How the property affordability calculator works
Most home loan tools begin with a price and produce a repayment. This calculator reverses the process. The borrower nominates the monthly repayment that the household could sustain, and the calculator converts it into the loan that such a repayment would clear over the selected term at the selected interest rate, using the standard amortisation formula in reverse. The loan is then added to the available deposit to give the total funds that could be applied to a purchase.
Those funds must cover more than the price. The calculator searches for the highest purchase price at which the price, the transfer duty payable on that price in the selected state or territory, and an allowance of about $3,000 for conveyancing, inspections and similar costs all fit within the funds available. Because duty depends on the price, and concessions may begin or end abruptly at particular thresholds, the search tests many candidate prices in turn. The result is rounded down to the nearest $1,000 and shown with the duty set aside.
Choosing a comfortable monthly repayment
The repayment figure determines almost everything that follows, so it warrants careful thought. A practical approach is to prepare a household budget of after-tax income and all regular spending, and to identify the amount that remains after savings and other goals have been provided for. Current rent plus regular savings is a useful reference point, because the household has already demonstrated that it can set that sum aside each month. The figure entered should be one that could be maintained for years and not merely for a few months.
Ownership brings costs that renters do not bear. Council rates, water charges, building insurance, strata levies on units and townhouses, and repairs and maintenance all fall to the owner, and they are payable in addition to the loan repayment. Borrowers may therefore wish to deduct an estimate of these costs before settling on a repayment. It is also prudent to consider foreseeable changes in circumstances, such as parental leave, childcare fees, a reduction in working hours or the end of a fixed rate period.
Deposit, interest rate and loan term inputs
The deposit field should contain the total cash available for the purchase, including funds that will ultimately be spent on duty and costs. The calculator deducts those costs itself, so they should not be subtracted beforehand. Savings that the household intends to retain as an emergency reserve should be excluded. Gifts from family members may be included where they are genuinely available, although lenders may treat gifted funds differently from genuine savings accumulated over time, particularly for low deposit loans.
The interest rate should approximate the rate expected on the loan, and a slightly conservative figure is preferable to an optimistic one. The term may be set between 10 and 30 years. The relationship between these inputs and the loan is not proportional. As an illustrative example, a repayment of $3,000 per month supports a hypothetical loan of approximately $500,000 at 6.00% over 30 years, approximately $451,000 at 7.00% over the same term, and approximately $466,000 at 6.00% over 25 years.
Transfer duty, buyer type and purchase costs in a property budget
Transfer duty, commonly called stamp duty, is levied by each state and territory on most property purchases and rises with the price. It is ordinarily paid from cash at or shortly after settlement and is not usually funded by the loan, so every dollar of duty reduces the deposit that remains. Duty schedules differ considerably between jurisdictions, which means that an identical repayment and deposit may support a different purchase price in each state or territory. The stamp duty calculator provides a more detailed estimate for a specific price.
The buyer type selection matters for the same reason. Most jurisdictions offer eligible first home buyers an exemption or concession below certain price thresholds, generally subject to conditions such as living in the home as a principal residence for a minimum period and not having owned residential property previously. Investors and owner-occupiers who are not first home buyers generally pay the standard rate. Thresholds and conditions change from time to time, so the relevant state revenue office should be consulted before relying on a concession.
What the LVR warnings above 80% and 95% mean
The calculator reports the loan to value ratio, or LVR, which is the loan divided by the target price. Where the LVR exceeds 80%, a note indicates that lenders mortgage insurance is likely to apply unless a guarantee arrangement is used. The premium protects the lender and not the borrower, is commonly added to the loan, and is not included in the estimate. Its inclusion would reduce the affordable price slightly. The LMI calculator provides an indicative premium for a given price and deposit.
Where the LVR exceeds 95%, the deposit entered does not cover a 5% deposit together with duty and costs. Most lenders will not lend above 95% of the property value, so the target price shown in that situation should be treated as unattainable without a larger deposit, a lower price or additional support such as a family guarantee. Eligible first home buyers may be able to purchase with a 5% deposit and without lenders mortgage insurance under the Home Guarantee Scheme, now marketed as the Australian Government 5% Deposit Scheme, subject to property price caps.
An illustrative example of how much house a budget supports
The following figures are hypothetical. A household nominates a repayment of $3,000 per month and has $100,000 in cash. At 6.00% over 30 years the repayment supports a loan of approximately $500,000, giving total funds of approximately $600,000. If transfer duty at the resulting price were a hypothetical $22,000, and other costs $3,000, the highest price that fits would be approximately $575,000. The deposit remaining after costs would be $75,000, the LVR would be approximately 87%, and the lenders mortgage insurance note would appear.
If the same household qualified for a full first home buyer duty exemption, only the $3,000 cost allowance would be deducted. The target price would rise to approximately $597,000 and the LVR would fall to approximately 84%. The comparison illustrates how strongly duty affects the outcome for buyers with modest deposits. In both cases the stress test figure would be the same, because it depends only on the loan: at 8.00%, the repayment on the hypothetical $500,000 loan would be approximately $3,672 per month, an increase of about $672.
