What makes for an affordable home?

Rates and fees last updated on

Your financial position and the amount you earn plays a vital role in determining what "an affordable property" is for you.

What makes for an affordable homeWhen people talk about finding an affordable property, the discussion often centres on the performance of the real estate market as a whole.

While this influences housing affordability, the biggest factor that impacts upon how much you can afford to spend is your household income. The amount you earn and your financial position will identify the price range that you can afford to spend on a property.

Let’s take a look at the financial factors you should take into account when searching for an affordable property.

Your income

Most people don’t realise how important their income is until they can no longer rely on it. A regular income allows you to fund your lifestyle and meet whatever expenses may arise, including keeping up with your mortgage repayments from one month to the next.

However, seven in ten Australian households earn less than $100,000 in gross income every year, while 33% of Aussie households earn less than $52,000 each year. When you consider median sales prices in Australia’s capital cities, it is clear that housing affordability is an issue for many homebuyers.

The 2016 edition of Demographia’s Annual International Housing Affordability Survey revealed that the typical Australian house costs 5.6 times the median household income.

Number of dependents

The number of dependents you have reduces your disposable household income and thus affects your borrowing capacity. From school fees to insurance costs and medical bills, the number of kids you have can affect your ability to service a mortgage, and thus the type of property that you can afford.

A 2013 study by AMP and The University of Canberra found that the cost of raising two kids in Australia for a middle-income family is a whopping $812,000. More dependants means more financial commitments, which in term has an effect on the kind of property that you can reasonably afford.

Your assets

Another important factor contributing to your overall financial health and your idea of what constitutes an "affordable" property is the value of your assets. This could be shares, savings, real estate or a range of other investments. our lender will ask for details of your assets when you fill out a home loan application.

Generally, the greater the value of the assets you own, the higher your price range when buying a property.

Your liabilities

Before a lender or mortgage broker can work out how much home loan debt you can afford to take on, they will need to assess your ongoing financial commitments, commonly referred to as liabilities. From car loans and personal loans to outstanding credit card debt, HECS/HELP debt and even ongoing child support requirements, you’ll need to provide details of all your liabilities in your home loan application.

The lender will use the information you provide to work out your debt-to-income ratio — that is, the proportion of your monthly income that goes towards meeting your ongoing financial commitments. If your ratio is above the lender’s acceptable limit for the amount you want to borrow, they won’t approve your home loan application.

They may offer you finance for a reduced amount instead, which may indicate that the property you want to purchase is out of your price range.

Working out how much you can afford to borrow

Assessing all of the factors outlined above will help you form a clearer picture of how much money you can afford to borrow and comfortably repay — and therefore which homes are affordable for you. You can use our borrowing power calculator, which takes into account your income, expenses and number of dependants when calculating your repayment capabilities.

However, for specific advice tailored to your situation, the best thing you can do is ask a mortgage broker for advice. A broker will take the time to assess your overall financial situation now and how it will change in the future. They will then be able to give you a much more accurate idea of the amount you can afford to borrow and repay without putting yourself through financial hardship.

Once you know which properties are affordable based on your financial situation, you’ll be able to start house hunting in earnest.

See what your home loan repayments would be below

Rates last updated November 25th, 2017
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Loan purpose
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Loan type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.65%
3.66%
$0
$0 p.a.
90%
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.69%
4.86%
$0
$395 p.a.
90%
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.49%
4.47%
$0
$375 p.a.
90%
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.54%
3.56%
$0
$0 p.a.
80%
This loan is for refinancers only. A basic but flexible low-rate loan for refinancers looking to save on repayments.

3.58%
3.58%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.64%
3.66%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.64%
3.64%
$0
$0 p.a.
70%
A low-rate basic home loan requiring a 30% deposit.
3.69%
3.72%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.62%
3.64%
$0
$0 p.a.
80%
This loan is for refinancers only. Switch from your current loan to this low-rate, flexible and feature-packed refinance special.

