/listings/?_listing_type=mortgage-broker)
 [Save Your Favourite Brokers](https://agentfind.com.au/bookmarks/)

Open any professional’s profile and choose Bookmark to add them to your shortlist — you’ll be asked to sign in first, then your saved professionals appear on your Bookmarks page.

Related reading: [sell first or buy first when moving](https://agentfind.com.au/downsizing-or-upgrading-sell-first-or-buy-first/) and [the hidden costs of selling property](https://agentfind.com.au/hidden-costs-of-selling-property-australia/).

Important — currency and verification notice

**This article is general information only and was current at the date of publication shown above. It is not legal, financial, taxation or credit advice, does not take your objectives, financial situation or needs into account, and the worked examples are illustrative rather than quotes.**

Interest rates, regulatory settings, lender policies, scheme eligibility, thresholds and caps change frequently, and several of the settings referred to here apply from staged dates. Before acting on anything in this article you must independently verify the current position that applies to you — including the relevant credit, property, strata and consumer legislation; the current APRA settings and the individual lender’s policy; the jurisdiction, procedures and time limits of the applicable tribunal (for example NCAT in New South Wales or VCAT in Victoria); the content and currency of any certificate you intend to rely on, such as a section 184 or section 108 certificate; and the current status of any building defect, combustible cladding or remediation scheme affecting a property you are financing.

AgentFind is a directory service. We do not provide legal, financial, credit or strata advice and we accept no responsibility for decisions made in reliance on this article. Obtain advice from a qualified professional — a solicitor, licensed conveyancer, accountant, licensed mortgage broker or licensed strata manager as appropriate — and confirm current requirements with the relevant government authority or regulator before committing to a transaction or a course of action.

*Sources: [APRA — maintains current macroprudential policy settings, 28 May 2026](https://www.apra.gov.au/news-and-publications/apra-maintains-current-macroprudential-policy-settings-highly-uncertain); [APRA — limit on high debt-to-income home loans](https://www.apra.gov.au/news-and-publications/apra-to-limit-high-debt-to-income-home-loans-to-constrain-riskier-lending); [RBA — Monetary Policy Decision, 11 August 2026](https://www.rba.gov.au/media-releases/2026/mr-26-19.html); [RBA — Cash Rate Target](https://www.rba.gov.au/statistics/cash-rate/).*

## Classification

- **Category:** Mortgage Brokers, Tips

## Images

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