Australia: the three-point serviceability buffer
Australia sets no fixed limit on the share of your income that may go to debt. What limits Australian borrowing is APRA's serviceability requirement: the lender adds three percentage points to the assessment rate and subtracts a benchmark for living costs, then asks whether the loan is still affordable. That test binds long before any ratio does.
The living-cost benchmark is the Household Expenditure Measure, a floor on what a household of your size is assumed to spend. Declaring frugal expenses does not help: the lender uses the higher of your stated costs and the benchmark, so the assessment is deliberately harder to game than a self-reported budget.
The 45% figure shown here is a market convention rather than a published limit, roughly where lenders' own serviceability assessments stop clearing, and the effective ceiling is tighter than the raw ratio implies once the buffer is applied.
APRA does cap one multiple, though not for you individually. Since 1 February 2026, lending at six times income or more has been limited to 20% of each lender's new mortgage lending, applied separately to owner-occupier and investor loans. It is a limit on the lender's book rather than a hard stop on one application, so borrowing above six times is still possible, but the allowance is finite and banks ration it.
Income is assessed before tax, and the buffer is what makes the difference between the rate you pay and the rate you are judged on. A loan quoted at 6% is assessed at 9%, which is a materially larger payment than the one that will actually leave your account.