Can I Afford a $700K House?

It’s the million-dollar question every first-home buyer asks. Short answer? It's possible, but it requires careful planning and a strong financial foundation. Buying a $700,000 home in 2026 means tackling a significant chunk of your income. Let's break down the numbers. Assuming current interest rates hover around 6.2% over a 30-year period, your estimated monthly repayment for a 20% deposit would be approximately $3,550. This payment alone needs to fit comfortably within your budget. To manage this repayment without straining your finances, most financial experts suggest your annual salary needs to be at least $140,000 to $150,000. This guide will show you exactly how that salary translates into your required deposit and monthly commitment.

The biggest upfront hurdle is the deposit. The less cash you have, the more expensive your loan becomes due to the Lender’s Mortgage Insurance (LMI). For a $700,000 home, your deposit requirements look like this: 5% requires $35,000, 10% needs $70,000, and 20% is the gold standard at $140,000. If you are planning for a smaller deposit (less than 20%), you must factor in the cost of LMI, which is an additional cost added to your loan. Understanding these different deposit levels is crucial. To get a clearer picture of your options, check out our guide on how much deposit you really need. Remember, securing that 20% deposit significantly reduces your risk and your overall borrowing cost.

So, what does that $3,550 monthly repayment actually mean for your take-home pay? Lenders prefer that your total mortgage repayments (including rates and insurance) don't exceed 28% to 33% of your gross income. If we use the 30% rule, that $3,550 repayment suggests you need a pre-tax income of at least $142,000 annually. If your income is lower, the pressure increases dramatically, making the loan harder to service. We recommend using our Can I Afford a House Calculator to test different scenarios with your specific income. Don't forget to factor in stamp duty and other upfront costs when assessing your true financial position.

A $700,000 median price point is common in desirable fringe suburbs or in major regional centres. While inner-city Sydney and Melbourne suburbs are often priced higher, you might find comparable value in areas like parts of Brisbane or outer suburbs in Adelaide. The good news is that the Australian government and local councils offer various incentives. If you are eligible, checking out current first home buyer grants could significantly reduce your upfront cash needs. Always start by running through our mortgage calculator to get an accurate estimate before talking to a bank. These schemes and grants are designed to help people like you get onto the property ladder.

Q: Does a higher salary automatically mean I can afford the house?

Answer: Not necessarily. While a high salary helps, lenders look at your debt-to-income ratio. If you have other large debts (car loans, credit cards), they will reduce the amount you can borrow, regardless of how much you earn.

Q: What if I can't afford the 20% deposit?

Answer: You will need to rely on LMI, which is more expensive. It is highly recommended to save extra cash to cover these fees, or look into government schemes that might assist with the deposit.

Q: Are interest rates fixed or variable?

Answer: They can be both. Always compare fixed-rate and variable-rate options, as the best choice depends on your financial stability and how long you plan to stay in the property.