Can I afford to buy a house
Finding out if you can afford to buy a house in Australia can feel daunting. This guide breaks down the key factors, from deposits to repayments, to help you assess your readiness.
Can I Afford to Buy a House? Free Guide & Calculator
Find out if you can afford to buy a house. Use our simple guide and calculator to check your budget, loan options, and upfront costs.
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How to calculate your home buying affordability
True affordability goes beyond income, it’s a full assessment of your financial health, including debts, expenses and savings. Lenders and brokers use specific metrics to gauge how much you can safely borrow.
Serviceability (borrowing power): The maximum loan amount you can manage based on income and expenses. Lenders test your ability to repay at higher interest rates to ensure long-term stability.
The 20% deposit rule: A 20% deposit avoids Lenders Mortgage Insurance (LMI), but many buyers purchase with less. If your deposit is below 20%, factor in LMI as a major additional cost.
Hidden costs: Include Stamp Duty (varies by state), legal fees, and inspections. These can add tens of thousands to your total outlay.
A HeyNest broker can assess your finances using the same tools as lenders, giving a realistic, confidential view of what you can afford.
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Essential steps to determine if you can afford a house
Before starting your property search, organise your finances and documents. This preparation clarifies affordability and speeds up approval.
Review your credit score: A strong score improves your rate options. Check your file for errors and resolve them early.
Save for deposit and costs: Plan for your deposit plus extra costs like LMI, Stamp Duty and legal fees. Lenders prefer evidence of genuine savings.
Reduce high-interest debt: Paying down personal loans and credit cards boosts borrowing power.
Organise paperwork: Gather bank statements, pay slips, and existing loan details.
HeyNest brokers streamline this process, guiding you through lender expectations and helping you strengthen your financial profile for maximum borrowing potential.
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Understanding the true cost of home ownership (beyond repayments)
Affording a house is not just about securing the initial loan; it's about sustaining the financial commitment over the life of the mortgage. Many first-time buyers underestimate the ongoing financial responsibilities.
Ongoing Expenses: Budget for council rates, water rates and strata fees (for units).
Maintenance: Plan for at least 1% of the property’s value annually for repairs and upkeep.
Interest rate changes: Test your budget against a 2% rate rise to ensure flexibility.
A HeyNest-connected broker provides a full affordability review, comparing loans from multiple Australian lenders to secure a structure that suits both your budget today and your financial future.
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Frequently asked questions
How much income do I need to afford a house in Australia?
There is no fixed number. Affordability is based on your entire financial profile (income minus all debts and expenses), not just your salary.
Can I afford a house if I only have a 5% deposit?
Yes, many lenders offer 95% LVR loans, but you will almost certainly be required to pay Lenders Mortgage Insurance (LMI).
What is a 'pre-approval' and why does it help my affordability assessment?
A pre-approval is a conditional agreement from a lender detailing how much they will lend you. It confirms your borrowing power and provides a clear budget before you start house hunting.
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