How Much Can I Borrow for a Home Loan in Australia?

How Much Can I Borrow for a Home Loan in Australia?

How much you can borrow for a home loan in Australia depends on your income, expenses, debts, deposit and the lender's own policy, so there is no single figure. Lenders generally test whether you could still meet repayments at a rate at least 3 percentage points above your actual rate, which is why the answer is personal and differs from lender to lender.

Quick Answer

Your borrowing capacity is the biggest loan a lender is prepared to offer you once it has: 1.added up your income, 2.deducted your living expenses and existing debts, and 3.confirmed that the money left over would still cover the new repayments at a higher “assessment” rate. Two people on the same salary can end up with quite different results. Debts, dependants, credit card limits and the choice of lender all change the outcome.

Key takeaways

You are tested at a higher rate than you will pay. APRA's minimum buffer is 3 percentage points above the loan rate, a safeguard against rate rises and changes in income or spending.

Card limits often matter more than card balances. Many lenders count a portion of every limit as a monthly commitment, even when the card is paid off.

Borrowing capacity is not the same as affordability. The most a lender will approve can be well above what you would feel comfortable repaying.

Every lender has its own rules. Income shading, expense assumptions and the treatment of HELP debt or bonuses differ, so one calculator or lender will rarely match another.

Your deposit shapes your choices. It sets your loan-to-value ratio (LVR), decides whether Lenders Mortgage Insurance (LMI) applies and can affect which government scheme you can use.

How lenders work out your borrowing capacity

Lenders don't simply multiply your salary by a fixed number. They start by estimating the surplus income you would have each month, then work out the largest loan whose repayments that surplus could support at the assessment rate. They also have legal duties. Under Australia's responsible lending framework, a lender must make reasonable inquiries about your financial situation and take reasonable steps to verify what you tell them. That is why applications ask for payslips, bank statements and a full list of your debts.

The assessment rate and the serviceability buffer

The rate you will actually pay isn't the rate used to test you. Lenders add a buffer on top, and that buffer is a minimum: some apply extra margins or floor rates of their own. APRA has held this setting steady. On 28 May 2026 it confirmed that the mortgage serviceability buffer would stay at 3 percentage points. APRA's rules cover authorised deposit-taking institutions (ADIs), meaning banks, credit unions and building societies. Non-bank lenders set their own policies, although the responsible lending obligations above apply to both ADIs and non-ADIs.

Living expenses

Lenders assess your whole cost of living, not only rent or existing repayments. They usually compare the expenses you declare with what your bank statements show, and they may also check them against benchmark figures. ASIC's guidance says benchmarks should only be used in a way that fits their design. Understating your spending rarely works in your favour, because the lender may simply use the higher figure it finds.

Existing debts, credit cards, HELP and buy now pay later

Each of these commitments reduces the repayments you can be assessed as supporting:

Personal and car loans: normally assessed using the actual repayment.

Credit cards: many lenders count a percentage of the limit every month, whatever the balance. The percentage varies by lender.

HELP/HECS: compulsory repayments can lower your assessed income. Treatment differs between lenders.

Buy now pay later: may be treated as a commitment, depending on the lender.

A worked example (illustrative only)

These figures are simplified and hypothetical. They are not real rates, lender policies or a forecast. Imagine a couple who want to borrow $600,000 over 30 years on principal-and-interest repayments.

	Rate	Approx monthly repayment
Hypothetical actual rate	6.00%	about $3,597
Assessment rate (actual rate + 3 points)	9.00%	about $4,828

The lender needs to be satisfied that the couple's surplus could cover the higher figure, which is roughly $1,230 a month more than the repayment they would really make. If their surplus falls short, the lender's maximum will be lower than $600,000. Credit cards follow the same logic. Say a lender counted 3% of each card limit as a monthly commitment (a hypothetical percentage). Two $10,000 limits would then add $600 a month in commitments, even if both cards were paid off, leaving less surplus to support the home loan.

