Can I Afford a $1.2M House?

Buying a home in Australia is a huge financial commitment, and when the price tag hits $1.2 million, it’s natural to feel overwhelmed. The short answer is: it’s possible, but it requires significant income and careful financial planning. In 2026, while demand remains high, understanding your true borrowing capacity is the first step. To comfortably manage a $1.2 million mortgage over 30 years at estimated rates (around 6.2% p.a.), you’re looking at monthly repayments of approximately $7,440. This means your minimum gross annual salary should be well over $250,000, depending on your existing debts and lifestyle costs. Before you even start looking at listings, take a deep breath and use our can-i-afford-a-house tool to get a realistic picture of your borrowing power.

The deposit is your contribution, but it doesn't tell the whole story. Lenders love seeing a 20% deposit—that’s $240,000 on a $1.2 million home—because it significantly reduces risk. If you have less than 20%, you’ll face something called Lender's Mortgage Insurance (LMI). Don't panic; LMI is just an insurance product that protects the bank, not you! It can add thousands to your upfront costs. For example, if you only have a 10% deposit ($120,000), you’ll need to budget for the LMI costs, which can be substantial. We recommend reading up on how much deposit you really need to understand the full cost of going under 20%.

Let’s look at how much those repayments eat into your income. For a $1.2M loan, repayments are steep. If you earn $200,000 gross per year, your repayments will represent a much larger percentage of your take-home pay than if you earn $350,000. Generally, experts suggest your total housing costs (including repayments, rates, and maintenance) shouldn't exceed 28-33% of your gross income. If you’re unsure about the exact monthly payment, use our mortgage calculator. Remember, high repayments can quickly make budgeting difficult, so always factor in unexpected costs like maintenance and council rates when you plan your finances.

While $1.2 million is a high benchmark, it’s worth noting that median house prices of this level are common in desirable suburbs across Sydney, Melbourne, and Brisbane. If you are a first-home buyer, there are concessions available! These programs, such as state-based grants, can significantly reduce your upfront costs. Always check the details of the first-home-buyer grants for 2026 and see if you qualify. Furthermore, some states offer specific stamp duty concessions that can save you tens of thousands of dollars. We suggest reviewing the official government sources and using our LMI calculator to estimate your true costs before speaking to a mortgage broker.

Q: Is 6.2% interest rate realistic for 2026?

A: Interest rates fluctuate constantly. The 6.2% figure used here is an estimate based on current market projections for modelling purposes. Always use a mortgage calculator that allows you to adjust rates based on the lender's current offers.

Q: What is LMI and why do I need to know about it?

A: LMI (Lender's Mortgage Insurance) is an insurance product that protects the bank if you default on the loan. If you put down less than 20% of the purchase price, the bank requires you to buy this insurance, adding significant upfront costs.

Q: Can I use my superannuation to buy a house?

A: You might be able to use superannuation for a deposit, but there are strict rules and penalties involved. It is best to consult a financial planner to understand if this is the right move for your personal financial situation.