How much can you borrow?
No two home buyers are the same, and the amount each person can borrow is different. It all depends on your income, your assets, your living expenses and the type of loan you’re looking for.
Your income helps us work out how much you can borrow on your home loan and if you have a strong savings history - one of the requirements. When working out how much you can afford, a good guide is to ensure your repayments don’t exceed 30% of your after-tax salary.
Use our calculators to get a good idea of what your repayments will be once you start making mortgage repayments.
Buying a home doesn’t have to mean sacrificing your lifestyle. To make sure you can comfortably afford the home you want, consider all your financial commitments, including monthly bills and living expenses.Your living expenses are the amount of money you need to maintain a reasonable standard of living, including expenses such as food, transport, clothing, utilities, education & health care.
Your financial commitments also affect how much you can afford to borrow. Try to consolidate and pay off loans with high interest rates, such as credit cards and personal loans, so you’re in a stronger financial position when you apply for a home loan.
The bigger your deposit, the smaller your loan will be and the less you’ll pay in interest. Ideally, you should try to save as much as you can—10% as a minimum and 20% of the property price if possible. If you are borrowing more than 80% of the property value, you’ll need Lenders’ Mortgage Insurance.
Understanding the costs of buying a property and using our budget planner tools will help you save a healthy deposit for your first home.
Saving a deposit for more than 3 months, and paying down debt so you have a credit history, are great ways to show evidence of your ability to manage home loan repayments—one of the requirements in your home loan application. You may also like to check your credit rating before you apply for a home loan, in case there are any old bills or applications that may affect how much you can borrow.