What raises or lowers your borrowing capacity

FactorTypical effectWhat to check Income(stable, verifiable)Higher income usually means more capacitySome lenders discount overtime, bonuses, commissions or rental income Living expensesHigher expenses reduce capacityRecent bank statements show what you really spend DependantsUsually reduce capacityLenders assume extra household costs Credit card limitsReduce capacityAsk whether cutting or closing unused cards makes sense for you Other loans, HELP, BNPLReduce capacityRepayment terms and remaining balances Loan termA longer term lowers repayments but adds to total interestCompare total cost, not just the monthly repayment Applying jointlyCan lift combined income, but also combines debts and expenses Every applicant's position is assessed Deposit / LVRDoesn't directly change serviceability, but affects cost and optionsLMI thresholds and scheme eligibility

APRA's debt-to-income limits

Beyond the buffer, there is now a second lever. From February 2026, APRA has required ADIs to keep new mortgage lending at a debt-to-income (DTI) ratio of six or higher to no more than 20 per cent of all their new mortgage lending. The limit is applied separately to owner-occupier and investor loans. Banks can still lend to creditworthy borrowers with a high DTI, as long as they stay within the limit. Bridging loans for owner-occupiers and loans to buy or build new dwellings are exempt. DTI compares your total debt with your gross annual income. On a household income of $150,000, six times income is $900,000 in total debt. Keep in mind that this is a cap on how much of a lender's own new lending can sit at high DTI. It is not a personal borrowing limit, and being below six times income doesn't guarantee approval.

Borrowing capacity vs what you can comfortably afford

A lender's maximum is a risk assessment. It doesn't know about your plans, such as childcare, travel, time out of work or building a savings buffer. Before treating that maximum as your budget, think through:

The repayment you could keep up if rates rose or your income dropped

How much of your surplus you are genuinely willing to commit

What you'd need to set aside for emergencies, maintenance, rates and insurance.

Borrowing less than the maximum is a perfectly sound choice.

Your deposit, LVR and government schemes

Deposit and LVR Your LVR is the loan amount divided by the property's value. A lower LVR opens up more lender options and may avoid LMI, which lenders commonly charge when the deposit is below 20%. The exact threshold and cost differ by lender. 5% Deposit Scheme (formerly the Home Guarantee Scheme) This Australian Government scheme helps eligible buyers purchase with a smaller deposit. According to the official site, the minimum deposit is 5% for first home buyers and 2% for single parents, with no income caps and unlimited places. Since 1 October 2025, no LMI is payable under the scheme. Property price caps apply by location, and depending on the eligibility criteria and your finances you may need more than a 5% deposit. Stamp duty and conveyancing costs aren't covered. You apply through a participating lender, so confirm current eligibility and caps on the official site before relying on the scheme. First Home Super Saver Scheme Eligible people can make voluntary super contributions, up to a total cap of $50,000, and release them (with associated earnings) to put towards a first home. Check eligibility and current rules with the ATO.

Costs beyond the loan

Borrowing capacity only covers the loan itself. Your budget should also allow for:

stamp duty (transfer duty), which varies by state and territory, plus any concessions you may qualify for

Conveyancing and legal fees

Lender and settlement fees

LMI, if it applies

building and pest inspections

Ongoing costs such as council rates, insurance and maintenance

Why results differ between lenders

The same application can produce different answers at different lenders, because each one sets its own policy on:

how much variable income it will count

how it treats credit card limits and other debts

which expense benchmarks it uses

its assessment rate and floor rate

how it handles HELP debt, self-employed income, casual work or rental income

how much of its high-DTI allowance it has left

That is why online calculators can only estimate. To see your real capacity you need a lender's formal assessment, or a broker's comparison across several lenders.

Risks and limitations

Rates can rise. Repayments on variable loans can go up after you borrow, and fixed rates eventually end.

Income can change. Job loss, illness or parental leave can shrink your surplus.

An assessment is not an approval. Final approval also relies on the property valuation, your documents and the lender's policy at the time.

Settings can change. APRA's settings and government schemes are reviewed from time to time, so check current rules before relying on them.

This is general information. It doesn't take your objectives, financial situation or needs into account.

Steps to take before you apply

1.Gather three months of bank statements, recent payslips, tax returns if you're self-employed, and details of every debt. 2.Review your credit card limits and unused credit accounts, and understand the consequences before changing anything. 3.Check your credit report for errors. 4.Hold off on new credit applications until after you've applied. 5.Track what you really spend, because it will be compared with what you declare. 6.Decide on a repayment you're comfortable with, not just the maximum. 7.Compare assessments from more than one lender.

How VIP Finance can help

Buying a home is one of the biggest financial decisions most people make, and the loan you choose can matter for years. VIP Finance helps Australians compare home loan options across more than 40 lenders, and our mortgage brokers can guide you from application through to settlement. That covers first home buyers, people upgrading and homeowners looking to refinance. For first home buyers, we can help with:

loan pre-approvals

deposit planning

borrowing capacity assessments

government grants and support programs

property purchasing guidance

What is pre-approval? It is a lender's conditional indication of how much you may be able to borrow before you buy a property, based on the documents you've supplied. It can help you set a budget and search with more confidence, but it isn't a guarantee of final approval.