How Much Can I Borrow in Australia 2026: Borrowing Power by Salary

If you’re wondering “how much can I borrow Australia 2026,” you’re not alone. Borrowing power is the single most important number for any property buyer — it dictates your budget, your suburb options, and even whether you can buy at all. Yet it is not a simple multiple of your salary. Australian lenders use a detailed serviceability assessment that accounts for your income, expenses, existing debts, number of dependants, and a mandatory interest rate buffer set by the Australian Prudential Regulation Authority (APRA).

This guide breaks down approximate borrowing power for different salary levels in the 2026–27 financial year, explains how lenders calculate your maximum loan, and walks through the factors that reduce or increase your borrowing capacity.

How Lenders Calculate Your Borrowing Power in 2026

Australian lenders do not use a simple income multiple. Instead, they run a serviceability test that asks a single question: after all living expenses and debt repayments, do you still have enough surplus income to afford the loan repayments — with a buffer?

The key components of a 2026 serviceability assessment are:

Your gross income. Lenders start with your pre-tax salary, and for PAYG employees this is straightforward via payslips. For self-employed borrowers, they use the average taxable income from your last two years of tax returns.

Living expenses. Rather than accepting your declared living costs, most lenders benchmark against the Household Expenditure Measure (HEM) — a statistical calculation of the median spending for a household of your size and income level. If your declared expenses are higher than the HEM benchmark, the lender uses the higher figure. For a single person with no dependants, HEM is approximately $1,600–$1,900 per month; for a couple with two children, it can exceed $3,500 per month.

Existing debts. Every debt obligation reduces your borrowing power. Credit card limits (not just balances) are assessed at 3.8% of the total limit per month. A $10,000 credit card limit therefore adds $380/month to your assessed expenses, even if you pay it off every month. Personal loans, car loans, HECS/HELP debts, and Afterpay-style buy-now-pay-later accounts all count against you.

The APRA serviceability buffer. APRA requires lenders to assess your ability to repay at 3.0 percentage points above the loan’s actual product rate (or the lender’s floor rate, whichever is higher). APRA confirmed the buffer was still 3% as at May 2026. For example, if you apply for a loan at 6.0%, the lender assesses your repayment capacity as if the rate were 9.0%. This buffer protects you from future rate rises — and it significantly limits borrowing power.

The APRA debt-to-income (DTI) limit. From February 2026, banks must keep new lending written at a debt-to-income ratio of 6 or above within 20% of new lending in each portfolio. DTI is your total debt divided by your gross annual income, so a household earning $150,000 with $900,000 of total debt sits exactly at a DTI of 6. This does not ban high-DTI loans outright, but it does ration them: once a lender is near its 20% allocation for the quarter, applications above DTI 6 face tighter scrutiny, longer assessment times, or a lower approved amount. If your scenario sits above DTI 6, expect the answer to vary noticeably between lenders — it depends on where each one sits against its own cap at the time you apply.

Loan term. Most serviceability calculations assume a 30-year loan term. A 25-year term increases monthly repayments and reduces borrowing power since the same principal must be repaid in fewer months.

Dependants. Each dependant adds to the HEM living expense benchmark, reducing your net surplus and therefore your maximum loan amount. A household with two children will typically have $1,500–$2,000 more in monthly living expenses than a childless couple, cutting borrowing power by $150,000–$250,000 or more.

Borrowing Power by Salary: Approximate Ranges for 2026

The following estimates assume a single applicant with no dependants, no existing debts, no credit cards, and HEM-level living expenses. Actual borrowing power varies by lender, interest rate, and individual circumstances. These figures use an assessed rate of approximately 9.0% (6.0% actual rate plus the 3% APRA buffer) over a 30-year term, which is the standard serviceability test scenario in 2026.

$60,000 annual salary: Approximately $260,000 to $310,000. At a 6.0% interest rate, monthly repayments on the maximum loan would be around $1,560–$1,860. This is a tight budget in most capital cities and suited to entry-level apartments or regional properties.

$80,000 annual salary: Approximately $370,000 to $450,000. This is the range for a typical first home buyer targeting an apartment in Brisbane or Perth, or a unit in outer Melbourne or Adelaide. Moving to a regional area like Ballarat, Toowoomba, or Bunbury stretches this further.

$100,000 annual salary: Approximately $480,000 to $570,000. This opens up established apartments in Sydney’s outer suburbs, townhouses in Brisbane, and single-family homes in Adelaide and Perth. At this income level buyers may start considering properties in the $600,000 range if they have a substantial deposit.

$120,000 annual salary: Approximately $580,000 to $680,000. This range brings medium-density properties in Melbourne’s middle-ring suburbs and houses in Brisbane’s middle ring within reach. In Sydney, this may still be limited to apartments within 20 km of the CBD.

$150,000 annual salary: Approximately $740,000 to $860,000. At this income level, a buyer could target detached houses in Perth, Adelaide, and Hobart, townhouses in Melbourne, and apartments in desirable Sydney suburbs. A 20% deposit on an $860,000 property would require $172,000 in savings.

$200,000 annual salary: Approximately $1,000,000 to $1,180,000. This level of borrowing power opens up much of the Australian property market outside Sydney’s premium suburbs. A detached house in most Brisbane suburbs, townhouses in Melbourne’s inner suburbs, and apartments in Sydney’s lower north shore become achievable.

