What the calculator actually computes
A borrowing capacity calculator estimates principal-and-interest repayments and the loan amount implied by supplied inputs. It does not assess whether the borrower can make them. ASIC’s Moneysmart Mortgage calculator (last updated 2 October 2026) says, “This is a model, not a prediction”; amounts and periods are estimates that may be higher or lower. It also says results do not take personal circumstances into account and do not guarantee eligibility for a loan.
How each input moves the result
All else equal, a higher income input increases the amount available for repayments; existing debts and expenses reduce that amount. The calculator cannot show whether a lender will recognise a particular income or expense.
A higher rate raises the repayment required for a given principal; at a fixed repayment budget, it reduces the principal that can be supported. The RBA’s Statement by the Monetary Policy Board: Monetary Policy Decision (Media Release 2026-27), dated 29 September 2026, records a 4.60 per cent cash rate target. The figure is a policy target, not a loan offer.
A shorter term produces higher repayments and less total interest; at the same repayment and rate, it can support more principal. A longer term lowers repayments but increases total interest. Moneysmart’s Choosing a home loan gives that term relationship.
Why a lender’s assessment differs
APRA’s statement APRA maintains current macroprudential policy settings in highly uncertain environment (28 May 2026) says the mortgage serviceability buffer remains 3 percentage points. The RBA’s Financial Stability Review, October 2026, ch. 2, describes mortgage applications being assessed at 3 percentage points above the offered rate due to APRA’s serviceability buffer. A calculator that holds the offered rate steady therefore shows lower repayments and overstates the repayment headroom available in that assessment.
APRA says its high debt-to-income (DTI) limits permit banks to lend up to 20 per cent of new owner-occupied and investment loans at DTI of six times income or more. The limit applies separately to each authorised deposit-taking institution’s owner-occupied and investor portfolios. It is not an individual ceiling; APRA said high-DTI lending remained well below the limits and was not restricting overall bank lending.
Using the number before an application
The result should be treated as a scenario with visible assumptions. Moneysmart’s Choosing a home loan says to calculate costs if interest rates were 3 per cent higher and to compare loans from at least two lenders. Across fact sheets, it identifies the personalised comparison rate, which combines the interest rate and most fees, rather than the headline rate alone. A calculator applies supplied assumptions; a lender applies its own lending criteria. The result is not pre-approval.
Common questions
Can the principal-and-interest tool calculate an interest-only loan?
Moneysmart limits the Mortgage calculator to principal-and-interest loans. For an interest-only loan, it directs users to a different calculator.
What costs are excluded from the estimate?
Moneysmart says the tool excludes up-front costs, including loan establishment fees. It also states that affordable repayments cannot be less than the fees entered.
Which interest assumptions does Moneysmart use?
Moneysmart says its average rate reflects the most recent Economic and Financial Statistics data published by the RBA. The calculator compounds interest at the same frequency as the selected repayment: weekly, fortnightly, monthly, quarterly or annually.
Which home loans are outside APRA’s DTI limit?
APRA’s 27 November 2025 statement, APRA to limit high debt-to-income home loans to constrain riskier lending, says the limit excludes bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings. Those exclusions form part of the portfolio limit described in the statement.
Which choices belong in a fact-sheet comparison?
Moneysmart says the fact-sheet decision includes principal-and-interest or interest-only repayments, repayment frequency, and whether the rate will be variable, fixed or a mix of both. Each selection describes part of the loan being compared.