Turning a household budget into a possible property price
Mortgage affordability has two essential components. The first is cash: how much of your savings can be used for a deposit after allowing for purchase expenses and the emergency reserve you want to keep. The second is repayment capacity: how much of your monthly household budget can support a mortgage after living costs, existing debts and ongoing property expenses.
This calculator combines those inputs to produce an indicative property budget. You can also enter a specific property price and deposit to test whether the proposed purchase aligns with the same assumptions.
The result is not a lender borrowing limit. Lenders use verified information, detailed expense benchmarks and product-specific credit policies that a public calculator cannot fully replicate.
Why the calculation uses a higher assessment rate
Lenders do not always test a mortgage using only the advertised interest rate. A serviceability buffer creates a higher assessment rate to check whether the borrower could still manage repayments if interest rates rise.
APRA currently requires regulated authorised deposit-taking institutions to apply a mortgage serviceability buffer of at least three percentage points. For example, an entered loan rate of 6% and a three‑percentage‑point buffer produce a 9% assessment rate.
APRA confirmed in May 2026 that the three‑percentage‑point setting would remain in place. Read APRA’s current macroprudential policy announcement .
A lender may apply a higher assessment rate, an interest‑rate floor or additional rules. The editable buffer in this calculator is therefore a scenario input rather than a guarantee that a lender will use the same rate.
Income
Lenders may treat salary, overtime, bonuses, commissions, rent and other income differently. Enter a sustainable after‑tax amount rather than relying on unusually high or temporary earnings.
Living expenses
Include regular spending on food, transport, utilities, childcare, education, healthcare, entertainment and other household needs. A lender may compare declared expenses with its own minimum benchmarks.
Existing debts
Personal loans, car finance, credit cards, student‑loan obligations and support payments reduce the amount available for a mortgage. Some facilities may be assessed from their limit rather than their current balance.
Property expenses
Council rates, water charges, building insurance, strata levies and maintenance continue after settlement. Including them avoids treating the mortgage as the only cost of ownership.
What the DTI result does—and does not—show
Debt‑to‑income ratio compares total relevant debt with gross annual income. A ratio of six means that the debt is six times the annual gross income. DTI is useful for identifying leverage, but it does not show repayment timing, household expenses or interest‑rate effects.
From 1 February 2026, APRA limits each regulated institution to placing no more than 20% of its new owner‑occupied lending and 20% of its new investor lending in loans with a DTI of six or more. This operates at the lender’s portfolio level. It does not prohibit every individual loan above six times income.
The calculator therefore uses the selected DTI value as a warning marker rather than an automatic rejection point. APRA describes the policy in its DTI limit implementation details .
Why savings do not all become a deposit
The amount saved is not necessarily the amount that can be applied to the property price. Buyers may also need to pay transfer duty, conveyancing charges, inspection expenses, lender fees and moving costs. The emergency‑reserve amount is deliberately kept outside the purchase calculation.
Transfer duty and concessions depend on the state or territory, purchase price, property type and buyer eligibility. Enter a current estimate from the relevant revenue authority rather than treating the calculator’s default as a quote.
A deposit below 20% may produce an LVR above 80%. Lenders mortgage insurance may then apply, although lender rules and eligible government guarantee schemes can change the outcome. LMI protects the lender rather than the home buyer.
MoneySmart’s house‑deposit guidance explains how deposit size, LVR and LMI are connected.
Reading the selected‑property result
The target‑property calculation begins with the selected price and subtracts the entered deposit to estimate the required home loan. It then shows the approximate LVR, repayments at both the entered and assessment rates, a simplified DTI result and the monthly cash remaining after the entered expenses.
A positive result does not mean that the property is affordable in every circumstance. Consider whether the remaining budget could absorb changes in income, childcare, insurance, strata levies, repairs or interest rates. A scenario that leaves only a narrow surplus may be vulnerable to relatively small changes.
The adjustment figures are mathematical illustrations. For example, the income figure linked to the DTI marker is not a lender‑issued income requirement, and reducing other monthly commitments may not increase actual borrowing capacity by the same amount.
Use more than one affordability scenario
A single maximum‑price result can create false precision. Try a conservative case with higher expenses, a larger cash reserve and a higher interest rate. You can then compare it with a central estimate and see which assumptions make the greatest difference.
MoneySmart notes that mortgage calculators are models rather than predictions and do not guarantee loan eligibility. Its calculator assumptions and guidance are available through the MoneySmart mortgage calculator .
Use the Australian home deposit calculator to examine your upfront cash goal. To explore repayments, interest and extra payments, use the Australian mortgage calculator .
Australian mortgage affordability questions
Why does the calculator use both gross and take-home income
Gross annual income is used for the simplified DTI indicator. Monthly take‑home income is used to examine cash remaining after living expenses, debts, ownership costs and the modelled mortgage repayment.
Does the calculated property price equal a bank’s pre-approval
No. A bank verifies the application and applies its own treatment of income, expenses, credit limits, liabilities, interest rates and the proposed property.
Why can the assessment repayment be higher than the expected repayment
The assessment repayment uses the entered rate plus a serviceability buffer. It tests a higher‑rate scenario; it is not necessarily the repayment initially charged under the proposed loan.
Does a DTI above six mean my application must be declined
No. APRA’s limit controls the proportion of qualifying new lending that a regulated institution may issue at DTI of six or more. Individual applications remain subject to the lender’s complete assessment and available policy capacity.
Should transfer duty be taken out of my deposit savings
If transfer duty must be paid from the same savings, it reduces the money available for the property deposit. Concessions and exemptions vary, so use a current estimate for your state or territory and circumstances.
Why does the calculator preserve an emergency reserve
Using every available dollar at settlement can leave no buffer for repairs, moving expenses, income interruptions or unexpected costs. The reserve input keeps the chosen amount outside the estimated deposit funds.
Can a 20% deposit guarantee that I can afford the home
No. It may reduce the loan and help avoid LMI in many cases, but affordability also depends on income, expenses, liabilities, interest rates and the cost of owning the property.