OneTaskBy Tim King · Updated
Home Affordability Calculator
How Much House You Can Borrow From Income, Debts and Deposit
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How the Home Affordability Calculator works
A common rule is to keep housing costs to about 28 to 30% of gross income, so 120,000 a year allows roughly 3,000 a month before other debts. This home affordability calculator answers "how much house can I afford?" from your income, other debts, deposit and the interest rate. It sets a monthly housing budget as a share of income, turns that budget into the largest loan it will repay, and adds your deposit to give a price. A stress test shows the price again at a higher rate.
Home affordability calculator formula
The calculator starts from a monthly budget and works back to a loan:
Budget = income ÷ 12 × housing share − other debts − other home costs Loan = the amount that budget repays at the rate over the term Price = loan + deposit
The housing share is the part of gross income you are willing to put towards repayments. 28 to 30% is a common rule of thumb, but you set it. Lenders use their own assessment rules, so treat the answer as a planning figure, not a loan approval.
Worked example: a 120,000 household
A household earning 120,000 a year puts 30% towards housing, which is 3,000 a month. Take off 300 of other debt repayments and the budget is 2,700. At 6% over 30 years that repays a loan of 450,337, so with an 80,000 deposit the price is 530,337. Tested at 9%, the same budget repays less and the price drops to 415,561.
Worked example: 90,000 and a smaller deposit
On 90,000 with no other debts, the budget is 2,250 a month, which repays 375,281 at 6% over 30 years. With a 50,000 deposit the price is 425,281 and the deposit is 11.8% of it. At 9% the price falls to 329,634.
How much house can I afford? A reference table
The largest loan a 30% housing budget repays over 30 years, by income and rate.
| Yearly income | Monthly budget (30%) | Max loan at 5% | Max loan at 6% | Max loan at 7% |
|---|---|---|---|---|
| 50,000 | 1,250 | 232,852 | 208,490 | 187,884 |
| 60,000 | 1,500 | 279,422 | 250,187 | 225,461 |
| 70,000 | 1,750 | 325,993 | 291,885 | 263,038 |
| 80,000 | 2,000 | 372,563 | 333,583 | 300,615 |
| 90,000 | 2,250 | 419,134 | 375,281 | 338,192 |
| 100,000 | 2,500 | 465,704 | 416,979 | 375,769 |
| 110,000 | 2,750 | 512,274 | 458,677 | 413,346 |
| 120,000 | 3,000 | 558,845 | 500,375 | 450,923 |
| 130,000 | 3,250 | 605,415 | 542,073 | 488,500 |
| 140,000 | 3,500 | 651,986 | 583,771 | 526,076 |
| 150,000 | 3,750 | 698,556 | 625,469 | 563,653 |
| 160,000 | 4,000 | 745,126 | 667,166 | 601,230 |
| 170,000 | 4,250 | 791,697 | 708,864 | 638,807 |
| 180,000 | 4,500 | 838,267 | 750,562 | 676,384 |
| 190,000 | 4,750 | 884,838 | 792,260 | 713,961 |
| 200,000 | 5,000 | 931,408 | 833,958 | 751,538 |
| 210,000 | 5,250 | 977,978 | 875,656 | 789,115 |
| 220,000 | 5,500 | 1,024,549 | 917,354 | 826,692 |
| 230,000 | 5,750 | 1,071,119 | 959,052 | 864,269 |
| 240,000 | 6,000 | 1,117,690 | 1,000,750 | 901,845 |
Quick answers
- A 1% rise in the rate cuts borrowing power by roughly 10%.
- 30% of a 100,000 income is 2,500 a month.
- 2,500 a month at 6% over 30 years repays about 417,000.
- Every 100 a month of other debt cuts the loan by about 16,700 at 6% over 30 years.
- A longer term raises the loan, but also the total interest.
- Divide the loan by your income to see how many times your income you are borrowing.
Sources: Moneysmart home loans; Mortgage calculator formula.
Checked against: Repayment from the standard amortisation formula, capped by your income limit
FAQ
How much house can I afford on my salary?
Multiply your monthly gross income by the share you are comfortable spending on housing, take off other debt repayments, and find the loan that payment repays. Add your deposit for the price. The table above shows the loan for a 30% share at three rates.
Why include a stress test?
Rates can rise after you buy. Checking the price at a higher rate shows whether you could still meet repayments, and many lenders assess loans a few percentage points above the actual rate for the same reason.
Does this include stamp duty and other buying costs?
No. Buying costs come out of your savings before the deposit, so subtract them from what you have saved before entering the deposit. The property buying costs calculator adds them up.
See also: all Property tools, Pay, Bills, Debt, Investing, Saving.
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