Borrowing Power on $120,000 Salary
How much you can borrow for a home loan on a $120,000 gross annual salary. Based on bank assessment rates and the 30% serviceability rule.
Last verified: 1 July 2025On a $120,000 salary, you could borrow approximately $364,664
Based on 9.25% assessment rate (6.25% + 3% buffer) and 30% serviceability ratio over 30 years.
Monthly repayment
$2,245.30
at 6.25% over 30 years
Fortnightly repayment
$1,036.29
at 6.25% over 30 years
Weekly repayment
$518.15
at 6.25% over 30 years
What $364,664 Buys You
How your $364,664 borrowing power compares to median house prices across Australian capital cities (with a 20% deposit).
| City | Median | Loan needed (80%) | Affordable? |
|---|---|---|---|
| Sydney | $1,150,000 | $920,000 | Short $555,336 |
| Melbourne | $800,000 | $640,000 | Short $275,336 |
| Brisbane | $780,000 | $624,000 | Short $259,336 |
| Perth | $700,000 | $560,000 | Short $195,336 |
| Adelaide | $720,000 | $576,000 | Short $211,336 |
| Hobart | $650,000 | $520,000 | Short $155,336 |
| Canberra | $850,000 | $680,000 | Short $315,336 |
| Darwin | $500,000 | $400,000 | Short $35,336 |
Median prices are approximate mid-2025 figures. Actual prices vary by suburb.
Deposit Needed
How much deposit you need for different property values with $364,664 borrowing power.
| Deposit % | Max property | Deposit | Est. LMI |
|---|---|---|---|
| 5% | $383,857 | $19,193 | $12,763 |
| 10% | $405,182 | $40,518 | $6,564 |
| 20%(no LMI) | $455,830 | $91,166 | $0 |
LMI estimates are approximate. Actual LMI varies by lender, loan amount, and LVR.
Monthly Repayments at Current Rates
| Rate | Monthly | Fortnightly | vs 6.25% |
|---|---|---|---|
| 5.5% | $2,070.52 | $955.63 | -$174.78/mo |
| 6% | $2,186.34 | $1,009.08 | -$58.95/mo |
| 6.25%(current) | $2,245.30 | $1,036.29 | — |
| 6.5% | $2,304.92 | $1,063.81 | +$59.63/mo |
| 7% | $2,426.12 | $1,119.75 | +$180.82/mo |
| 7.5% | $2,549.78 | $1,176.82 | +$304.48/mo |
What Reduces Your Borrowing Power
HECS-HELP debt
Compulsory repayments are deducted from income before assessment
-$27,350
Credit card ($10K limit)
Banks assume 3% of your credit limit as a monthly commitment, even if paid in full
-$36,466
Car loan ($500/month)
Existing debt repayments directly reduce serviceability
-$60,777
Each dependant
Banks add ~$400/month per dependant to living expenses
-$48,622
How to Increase Your Borrowing Power
- Pay off debts first — closing a $10K credit card could add $36,466 to your borrowing power
- Save a bigger deposit — a 20% deposit avoids LMI (saving $12,763) and shows lenders you're a lower risk
- Longer loan term — a 35-year term increases borrowing power to approximately $373,718 ($9,054 more)
- Add a co-borrower — combining incomes significantly increases capacity
- Reduce living expenses — lower declared expenses mean more income available for repayments
Lenders Mortgage Insurance (LMI)
LMI is required when your deposit is less than 20% of the property value. Here's what you'd pay on a $364,664 loan:
5% deposit (95% LVR)
$12,763
on $383,857 property
10% deposit (90% LVR)
$6,564
on $405,182 property
15% deposit (85% LVR)
$2,917
on $429,016 property
LMI can often be added to the loan (capitalised), but this increases your total debt. First home buyers may be eligible for the First Home Guarantee which allows a 5% deposit with no LMI.
Frequently Asked Questions
How much can I borrow on a $120,000 salary?
On a $120,000 gross salary, you could borrow approximately $364,664 for a home loan. Banks assess your ability to repay at 9.25% (the current rate of 6.25% plus a 3% buffer), using up to 30% of your gross income for loan serviceability.
Can I buy a house on a $120,000 salary?
With a borrowing power of $364,664, you could buy a property worth up to $455,830 with a 20% deposit. This is not enough for a median-priced house in Sydney ($1,150,000) but may require a smaller city or unit.
What deposit do I need on a $120,000 salary?
With $364,664 borrowing power, a 20% deposit of $91,166 gets you a $455,830 property with no LMI. A 10% deposit of $40,518 would mean paying approximately $6,564 in Lenders Mortgage Insurance.
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General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.
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