How Australian mortgage affordability works
Banks don't just look at your income — they stress-test it. Under APRA rules, every lender must assess whether you could afford repayments at your actual interest rate plus 3%. This means a 6.3% loan is assessed at 9.3%, which significantly reduces what you can borrow compared to what a simple income multiple suggests.
1. Income — total household gross income assessed at the buffer rate
2. Expenses — living costs reduce the repayment capacity lenders will allow
3. Deposit — determines LVR and whether LMI applies
Rough borrowing capacity by income (2026)
| Household income | Approx. max borrow | Monthly repayment | Notes |
|---|---|---|---|
| $80,000 | $380,000 | $2,350 | First home buyer, modest property |
| $120,000 | $580,000 | $3,580 | Typical couple, regional city |
| $160,000 | $780,000 | $4,820 | Dual income, major city outskirts |
| $200,000 | $980,000 | $6,060 | High income, inner suburb |
| $250,000 | $1,230,000 | $7,610 | Professional couple, premium property |
Assumes 6.3% rate, 30-year term, $3,000/mo expenses, 20% deposit. Approximate only.
Frequently asked questions
Sources
- APRAAustralian Prudential Regulation Authority · Prudential standards and policy guidance for Australian lenders.
How this calculation works
This calculator estimates borrowing power using household income, living expenses, deposit size, and a serviceability buffer rather than a simple income multiple.
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Methodology
- Start with household income and core expenses.
- Estimate the repayment a lender may test under standard serviceability assumptions.
- Apply an interest-rate buffer to reflect lender stress testing.
- Show indicative borrowing capacity and repayment implications.
Assumptions
- The model is an estimate, not a formal lender assessment.
- Living expenses, debts, dependants, and deposit size all affect the result.
- Lenders may treat bonuses, contractor income, and overtime differently.
Limitations
- Actual borrowing power varies by lender policy.
- Government schemes, credit history, and existing debts can materially change capacity.
Life Calculators provides independent modelling tools based on publicly available data and standard formulas. Results are estimates only and are not financial advice.
Last updated: 17 March 2026