Stress testing home loan repayments against interest rate rises
A repayment that is comfortable at the current rate may become difficult to sustain if rates rise. The calculator therefore shows the repayment on the same loan at a rate two percentage points higher. Borrowers may compare that figure with their budget to judge how much margin exists. Lenders apply a similar discipline. APRA currently expects banks to assess new loans at a rate at least three percentage points above the actual rate, a setting that is reviewed periodically and is subject to change.
A widely used indicator treats loan repayments above approximately 30% of household income as a sign of potential housing stress. Reserve Bank of Australia analysis notes that the measure is most meaningful for lower-income households, and that it may overstate vulnerability where borrowers are making voluntary extra repayments. It is a general guide and not a rule. Where the stressed repayment would strain the budget, borrowers may consider a lower target price, a larger deposit, or holding a cash reserve in an offset account as protection against higher rates or an interruption to income.
Affordability compared with borrowing power and lender assessment
The result is derived solely from the repayment entered. It is not a serviceability assessment, and a lender may approve a lower or a higher amount. Lenders estimate after-tax income, apply expense benchmarks, deduct existing debts and credit card limits, and test the loan at a buffered interest rate. The borrowing power calculator applies a simplified version of that process. Reviewing both tools together is worthwhile, because a purchase requires that the household is comfortable with the repayment and that a lender is prepared to advance the loan.
Where the two figures differ, the lower one is generally the more prudent guide. A loan at the upper limit of lender approval may leave little room for changes in income, the arrival of children, or rises in rates, insurance and maintenance costs. Conversely, a household that is comfortable with a repayment a lender will not support may need to reduce other debts, close unused credit cards or save a larger deposit before applying. Policies differ between lenders, so an assessment from one institution is not conclusive.
Common mistakes and how to act on the result
Common errors include selecting a repayment based on the most the household could pay in a good month, overlooking ownership costs, entering the deposit net of duty so that duty is deducted twice, and assuming a first home buyer concession without checking eligibility. Buyers also sometimes treat the target price as a fixed entitlement. It is an indicative ceiling, and auction conditions, valuation shortfalls and changes in interest rates between pre-approval and settlement may all reduce the amount that can prudently be paid.
The result may be used to set a search range, generally somewhat below the indicative ceiling, and to decide whether further saving is warranted before buying. The deposit calculator shows how long it may take to reach a deposit of 5%, 10% or 20% at a given rate of saving, and the mortgage repayment calculator shows the repayments on a specific loan. Borrowers who intend to proceed may then seek a formal assessment and pre-approval from a lender or mortgage broker. This information is general in nature and does not take personal circumstances into account.
Property Affordability Calculator: frequently asked questions
How much house can I afford in Australia?
The answer depends on the repayment that can be sustained, the deposit, the interest rate, the loan term and the purchase costs in the relevant state or territory. The calculator converts a monthly repayment budget into an indicative property price after allowing for transfer duty and about $3,000 of other costs. A lender assessment may produce a different figure, so the borrowing power calculator is worth reviewing as well.
What is the difference between borrowing power and affordability?
Borrowing power is the maximum amount a lender may approve under its serviceability rules, which include expense benchmarks and an interest rate buffer. Affordability is the amount a household can repay comfortably in accordance with its own budget and priorities. The two figures frequently differ, and the lower of the two is generally the more prudent basis for determining a purchase price.
What proportion of income should be spent on mortgage repayments?
No single figure applies to every household. A widely cited guideline regards repayments above approximately 30% of household income as an indicator of possible mortgage stress, and the measure is most relevant to lower-income households. Households on higher incomes may manage a greater proportion. A detailed personal budget that includes ownership costs is generally a more reliable guide than a fixed percentage.
Does the affordability calculator include stamp duty?
Yes. The calculator estimates transfer duty for the selected state or territory and buyer type, together with an indicative allowance of about $3,000 for conveyancing and other costs, and deducts both from the available funds before determining the target price. Lenders mortgage insurance is not deducted, and should be considered separately where the LVR exceeds 80%.
How much do I need to earn to afford a $600,000 house?
The required income depends on the deposit, the interest rate, existing debts and household expenses, so no single salary applies. One approach is to use the mortgage repayment calculator to find the repayment on the intended loan, and then to test in the borrowing power calculator which income supports that loan once a lender buffer of three percentage points is applied.
How would a rise in interest rates affect how much I can afford?
A higher rate increases the repayment on the same loan, or reduces the loan that a given repayment supports. The calculator displays the repayment if rates were two percentage points higher. Borrowers may use that figure to assess whether the household budget could absorb the increase without hardship, and may choose a lower target price where the margin appears thin.
Why does the calculator show a warning about LVR?
Where the loan exceeds 80% of the target price, lenders mortgage insurance is likely to apply unless a guarantee arrangement is used, and the premium is not included in the estimate. Where the loan exceeds 95%, the deposit does not cover a 5% deposit plus duty and costs, and most lenders would not approve the loan without a larger deposit or a lower price.
Sources for the affordability guide
- APRA: macroprudential policy settings update, May 2026
- RBA Financial Stability Review, October 2018: vulnerable households and financial stress
- RBA Financial Stability Review, October 2021: mortgage macroprudential policies
- Revenue NSW: First Home Buyers Assistance Scheme
- Australian Government 5% Deposit Scheme (Housing Australia)