Determining what you can afford when buying your first home is one of the most crucial steps in the process. To get an accurate idea of your budget, start by assessing your financial situation, including your income, expenses, savings and any existing debts. Lenders typically use a debt-to-income ratio to assess how much you can afford to borrow, which takes into account your monthly income and existing financial commitments. 

A general rule of thumb is that your total monthly mortgage repayments should not exceed 30-40% of your gross monthly income, but this can vary depending on the lender and your circumstances. It’s also important to factor in additional costs beyond the mortgage, such as stamp duty, home insurance, ongoing maintenance, Strata fees and utilities. A table with rough figures is listed below*.

Monthly gross income Repayment per month Possible loan amount
$8,500 $2,975 $575,000
$9,000 $3,150 $610,000
$9,500 $3,325 $640,000
$10,000 $3,500 $680,000
$10,500 $3,675 $710,000
$11,000 $3,850 $750,000
  • The table is based on 35% of gross monthly income, assuming no other debts and no dependents

To work out repayments, we created a dedicated page. See here. This page allows you to test different interest rates, timeframes and loan amounts and shows what the monthly principal and interest payment is in each scenario.