How much can I afford to borrow for a mortgage with my salary?

Here's a quick way to calculate what you can afford to borrow and repay based on your income.

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This article was fact-checked and reviewed by , an accredited and award-winning finance broker and industry mentor. Content has been updated for 2021.

When a lender looks at your mortgage application, they generally assume about 30% of your gross income can be used to make loan repayments. Then they factor in your debt, assets and spending to forecast your borrowing power.

To get a rough idea of what you can realistically expect a bank to lender you, you can make a rough calculation by looking at:

  1. Your annual income
  2. Your deposit size
  3. Your average expenses

How can you estimate an affordable property price?

Take 30% of your annual gross income, equate this into a loan amount using an average rate of 2.75%, factor in a 10% deposit, and then use these calculations to estimate a potential purchase price.

Assuming that you don’t have any debts or liabilities, and using a rate of 2.75% over a 30-year loan term, here are three potential scenarios:

Scenario 1 - $50k income

  • $50,000 annual gross income @ 30% = $1,250 per month.
  • With a mortgage at 2.75% p.a. this equates to a loan amount of $305,000.
  • With a 10% deposit contribution worth around $34,000, the maximum affordable property price would be $339,000.

Scenario 2 - $75k income

  • $75,000 annual gross income @ 30% = $1,875 per month.
  • With a mortgage at 2.75% p.a. this equates to a loan amount of $460,000.
  • With a 10% deposit contribution worth around $51,100, the maximum affordable property price would be $511,000.

Scenario 3 - $100k income

  • $100,000 annual gross income @ 30% = $2,500 per month.
  • With a mortgage at 2.75% p.a. this equates to a loan amount of $614,000.
  • With a 10% deposit contribution worth just over $68,000, the maximum affordable property price would be $682,000.

How can first home buyers prepare for home ownership?

If you're a first home buyer and you've saved up a deposit, test yourself using a mortgage repayment calculator.

  • Work out how much you currently spend on rent.
  • Calculate what your monthly mortgage repayments would be with a loan amount you feel comfortable with.
  • What's the difference? Can your bank balance handle the increased costs?

To make this test more real, try it for a few months and actually remove the extra money from your spending account. Can you live without it? You may even be able to ask your HR or payroll department to actually start splitting your pay and transferring that money straight into a different high interest savings account, so you don't even have the temptation to spend the money or be responsible for transferring it yourself.

Be sure to factor in other ongoing costs, such as home and contents insurance or body corporate fees.

You can still try this test if you're currently living with your parents. You just need to estimate your costs for groceries and utilities along with your mortgage costs.

This could be an opportune time to reduce your expenses, by renegotiating or shop around for savings on your utilities, memberships and subscriptions; do you really need to all of them and are you using them? Look for ways to be more mindful of unnecessary 'tap n go' purchases if you are serious about saving a deposit and buying a home.

Read our essential tips on how to increase your borrowing capacity

What about self-employed borrowers?

The scenario changes again if you run your own business, as there are various types of business income that banks and lenders will look at in addition to your self-employed salary when considering borrowing capacity for a self-employed borrower.

Looking for a home loan? Check out these offers and apply today

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

HSBC Fixed Rate Home Loan Package P&IHome 2Y Fixed≥ 20% Deposit

HSBC Fixed Rate Home Loan Package
1.88%
2.65%
  • App: $0
  • Ongoing: $390 p.a.
$547
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit.Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

UBank UHomeLoan Fixed P&IHome 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
1.79%
2.18%
  • App: $0
  • Ongoing: $0 p.a.
$540
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.85%
2.21%
  • App: $0
  • Ongoing: $0 p.a.
$545
Get a low discounted variable rate loan. Requires a 20% deposit. Get your loan processed fast and settle within 30 days.

homeloans.com.au Low Rate Home Loan with Offset P&IHome≥ 40% Deposit

homeloans.com.au Low Rate Home Loan with Offset
1.89%
1.89%
  • App: $0
  • Ongoing: $0 p.a.
$548
A competitive rate with no application or ongoing fees. This loan is not available for construction.