3.69%
4.01%
$0
$299 p.a.
95%
A loan with no application fee and borrow up to 95% LVR.
3.74%
3.74%
$0
$0 p.a.
80%
Combine a low variable interest rate and free redraw with no application or ongoing fees.
4.64%
4.01%
$0
$0 p.a.
80%
Enjoy a fast application process and flexible repayment options with this fixed rate investment loan.
4.14%
4.14%
$0
$0 p.a.
80%
An investment home loan with competitive rate and 100% offset account.
3.39%
4.31%
$0
$0 p.a.
95%
Enjoy a low introductory fixed or variable interest rate for the first 12 months with no application or ongoing fees.
4.79%
5.44%
$0
$395 p.a.
95%
Package your 4-year fixed rate investment loan and pay no application fees.
3.54%
3.56%
$0
$0 p.a.
80%
For new home buyers only. No refinance option. A low interest variable home loan with no application fee and free redraws. Offer ends 30th Nov.
4.49%
4.52%
$0
$0 p.a.
80%
An interest-only loan for investors. Access equity to further your investment opportunities.
3.69%
3.69%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
4.19%
4.22%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.65%
4.84%
$0
$395 p.a.
90%
A 2 years fixed platinum package that has $0 application and a loan redraw facility.
3.99%
4.00%
$0
$0 p.a.
80%
A low-fee variable rate investor loan with a fast online application process.
3.69%
4.15%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.64%
4.03%
$0
$395 p.a.
80%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.78%
3.79%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
4.09%
4.11%
$0
$0 p.a.
80%
Pay no application fee on this low variable rate investment home loan.
3.79%
4.11%
$0
$299 p.a.
80%
A fully featured home loan with an offset account and discounts available.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
A low interest rate home loan that allows borrowers to borrow up to 80% of the property value.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
3.72%
3.75%
$600
$0 p.a.
80%
A maximum 80% LVR home loan with no ongoing service fees and a linked transaction account.
3.72%
3.74%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.77%
3.81%
$200
$0 p.a.
95%
A basic home loan with a low interest rate and a redraw facility available.
3.74%
4.15%
$0
$395 p.a.
80%
Enjoy a discount of a competitive interest rate and 100% offset account.
3.88%
3.81%
$0
$0 p.a.
95%
A competitive 3-year fixed rate loan with a high max insured LVR.
3.85%
4.97%
$300
$10 p.a.
95%
A flexible, competitive fixed rate loan that allows for extra repayments.
3.69%
3.75%
$600
$0 p.a.
80%
A low interest rate variable home loan with no ongoing fees.
3.79%
4.00%
$0
$10 monthly ($120 p.a.)
90%
Get a competitive interest rate for 3 years and a discounted variable rate when the fixed period ends.
3.94%
4.88%
$0
$0 p.a.
90%
Enjoy a low interest rate and borrow up to 90% (with LMI) of your property's value.
3.74%
3.74%
$0
$0 p.a.
90%
A competitive variable rate with a redraw facility. NSW, QLD and ACT residents only.
3.73%
3.73%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.84%
3.84%
$0
$0 p.a.
110%
Requires a family member to act as guarantor. Discounted rate available with family pledge loans. Family pledge loans require no LMI and no deposit. NSW, Qld and ACT only.
3.85%
4.18%
$500
$0 p.a.
95%
Apply for Easy Street fixed rate home loans and get a competitive loan with a fixed interest rate.
3.88%
4.89%
$0
$395 p.a.
95%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.96%
3.98%
$0
$0 p.a.
90%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
3.99%
3.99%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
3.97%
4.02%
$0
$0 p.a.
90%
A discounted interest rate home loan with no monthly fees.
3.97%
3.97%
$0
$0 p.a.
90%
A competitive variable rate home loan with no ongoing fees.
3.79%
3.80%
$0
$0 p.a.
80%
A competitive rate with no ongoing monthly fees or application fees.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
3.84%
4.83%
$0
$0 p.a.
95%
Get a competitive 2-year fixed rate with no application or ongoing fees.
3.69%
4.00%
$0
$350 p.a.
95%
Fix your rate for 3 years and borrow up to 95% LVR.
$0
$0 p.a.
A basic low-rate home loan that still offers some useful features.
3.74%
3.74%
$0
$0 p.a.
95%
A low rate home loan with no application or ongoing fees. Note that to be eligible for this loan you must be QLD resident.
3.69%
4.45%
$0
$375 p.a.
90%
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
4.09%
4.25%
$300
$10 monthly ($120 p.a.)
80%
Get a competitive investment home loan rate without expensive features you may not need.
3.99%
4.02%
$600
$0 p.a.
90%
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.99%
4.77%
$0
$0 p.a.
95%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.69%
3.69%
$0
$0 p.a.
70%
Enjoy a low variable rate with no application and ongoing fees.
3.88%
4.88%
$0
$395 p.a.
95%
Lock in a discounted fixed rate with a low service fee.
3.99%
4.03%
$0
$0 p.a.
95%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.85%
4.95%
$0
$395 p.a.
95%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.99%
4.99%
$0
$395 p.a.
95%
A package home loan with fee free extra repayments available during the fixed term.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Borrow up to and fix in a 3 year home loan rate. Access your account via internet and phone banking.
3.69%
4.03%
$0
$299 p.a.
80%
Enjoy a low variable rate with no application fee.
5.29%
5.64%
$995
$15 monthly ($180 p.a.)
65%
Available for former bad credit borrowers who have had a clean credit file for the last 24 months. Loan can be used to purchase a property or refinance.
3.75%
4.44%
$0
$0 p.a.
95%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$600
$0 p.a.
90%
Get a low variable rate along with some important basic features.
5.59%
5.94%
$995
$15 monthly ($180 p.a.)
55%
Available for borrowers with bad credit history. Can be used for purchase or refinance even with negative listings on your credit file.

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