Combined income of $160,000 (two $80k earners): Approximately $700,000 to $860,000. Joint applications roughly double borrowing capacity but not exactly — the second applicant brings additional HEM living expenses and any debts they hold, so the multiplier is not a simple 2x.

Factors That Reduce Your Borrowing Power

Several factors can dramatically lower the figures above. Here is what hurts most:

Credit cards. As noted, lenders assess the limit, not the balance. A $15,000 credit card limit adds $570/month to your assessed expenses and can reduce borrowing power by $60,000–$80,000. Closing unused credit cards before applying for a home loan is one of the simplest ways to increase your borrowing power.

Existing personal or car loans. A $500/month car loan repayment reduces your net surplus by exactly $500 per month, which translates to roughly $55,000–$70,000 less borrowing capacity. Similarly, a HECS/HELP debt reduces take-home pay by 1%–10% of income depending on your salary bracket, directly lowering the net income lenders can assess.

Dependants. Children increase HEM living expenses substantially. A couple with two children typically sees their HEM benchmark rise by $1,500–$2,000 per month compared to a childless couple with the same income. This alone can reduce borrowing power by $200,000–$280,000. Private school fees and childcare costs, if declared, further reduce capacity.

Buy-now-pay-later accounts. Afterpay, Zip, and similar services are treated as ongoing liabilities. Even small BNPL limits of $1,000–$2,000 are assessed as recurring expenses, and multiple active accounts signal to lenders that you are living close to the edge of your income.

Loan term. Opting for a 25-year term instead of 30 years increases monthly repayments by approximately 10%–12%, reducing borrowing power by a similar margin. For a $500,000 loan at 6.0%, a 30-year term means approximately $2,998/month versus approximately $3,233/month over 25 years.

The Role of LVR and Deposit Size

Your borrowing power calculation does not directly depend on your deposit — but your deposit determines your Loan to Value Ratio (LVR), which affects the interest rate you receive and whether you must pay Lenders Mortgage Insurance (LMI).

With an LVR above 80% (deposit below 20%), most lenders require LMI. A smaller deposit also often means a higher interest rate — lenders typically add 0.1%–0.4% to the rate for high-LVR loans (above 80%), and another 0.1%–0.3% for very high LVR loans (above 90%). These rate premiums feed back into the serviceability calculation at the buffered rate, reducing borrowing power.

The Home Guarantee Scheme, administered by Housing Australia, allows eligible first home buyers to purchase with as little as a 5% deposit without paying LMI, because the government guarantees up to 15% of the loan. This scheme has annual caps (35,000 places in 2025–26, with similar numbers expected for 2026–27) and property price caps that vary by state and region. A successful applicant with a $80,000 salary who enters the scheme could borrow approximately $410,000–$460,000 with a 5% deposit, compared to roughly the same loan size but with $8,000–$12,000 of LMI added if the scheme were not available.

How Much Deposit Do You Actually Need?

Beyond the borrowing power number, you need cash for the deposit plus upfront costs. For a $650,000 property:

• A 20% deposit is $130,000. No LMI applies.
• A 10% deposit is $65,000. LMI on a $585,000 loan at 90% LVR is approximately $10,000–$15,000 depending on the lender (capitalised or paid upfront).
• A 5% deposit is $32,500. LMI on a $617,500 loan at 95% LVR is approximately $22,000–$30,000.

Stamp duty adds another significant upfront cost. On a $650,000 property, stamp duty ranges from approximately $19,000 in Queensland (owner-occupier) to $31,000 in Victoria, and around $25,000 in New South Wales as of the 2026–27 financial year. First home buyers often receive concessions or exemptions; see our first home buyer guide for state-by-state details.

For a comprehensive look at upfront costs and how they affect your buying timeline, read our guide on how much deposit you need to buy a house in Australia 2026. If you are a first home buyer, our first home buyer guide Australia 2026 walks through all the grants and schemes available to you.

Tips to Maximise Your Borrowing Power

Close unused credit cards. A $10,000 credit card limit reduces your borrowing power by roughly $40,000–$55,000. Close every card you do not need before applying.

Pay down personal loans, car loans, and BNPL balances. Eliminating a $500/month car loan repayment can increase your borrowing power by $55,000–$70,000. Even a small Afterpay account with a $2,000 limit can cost you $10,000 in borrowing capacity.

Reduce your credit card limits. If you must keep a credit card, lower its limit to the minimum you actually need. A $3,000 limit assessed at 3.8% adds $114/month, compared to $380/month for a $10,000 limit.

Consider a longer loan term. A 30-year term maximises your borrowing power. You can always make extra repayments to shorten the effective term, but the longer term gives you headline capacity.

Joint application. Combining incomes with a partner is the most powerful way to increase your borrowing capacity. But both applicants’ debts, credit cards, and living expenses count, so it pays to clean up both financial profiles before applying.

Speak with a mortgage broker. Different lenders have different serviceability models, HEM benchmarks, and policies on casual income, overtime, and self-employed income. A broker who understands which lenders are more generous for your specific situation can find you tens of thousands in extra borrowing power.

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Disclaimer

Disclaimer: This article provides general estimates only and does not constitute financial, tax, or legal advice. Rates, thresholds, and rules change. Always refer to the ATO, your state revenue office, or a licensed professional for your specific circumstances. Last updated: July 2026.