HSBC Home Value Loan P&IHome≥ 30% Deposit

HSBC Home Value Loan
1.97%
1.98%
  • App: $0
  • Ongoing: $0 p.a.
$554
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

Nano Variable Home Loans P&IHome≥ 25% Deposit Refi Only

Nano Variable Home Loans
1.99%
1.99%
  • App: $0
  • Ongoing: $0 p.a.
$555
Switch to this competitive variable rate with zero fees. Requires a 25% deposit.

Well Home Loans Equity Plus P&IHome≥ 40% Deposit

Well Home Loans Equity Plus
1.82%
1.85%
  • App: $250
  • Ongoing: $0 p.a.
$543
Borrowers with 40% deposits or equity can get this low variable rate loan. 100% offset account included.

Athena Variable Home Loan P&IHome≥ 40% Deposit

Athena Variable Home  Loan
1.99%
1.99%
  • App: $0
  • Ongoing: $0 p.a.
$555
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.

Macquarie Bank Basic Home Loan P&IHome≥ 40% Deposit

Macquarie Bank Basic Home Loan
2.14%
2.14%
  • App: $0
  • Ongoing: $0 p.a.
$567
Apply for the Macquarie Bank Basic Home Loan - LVR ≤ 60% (Owner Occupier, P&I) and get a low variable interest rate, plus no application and ongoing fees. Requires a 40% deposit.

Beyond Bank Total Home Loan Package P&IHome 2Y Fixed≥ 40% Deposit

Beyond Bank Total Home Loan Package
1.79%
3.73%
  • App: $0
  • Ongoing: $395 p.a.
$540
Lock in a very low rate for two years and get package benefits. Requires a 40% deposit.

Bank of Melbourne Basic Variable Rate Home Loan P&IHome≥ 20% Deposit

Bank of Melbourne Basic Variable Rate Home Loan
2.19%
2.21%
  • App: $0
  • Ongoing: $0 p.a.
$570
$3,000 refinance cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 November 2021. Terms and conditions apply). Refinancers Only.

Well Home Loans Balanced Fixed Home Loan P&IHome 1Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
1.87%
1.89%
  • App: $250
  • Ongoing: $0 p.a.
$546
Owner occupiers can get a sharp fixed rate for the first year, plus an offset account. Available with a 10% deposit.

Bank of Melbourne Fixed Rate Home Loan with Advantage Package P&IHome 2Y Fixed≥ 20% Deposit

Bank of Melbourne Fixed Rate Home Loan with Advantage Package
2.29%
3.46%
  • App: $0
  • Ongoing: $395 p.a.
$578
$3,000 refinance cashback
Get a competitive home loan rate for two years. Requires at least a 20% deposit. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 November 2021. Terms and conditions apply). Refinancers Only.

Newcastle Permanent Building Society Premium Plus Package Fixed Rate P&IHome 3Y Fixed≥ 20% Deposit

Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.34%
3.65%
  • App: $0
  • Ongoing: $395 p.a.
$582
$2,000 cashback for eligible refinancers borrowing $250,000 or more. Lock in this competitive rate for 3 years.

UBank UHomeLoan Fixed P&IHome 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.49%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$594
A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47%
  • App: $0
  • Ongoing: $0 p.a.
$555
Home buyers can get a very low discounted variable rate for the first year. Requires a 20% deposit. Add an offset sub-account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

Greater Bank Great Rate Fixed Home Loan P&IInvestment 1Y Fixed≥ 20% Deposit

Greater Bank Great Rate Fixed Home Loan
1.89%
2.27%
  • App: $0
  • Ongoing: $0 p.a.
$548
Lock in your interest rate for 1 year and pay no application or ongoing fees.

Nano Variable Home Loans P&IInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.29%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$578
Investors can refinance this no-fee variable rate loan. You will need a 25% deposit. Fast online approval.

Macquarie Bank Basic Fixed Home Loan P&IHome 3Y Fixed≥ 30% Deposit

Macquarie Bank Basic Fixed Home Loan
3.09%
2.41%
  • App: $0
  • Ongoing: $0 p.a.
$641
Get a low interest rate and a mortgage with flexible, basic features. No application or ongoing fees. Requires a 30% deposit. Refinancers can switch with a convenient digital application.

Well Home Loans Balanced Fixed Home Loan P&IHome 2Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
2.05%
1.92%
  • App: $250
  • Ongoing: $0 p.a.
$560
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
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