Home Loan Affordability Australia — How Much Can You Borrow?
This article provides general information only and does not constitute financial advice. For advice tailored to your situation, consult a licensed financial adviser. Learn more.
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How much you can borrow for a home loan in Australia depends on your income, existing debts, living expenses, deposit size, and the specific lender you apply with. Understanding how lenders calculate borrowing capacity — and what reduces it — is essential before you start house-hunting.
How Australian Lenders Calculate Borrowing Power
Australian lenders use a serviceability assessment to determine the maximum loan you can repay without financial stress. This involves three steps:
1. Net income calculation: Your gross income is converted to net income after income tax. For self-employed borrowers or those with variable income, lenders use an averaged or discounted figure.
2. Expense assessment: Lenders use the higher of your declared living expenses and a floor based on the Household Expenditure Measure (HEM) — a benchmark of minimum spending for a household of your size. Many borrowers find the HEM significantly underestimates their actual lifestyle costs.
3. The APRA buffer: Under APRA’s prudential standards, lenders must test whether you can afford repayments at the loan interest rate plus 3%. If the actual rate is 6.0%, you are assessed at 9.0%. This buffer significantly reduces maximum borrowing capacity compared to what you might expect based on current repayments alone.
Estimated Borrowing Power by Salary (2026)
The table below assumes a single applicant, 30-year loan term, 6.0% rate (assessed at 9.0%), no credit card limits, and moderate living expenses.
| Annual salary | Estimated borrowing power | Monthly repayment at 6% |
|---|---|---|
| $60,000 | ~$290,000–$330,000 | ~$1,740–$1,980 |
| $80,000 | ~$400,000–$460,000 | ~$2,400–$2,760 |
| $100,000 | ~$520,000–$590,000 | ~$3,120–$3,540 |
| $120,000 | ~$640,000–$730,000 | ~$3,840–$4,380 |
| $150,000 | ~$820,000–$940,000 | ~$4,920–$5,640 |
| $200,000 | ~$1,100,000–$1,300,000 | ~$6,600–$7,800 |
These are indicative estimates only. Actual borrowing power varies significantly between lenders and depends on your individual expenses, liabilities, credit history, and deposit.
What Reduces Your Borrowing Power
Several factors reduce borrowing capacity beyond just your income:
Credit card limits: Lenders assess credit card limits as potential debt, not just actual balances. A $20,000 credit card limit reduces your borrowing capacity by approximately $80,000–$100,000, even if the balance is zero. Cancelling or reducing unused cards before applying materially improves borrowing capacity.
Existing debts: Car loans, personal loans, HECS-HELP repayments, and buy now pay later facilities all reduce your assessed surplus income. HECS repayments are automatically deducted from income in serviceability assessments.
Number of dependants: Each dependent child reduces assessed income by a household expense allowance — typically $700–$1,200 per month depending on the lender’s model.
Interest rate: Every 0.5% increase in the assessment rate reduces borrowing capacity by approximately 4–5%. The APRA 3% buffer means rising rates disproportionately affect new borrowers’ capacity.
Australian Housing Affordability
Australia’s housing affordability challenge is acute in Sydney and Melbourne. The median house price in Sydney is approximately $1.4 million (2026) — requiring an income of over $180,000 (single) to comfortably service at standard borrowing limits, with a significant deposit to avoid LMI.
Brisbane, Perth, and Adelaide offer more accessible markets, with median house prices of $850,000–$950,000. However, all major capital cities have seen price-to-income ratios deteriorate significantly since 2020.
The First Home Guarantee (5% deposit, no LMI) and stamp duty concessions by state are the primary government mechanisms designed to ease affordability for first home buyers within their respective income and price caps.
Frequently Asked Questions
How much can I borrow on a $100,000 salary in Australia? On a $100,000 salary, with no other debts, no credit card limits, and moderate expenses, most lenders will approve approximately $520,000–$590,000. This varies by lender and depends on your specific financial situation. Joint borrowers with a combined income of $100,000 may borrow more due to shared expenses.
Does HECS debt reduce my borrowing capacity? Yes. The ATO automatically deducts HECS repayments from your salary before you receive it, and lenders treat this as a reduction in your net income. On a $100,000 salary, HECS repayments of approximately $7,500–$10,000 per year reduce borrowing capacity by roughly $50,000–$80,000.
How much deposit do I need to buy a house in Australia? The standard deposit to avoid lenders mortgage insurance (LMI) is 20% of the purchase price. First home buyers can use the First Home Guarantee to purchase with 5% deposit (no LMI) subject to income and price caps. Purchases with 10–19% deposit without the Guarantee attract LMI.
Do joint applications double your borrowing power? Not quite — but combined income significantly increases borrowing capacity. Two people each earning $80,000 ($160,000 combined) can typically borrow $800,000–$950,000, compared to $400,000–$460,000 for a single $80,000 earner. Joint living expenses are partially shared, so the effective increase is more than double.
Borrowing power varies significantly between lenders and depends on your individual circumstances. For advice tailored to your situation, speak with a licensed mortgage broker. Find one through MoneySmart.