How much home loan can you afford in Australia?
Australian mortgage affordability depends on verified income, living expenses, existing commitments, deposit, buying costs, loan term and the interest rate used for serviceability. This calculator converts the monthly cash flow available for a mortgage into an estimated loan amount at a buffered assessment rate.
The result is a personal planning estimate, not lender borrowing power or pre-approval. Banks may use different treatment for overtime, bonuses, rent, dependants, credit-card limits, existing loans and household expenses.
Australia’s mortgage serviceability buffer
APRA states that regulated banks must assess new borrowers using a mortgage serviceability buffer of at least 3 percentage points above the loan rate. Since 2021 the minimum buffer has been 3 percentage points. It is an assessment rate, not the interest rate charged to the borrower.
The buffer remains editable because a lender may use a higher floor, additional margins or different product assumptions. See APRA’s current System Risk Outlook for its explanation of the buffer.
Income and expenses
Lenders verify income and assess living expenses using application data, bank statements and internal benchmarks. Enter a realistic take-home income and complete monthly spending rather than an optimistic budget.
Existing commitments
Car loans, personal loans, credit cards, support obligations and other commitments reduce repayment capacity. A lender may assess a credit-card limit even when its balance is low.
Deposit and buying costs
Transfer duty, conveyancing, inspections, loan fees and an emergency reserve are separate from the deposit. Transfer-duty concessions differ by state or territory.
Ownership costs
Council and water rates, insurance, strata levies and maintenance remain payable alongside the mortgage and should be included in a personal budget.
Debt-to-income lending in Australia
Debt-to-income divides total debt by gross annual income. From 1 February 2026, APRA limits each regulated bank’s new owner-occupied and investor mortgage lending at DTI of six times or more to 20% of its new lending in each portfolio. This is a portfolio-level limit, not an automatic six-times cap for every borrower.
The calculator therefore displays DTI as a warning indicator and lets you edit the marker, but it does not replace the cash-flow assessment with a hard six-times rule. Read APRA’s DTI limits announcement.
Deposit, LVR and lenders mortgage insurance
A larger deposit reduces the home loan, assessment repayment and LVR. LMI may apply when borrowing exceeds 80% of the lender-accepted property value, although eligible guarantee schemes and lender policies can change the outcome. LMI protects the lender and is not included automatically in this estimate.
MoneySmart recommends allowing for buying costs and ongoing ownership expenses and being realistic about affordability. Its buying a house guide also suggests testing how repayments would feel if rates rose.
How to use the target-property check
Enter the price and deposit for a specific property. The calculator shows the loan, LVR, buffered repayment, repayment at the entered rate, DTI, cash requirement and remaining monthly budget. The “What needs to change?” section estimates whether a larger deposit or lower monthly commitments could close a serviceability gap.
Use the Australia deposit calculator for a detailed savings goal and the Australia mortgage calculator for repayments, total interest and overpayment scenarios.
Australia mortgage affordability questions
What assessment rate do Australian banks use?
APRA-regulated banks must apply at least a 3 percentage-point buffer above the loan rate, but lender floors and other assessment rules can produce a higher rate.
Is borrowing power based on gross or net income?
Lenders verify gross income and apply tax, income-shading, expense and commitment rules. This calculator uses gross income for DTI and entered take-home income for its cash-flow estimate.
Is six times income the maximum mortgage?
No. APRA’s DTI measure limits the share of a bank’s new lending at DTI of six or more; it is not a universal individual cap. Lender serviceability and credit policies still determine approval.
Does a 20% deposit guarantee approval?
No. It can avoid LMI and reduce repayments, but income, expenses, debts, credit, valuation and property requirements still apply.
Does the calculator include stamp duty?
It includes the transfer-duty estimate you enter because rates and concessions differ by state, territory, property and buyer.
Why might a lender offer less?
The lender may use a lower accepted income, higher benchmark expenses, assessed credit-card commitments, a different rate floor, shorter term or lower property valuation.