Can I Afford a House? — Home Affordability Check

As a rough guide, banks will lend you 5-6x your gross annual salary. So on a $100,000 salary, you could borrow approximately $500,000-$600,000. However, affordability depends on your deposit size, existing debts, expenses, and the interest rate. The key rule is that mortgage repayments should not exceed 30% of your gross income. Use our calculator above to get a personalised answer based on your exact situation.

Ideally 20% of the property price to avoid Lenders Mortgage Insurance (LMI). For a $600,000 home, that's $120,000. However, you can buy with as little as 5% deposit ($30,000) — you'll just need to pay LMI, which can cost $8,000-$30,000 depending on the loan size. Some government schemes like the First Home Guarantee allow 5% deposits without LMI. You'll also need funds for stamp duty, legal fees, inspections, and moving costs — budget an extra $15,000-$30,000.

The 30% rule states that your housing costs (mortgage repayments, rates, insurance) should not exceed 30% of your gross household income. If you earn $100,000/year, that means no more than $30,000/year or $2,500/month on housing. Exceeding this threshold puts you into 'mortgage stress'. Some financial advisors use a stricter 28% rule, and conservative lenders may assess at even lower ratios. Our calculator uses this rule to give you a clear affordability verdict.

While property prices are high in major cities, there are realistic paths to home ownership. Consider: (1) Look at more affordable suburbs or regional areas, (2) Use government schemes like First Home Guarantee (5% deposit, no LMI), (3) Explore rentvesting — buying where you can afford and renting where you want to live, (4) Consider apartments or townhouses as a first step, (5) Boost your deposit through salary sacrifice into a FHSSS account (up to $50,000 in tax-advantaged savings). The median house price varies enormously — from $450,000 in regional areas to $1.4M+ in Sydney.

At a 6.0% interest rate over 30 years, repayments on a $500,000 mortgage are approximately $3,000/month or $690/week. Over the full 30-year term, you'd pay about $580,000 in interest — more than the original loan. Increasing repayments by just $200/month would save you approximately $80,000 in interest and pay off the loan 4 years early. The exact amount varies by interest rate: at 5.5%, repayments are $2,839/month; at 6.5%, they're $3,160/month.

LMI is a one-off insurance premium you pay when your deposit is less than 20% of the property price. It protects the lender (not you) if you default. LMI costs typically range from $4,000 for a $400,000 property with 15% deposit to $30,000+ for an $800,000 property with 5% deposit. LMI can be paid upfront or added to your loan (capitalised). Some ways to avoid LMI: save a 20% deposit, use the First Home Guarantee scheme, or take out a family guarantee loan.

Grants vary by state: NSW offers $10,000 for new homes under $600,000 plus stamp duty exemption under $800,000. VIC offers $10,000 for new homes under $750,000. QLD offers $30,000 for new homes under $750,000. WA offers $10,000 for new homes. SA offers $15,000 for new homes under $650,000. Federal schemes include the First Home Guarantee (5% deposit, no LMI), Regional First Home Buyer Guarantee, and the First Home Super Saver Scheme (withdraw up to $50,000 from super for a deposit). Eligibility criteria apply — check our First Home Buyer Grant Checker for your exact entitlements.

This depends on the property price, your target deposit percentage, and how much you can save per month. For a $600,000 home with a 20% deposit ($120,000), saving $2,000/month would take about 5 years. With a 10% deposit ($60,000), it would take about 2.5 years. Using the FHSSS (First Home Super Saver Scheme) can accelerate this by up to 30% due to tax savings on contributions. Our calculator shows you exactly how long it will take based on your current savings and income.