Private school fees and childcare can cut borrowing power sharply, because many lenders add them on top of the living cost benchmark rather than inside it. At a 9% assessment rate, every $100 a month of fees reduces what you can borrow by about $12,400. Two children at $15,000 a year each can reduce a family’s limit by around $310,000.

Fees and borrowing power at a glance
Monthly fees counted Borrowing power reduced by about
$500 $62,000
$1,000 $124,000
$2,500 $311,000

Why do school fees count separately?

Lenders compare your declared living costs with the Household Expenditure Measure, a benchmark of typical spending, and use the higher figure. Many treat private school fees as a separate commitment, because they vary so much between families and are hard to cut once a child is enrolled. The article on HEM and living expenses explains the benchmark.

What about childcare?

Lenders ask for your out-of-pocket childcare cost, after the Child Care Subsidy. Many treat it the same way as school fees. Childcare usually ends when a child starts school, and some lenders will take that into account if it is close.

A worked example

A couple in the Inner West earn $140,000 between them, with two children at private schools costing $15,000 a year each, or $2,500 a month. On the site’s model at a 9% assessment rate, without the fees they could borrow about $577,000. With $2,500 a month counted on top of the benchmark, that falls to about $266,000. The figures are illustrative; some lenders treat fees differently, which is where the gap between lenders becomes large.

How can families keep their borrowing power?

  • Choose the lender carefully. Lenders differ in how they treat fees and in their benchmarks.
  • Show the real figure. Use the fee schedule net of sibling discounts or scholarships.
  • Show when fees end. A child finishing Year 12 next year matters to some lenders.
  • Document family help. If grandparents pay the fees directly, a written confirmation may help.
  • Reduce other debts. Card limits and car loans also count; see the guide to borrowing power.

Should you change schools to buy a home?

That is a family decision, not a lending one. What a broker can do is show you the exact borrowing figure each way, so the decision is made on real numbers rather than a guess.

What do lenders ask for?

  • The school’s fee schedule for the current year, or invoices.
  • Childcare statements showing your out-of-pocket cost after the subsidy.
  • Ages of the children, so the lender can see when costs change.
  • Any scholarship, bursary or sibling discount letters.

Fees paid in a lump sum each year still count, converted to a monthly figure.

Does it matter for refinancing?

Yes, a refinance is a new application, so fees are assessed again. If your fees have increased since you took the loan, a new lender may approve less than you owe, which can make refinancing harder. The refinancing page covers what lenders check.

Questions people ask

Do lenders count private school fees?

Many do, as a commitment on top of the living cost benchmark. Policies differ between lenders.

Is childcare included in HEM?

Lenders usually ask for out-of-pocket childcare costs separately and add them in, though treatment varies.

Will public school costs reduce my borrowing?

Ordinary public school costs are generally covered by the living cost benchmark.

Charles Touma compares how each lender treats school fees and childcare, so families see the best figure available to them. A free 30-minute call covers it. General information only, not credit advice. Example figures use the 6% example rate, assessed at 9%.

Sources: ASIC, Regulatory Guide 209, checked 18 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.