Serviceability explained
Your deposit gets you in the door. Serviceability decides how much you can borrow once you are there. Here is how lenders work it out, and how to make the number bigger.
Last updated 14 June 2026
Serviceability is a lender's test of whether you can afford a loan after living costs and debts, assessed at a buffered rate around 3% above the one you would pay. It is the main driver of how much you can borrow. The Property Plug helps you lift it and pick the lender whose rules suit you. This is general information, not credit advice.
Why lenders test you at a higher rate
A lender will not assess your loan at the rate you actually pay. APRA requires a serviceability buffer, commonly about 3%, added on top, to check you could still meet repayments if rates rose. So a loan advertised at 6.1% is stress-tested near 9.1%. This single rule is why your borrowing power feels lower than a quick repayment sum suggests, and why two people on the same income can borrow very different amounts depending on their debts.
The buffer is not a trap, it is a safeguard. But it means the lever on your borrowing power is your surplus, the gap between your net income and your living costs and commitments. The bigger that surplus, the more loan the buffered rate will support.
Not all income is treated equally
| Income type | Typical treatment |
|---|---|
| Base salary | Counted in full |
| Overtime / bonus / commission | Often discounted, commonly to 80% |
| Rental income | Usually shaded to about 80% for vacancy and costs |
| Self-employed income | Assessed on two years of tax returns |
| Government benefits | Accepted by some lenders, varies |
Treatment varies by lender. This is where matching the right lender lifts your capacity. Last updated 14 June 2026.
The commitments that cut your capacity
On the other side of the ledger, your commitments reduce the surplus a lender will lend against. Some of these are easy to fix before you apply, and the gain can be large.
- Credit card limits are assessed at about 3.8% of the total limit per month, used or not. A $20,000 limit is a $760 monthly commitment.
- Personal and car loans reduce your surplus dollar for dollar by their repayment.
- Buy-now-pay-later accounts now show up and count against you.
- HECS or HELP debt reduces net income through compulsory repayments.
- Living costs (HEM) scale with household size, and lenders use the higher of your real spending or the benchmark.
How to borrow more, the right way
You cannot change the buffer, but you can change your surplus and your lender. Clearing a $15,000 card frees about $570 a month of assessed commitment, and paying out a $400 car loan can add $50,000 to $60,000 of capacity. Choosing the lender whose income and expense rules suit your situation can lift the number again without changing a thing about your finances.
See your own position in the borrowing power calculator, then book a call and we will run it against real lender policy to find the one that lends you the most for your build.
This is general information only and does not take into account your objectives, financial situation or needs. It is not credit assistance or a credit quote. Consider whether it is right for you and seek advice. Finance is arranged through Central Lending Solutions, the licensed credit partner The Property Plug works with (Australian Credit Licence or credit representative number [TBC]).
What does serviceability mean?
Serviceability is a lender's assessment of whether you can comfortably afford a loan's repayments after your living costs and existing commitments. It is the main thing that decides how much you can borrow, more than your deposit. Lenders test it at a buffered rate higher than the one you would actually pay.
Why is the assessment rate higher than my actual rate?
APRA requires lenders to add a serviceability buffer, commonly around 3%, on top of the rate you would pay, to check you could still afford the loan if rates rose. So a loan advertised at 6.1% might be assessed near 9.1%. This is why your borrowing power looks lower than a simple repayment sum suggests.
How is my income assessed?
Lenders use your stable, verifiable income. Base salary is taken in full, while overtime, bonuses, commission and rental income are often discounted (commonly 80%) because they are less certain. Self-employed income is usually assessed on two years of tax returns. How your income is shaded varies by lender, which is where a broker adds value.
What hurts my serviceability the most?
Existing debts and credit card limits are the biggest drags. Lenders assess about 3.8% of your total card limit as a monthly commitment even if unused, and personal and car loans reduce your surplus dollar for dollar. Buy-now-pay-later and HECS or HELP debt also count. Clearing these before you apply can lift your capacity noticeably.
How can I improve my serviceability?
Reduce or close credit cards, pay out small personal and car loans, avoid new buy-now-pay-later accounts, keep your spending tidy in the months before applying, and consider a longer loan term. Choosing the lender whose income and expense rules suit your situation can also lift your capacity, which is exactly what a broker does.
Maximise what you can borrow
Book a free call. We find the lender whose serviceability rules suit you and show you the changes that lift your capacity most.