Can I Afford This Property?
Estimate whether a property fits your budget. Calculate borrowing power, monthly repayments, and affordability in seconds.
How Property Affordability Is Calculated
Understanding whether you can afford a property involves more than comparing the purchase price to your savings. Lenders assess your ability to meet monthly repayments based on your income, existing debts, living expenses, and other commitments. Here's how property affordability is typically calculated.
Income
Your total household income forms the foundation of affordability. This includes salary and wages (gross annual income), rental income from existing properties, bonuses, commissions, government benefits, and other regular income. For couples applying jointly, both incomes are combined. Self-employed applicants may need to provide additional documentation, as lenders often use an average of recent years rather than a single year.
Debts and Liabilities
Lenders subtract your existing commitments from your income. This includes home loan repayments, car loans, personal loans, HECS/HELP repayments, and credit card commitments. Importantly, credit card limits—not just balances—are used, as lenders assume you could draw down to the limit. A common rule is 3% of your total credit limit per month. Reducing credit limits or paying off cards can improve your borrowing power.
Dependants
Having children or other dependants affects affordability. Lenders apply benchmark living expenses based on household size. More dependants typically mean higher assumed expenses, which reduces the amount available for mortgage repayments. Declared childcare and school fees are also factored in.
Lender Buffers
Lenders stress-test your ability to repay by applying an assessment rate higher than the advertised rate—often 3% above the actual rate. This buffer ensures you can still afford repayments if interest rates rise. The maximum repayment is usually capped at around 35% of your available income (after expenses and debts).
Rental Income (Investment Properties)
For investment properties, rental income can boost your borrowing power. However, lenders typically discount rental income—commonly using 70–80% of the declared rent to account for vacancies and costs. Existing investment properties may also contribute to your serviceability if they generate positive cash flow.
This calculator provides general estimates only. A licensed mortgage broker can review your full financial situation and confirm whether you qualify for a specific property.
Frequently Asked Questions
- Can I afford this property?
- Affordability depends on your income, expenses, debts, and the size of your deposit. Lenders typically allow mortgage repayments of up to around 35% of your available income. Use this calculator to estimate whether a specific property fits your budget based on your household finances.
- How much deposit do I need?
- For owner-occupied properties, many lenders accept deposits of 5–10% of the purchase price, though a 20% deposit helps avoid Lenders Mortgage Insurance (LMI). For investment properties, deposits of 20% or more are common. A larger deposit reduces your loan amount and monthly repayments.
- Do lenders count rental income?
- Yes. For investment properties, lenders include rental income in serviceability calculations. However, they typically use only 70–80% of the declared rent to account for vacancies, maintenance, and management costs. Some lenders may require evidence such as a lease or rental appraisal.
- Does having children affect borrowing power?
- Yes. Lenders apply higher living expense benchmarks for households with dependants. Childcare and school fees are also deducted from your available income. More dependants generally reduce the amount you can borrow, though the impact varies by lender.
This calculator provides general estimates only and does not constitute financial advice. CredoraLend is not a credit provider. We connect borrowers with licensed mortgage brokers.