On a $120,000 gross annual salary in Australia, most lenders will approve a home loan in the range of $600,000 to $720,000, depending on your expenses, debts, and lender. Applicants with low debts and controlled expenses may qualify for up to $780,000.
Estimated Borrowing Power on $120,000
| Scenario | Estimated borrowing power | Monthly repayment at 6% |
|---|---|---|
| Low expenses, no debts | ~$710,000–$780,000 | ~$4,260–$4,680 |
| Moderate expenses, no debts | ~$620,000–$700,000 | ~$3,720–$4,200 |
| With $15k credit card limit | ~$570,000–$640,000 | ~$3,420–$3,840 |
| With $600/month car loan | ~$520,000–$590,000 | ~$3,120–$3,540 |
| With HECS-HELP debt | ~$570,000–$640,000 | ~$3,420–$3,840 |
Based on 30-year P&I loan at 6.00% p.a., assessed at 9.00% (APRA buffer). Use our borrowing power calculator for a personalised estimate.
How Lenders Assess $120,000
Gross monthly income: $10,000. Net income after PAYG and Medicare levy: approximately $85,000–$87,000/year ($7,080–$7,250/month).
At the APRA assessment rate of 9.00%, a $660,000 loan over 30 years requires a monthly repayment of approximately $5,312. Lenders test whether your income — after living expenses and existing commitments — can comfortably service this level.
At $120,000, you’re in a higher tax bracket. The Medicare Levy Surcharge may also apply if you don’t hold private hospital cover (income over $93,000 for singles in FY2025–26). Lenders account for your actual tax position when assessing affordability.
HECS-HELP at $120,000
The compulsory HECS repayment rate at $120,000 in FY2025–26 is 9.0% of taxable income ($10,800/year = $900/month). This is a significant commitment and lenders deduct it in full from available income.
Effect on borrowing power: approximately $100,000–$120,000 reduction compared to an applicant without HECS.
At $120,000, if your HECS balance is under $60,000–$80,000, the interest savings on your mortgage from paying out HECS before buying (and then borrowing that extra ~$100k on the mortgage at 6%) is a close calculation. The HECS indexation rate (CPI) is typically lower than mortgage rates — but the serviceability impact can still make paying HECS first worthwhile. See our HECS and home loans guide.
Repayment Estimates
| Loan amount | Monthly repayment (6%, 30yr) | Fortnightly | % of $120,000 gross |
|---|---|---|---|
| $500,000 | $2,998 | $1,384 | 30% |
| $600,000 | $3,597 | $1,660 | 36% |
| $700,000 | $4,196 | $1,937 | 42% |
| $800,000 | $4,796 | $2,214 | 48% |
At 30% of gross income ($3,000/month), comfortable housing costs support approximately $499,000 in borrowing at 6% over 30 years. Lenders will often approve 40–45% — but maintaining financial buffers is important when interest rates move.
Deposit Requirements
| Purchase price | 20% deposit | Stamp duty (NSW est.) | Total funds needed |
|---|---|---|---|
| $650,000 | $130,000 | ~$24,965 | ~$160,000 |
| $750,000 | $150,000 | ~$29,490 | ~$185,000 |
| $850,000 | $170,000 | ~$33,340 | ~$210,000 |
With a 20% deposit, LMI is avoided. At $120,000 income, saving $130,000–$170,000 while renting typically takes 4–7 years, depending on your living costs and location. Using an offset account during the savings phase can help see our offset calculator for an illustration of interest savings.
First Home Buyer Note: The First Home Guarantee (5% deposit, no LMI) has income caps — for singles, $125,000 in FY2025–26. At exactly $120,000, you may qualify depending on your taxable income after deductions.
What Can $120,000 Buy?
With borrowing power of $620,000–$720,000 and a 20% deposit (~$140,000–$160,000), purchase prices of $760,000–$880,000 are realistic.
| City | What’s achievable |
|---|---|
| Sydney | Apartment inner suburbs, house outer suburbs (60–70km+) or satellite cities |
| Melbourne | Established house in middle suburbs; apartment inner city |
| Brisbane | House in middle suburbs, premium options in outer areas |
| Perth | House in good suburban locations; upper-mid market well within reach |
| Adelaide | House in most suburbs including desirable inner/middle areas |
At $120,000, you’re positioned to buy an established house in most Australian cities outside inner Sydney.
How to Maximise Borrowing Power on $120,000
1. Reduce credit card limits — cancel unnecessary cards immediately. A $15,000 total limit adds the equivalent of an assessed monthly commitment of $450.
2. Pay down personal debt — clearing a $20,000 car loan at $600/month adds approximately $80,000–$100,000 in borrowing power.
3. Review salary packaging — if your employer offers salary packaging (e.g., novated lease, super packaging), ensure the income you declare to lenders is the right figure. Packaging can sometimes reduce declared income — speak with your broker.
4. Leverage a joint application — a second income of $80,000+ on top of $120,000 pushes combined borrowing power well above $1 million in most cases.
5. Consider pre-approval — at this income level, pre-approval is particularly useful to know your exact ceiling before bidding at auction.
FAQ
Is $120,000 a good salary for buying a house?
$120,000 is above the Australian average salary and supports a solid home loan of $620,000–$720,000. In most cities outside inner Sydney, this is sufficient for an established house. Sydney remains challenging on a single income at this level.
Can I buy in Melbourne on $120,000?
Melbourne’s median dwelling price is approximately $940,000 (April 2026). On $120,000 with an estimated borrowing power of $650,000 and a deposit of $140,000–$190,000, properties in the $800,000–$850,000 range are achievable. This covers established houses in many middle-ring and outer suburbs. See our income needed to buy in Melbourne guide.
Borrowing power estimates are indicative only. For advice tailored to your situation, speak with a licensed mortgage broker. Find one through MoneySmart.