Can I Afford a $500K House?

Let’s tackle the big question first: the monthly payments. Buying a $500,000 house means taking out a substantial loan, and the repayments are the number that keeps lenders and buyers up at night. Based on current estimates, assuming an interest rate of 6.2% over a 30-year loan term, your principal and interest (P&I) repayment will be approximately $1,045 per month. To determine if this is affordable, we need to look at your income. Generally, financial experts advise keeping your mortgage repayments below 30-35% of your gross income. To comfortably absorb the $1,045 monthly payment, you would likely need a minimum gross annual salary of at least $45,000. If your income is higher, say $70,000, the repayments only represent about 15% of your gross pay, which is much safer. You can get a deeper understanding of your borrowing power using our affordability calculator.

The deposit is the first hurdle, and it’s crucial. Lenders typically prefer to see you have at least a 20% deposit, which for a $500,000 home, means setting aside a full $100,000. If you are starting with less, the gap is filled by two things: Lenders Mortgage Insurance (LMI) and potentially higher interest rates. If your deposit is only 10% ($50,000), you’ll face LMI costs, which are mandatory fees that protect the bank but add thousands to your upfront costs. If you are looking at a 5% deposit ($25,000), the costs climb even higher. Before you start saving, it’s a good idea to check out our guide on deposit requirements and run through our LMI calculator to understand the true cost of going under 20%.

Understanding what your repayments represent as a percentage of your income is key to financial stability. For instance, if you earn $45,000 a year, the $1,045 repayment represents roughly 25% of your gross income—a manageable, but tight, percentage. If you earn $70,000, that same repayment is only 15% of your income, leaving you plenty of breathing room for bills, savings, and lifestyle costs. This ratio is what lenders and financial advisors focus on. Regarding location, median house prices around the $500,000 mark in 2026 could be found in growing suburbs across regional areas, or specific suburbs within larger metro areas like Brisbane or Perth. Use the mortgage calculator to model different repayment scenarios as your income grows or changes.

The good news is that you don't have to tackle this alone! Australia offers various first home buyer concessions, which can significantly reduce your overall costs. These grants and schemes can help bridge the gap between your required deposit and the actual funds you need. We recommend checking the latest information on first-home-buyer grants for 2026, as state-based rules change frequently. Also, always look into local council assistance programs, as they can offer unexpected help. Remember that while the initial cost of the house is $500,000, your total financial picture must account for stamp duty, council rates, and utility connections. Use our main affordability tool early in your journey to create a comprehensive financial plan that includes all these necessary costs.

Q: Are the repayments fixed?

A: Generally, no. The repayments are calculated based on the interest rate (6.2% in our example), which is variable. Your actual rate can change over the life of the loan, so always budget with a buffer for potential increases.

Q: Does my salary need to be the only factor?

A: No. Lenders consider your entire financial picture, including any stable secondary income, rental income, and your existing debts (like car loans or credit cards). A full financial assessment is always required.

Q: How much should I budget for stamp duty?

A: Stamp duty is a massive upfront cost that varies hugely by state and local council. It is *not* included in the loan amount and must be factored into your total cash outlay.