How much can I borrow for a home loan in Australia? (2026)

What lenders look at

Moneysmart lists the main factors as your income and financial commitments, your deposit and any other savings, and your credit score and credit report². Lenders also check your savings history, your employment and whether a guarantor is involved⁸. APRA's guidance to banks (APG 223) sets out how prudent lenders treat each part of the picture⁵:

• Income. Lenders discount or disregard income that is temporarily high or uncertain. APRA describes discounts of at least 20% on most non-salary income, such as bonuses, overtime, commissions and investment income, as prudent practice⁵.
• Living expenses. APRA expects banks to use the greater of the expenses you declare or a scaled-up benchmark such as the Household Expenditure Measure (HEM)⁵.
• Existing debts. Car loans, personal loans and other home loans are counted, including their interest rate, remaining term and balance⁵.
• Credit cards. APRA's guidance gives the example of assessing credit cards at 3% per month of the total limit, not the balance owing⁵. A card with a high limit can reduce borrowing power even if it is paid off every month.
• Dependants. ASIC's responsible lending guide names the number and kind of dependants as a reason a borrower may have higher essential spending⁷, and expense benchmarks are set by household type, including the number of adults and dependants⁷.
• Credit history. Moneysmart notes that too many applications in a short time can lower your credit score¹¹.

The 3 percentage point serviceability buffer

APRA, which supervises banks, requires them to check that you could still afford repayments if rates rose. Banks must assess loans at an interest rate at least 3 percentage points above the rate you will actually pay⁵. In its most recent statement, on 28 May 2026, APRA said the buffer will remain at 3 percentage points³.

As an illustration using official figures: the Reserve Bank's average rate on new owner-occupier loans funded in July 2026 was 6.2% a year¹⁴. A loan at that rate would be tested at 9.2% or more. The buffer is applied to the full rate, ignoring any discounted introductory or honeymoon rate⁵.

Good to know: Interest rates change constantly. The 6.2% figure is an average from the RBA's statistical table F6 (published 7 September 2026, for July 2026). It is not a rate any lender is offering you.

Debt-to-income (DTI) limits

Since 1 February 2026, APRA has limited banks to 20% of new mortgage lending at a debt-to-income ratio of six times or more⁴. The limit applies separately to owner-occupier and investor lending⁴. It excludes bridging loans for owner-occupiers and loans to buy or build new dwellings⁴.

APRA expected the limit to affect investors more, because they typically borrow at higher DTI ratios⁴. In May 2026 APRA said high-DTI lending remained well below the limits, so they were not restricting overall bank lending³. In practice, borrowing six times your income or more is still possible, but each bank only has room for a share of those loans.

Responsible lending: what the law requires

Lenders and mortgage brokers hold an Australian credit licence and must follow the responsible lending obligations in the National Consumer Credit Protection Act, which ASIC enforces⁶. A licensee must not provide, suggest or help you apply for a loan that is unsuitable for you⁶. That involves⁶:

1. Making reasonable inquiries about your financial situation, requirements and objectives.
2. Taking reasonable steps to verify your financial situation.
3. Assessing whether the loan is "not unsuitable" for you. A broker makes a preliminary assessment and the lender makes the final one.
4. Giving you a written copy of that assessment if you ask for it.

Good to know: This is why lenders ask for payslips, bank statements and details of your spending. Moneysmart says lenders cannot lend if they think you will not be able to make the repayments¹¹.

Deposit, loan-to-value ratio (LVR) and lenders mortgage insurance

Your LVR is the loan as a share of the property's value. Moneysmart's example: borrowing $450,000 to buy a $600,000 home is an LVR of 75%⁸.

Moneysmart describes a 20% deposit, plus buying costs, as a good savings goal, because it avoids lenders mortgage insurance (LMI)². If your LVR is above 80% you may need to pay LMI, a one-off fee that protects the lender, not you or your guarantor⁸¹³. It can be paid at settlement or added to the loan⁸.

Some lenders accept a deposit as small as 5%⁸. Government schemes can lower the deposit further: the 5% Deposit Scheme allows a deposit as low as 5%, the Family Home Guarantee as low as 2%, and both may help you avoid LMI⁹.

Using the Moneysmart mortgage calculator

Moneysmart's free mortgage calculator helps answer "how much can I borrow?" and shows repayments and total cost¹. Its default interest rate reflects the latest Reserve Bank housing lending rate data¹.

Moneysmart is clear about its limits: using it does not guarantee you will be eligible for a loan, it does not take your personal circumstances into account, it leaves out up-front costs, and it does not consider your ability to make the repayments shown¹. It covers principal and interest loans, with a separate calculator for interest-only¹.

Moneysmart suggests checking what your costs would be if interest rates rose²¹². Its pages use different figures for that test (2% on one page, 3% on another), so treat any single figure as a guide only.

Why different lenders give different answers

APRA sets minimums, and each lender builds its own calculator on top. The 3 percentage point buffer is a floor⁵. APRA describes income discounts of "at least" 20%, and gives 3% a month on credit card limits as an example, not a fixed rule⁵. Lenders also scale expense benchmarks to income in their own way⁵, and each one has its own room under the DTI limit⁴.

The result is that the same person can be offered noticeably different amounts. Moneysmart suggests contacting or comparing at least two different lenders²¹². Every home loan comes with a Key Fact Sheet in the same layout, which makes comparison easier¹².

Pre-approval (conditional approval) lasts for 3 to 6 months and gives an indication of how much a lender will lend². Too many applications in a short time can lower your credit score¹¹.

What a mortgage broker does

A mortgage broker must act in your best interests when suggesting a loan¹⁰. Moneysmart says a broker can help you work out what you can afford to borrow, find loan options, explain costs and manage the application through to settlement¹⁰. The broker should present you with more than one option¹⁰.

Brokers are usually paid commission by the lender, as a percentage of the loan with an upfront and ongoing payment, and must tell you about the commissions they may receive¹⁰. If a broker charges you a fee, you must get a written quote and sign it¹⁰. Moneysmart suggests asking which lenders they cannot access¹⁰.

Brokers must hold an Australian credit licence or be a credit representative of a licensee. You can check either on ASIC Professional Registers Search¹⁰. FIZO checks the brokers it lists against those registers and shows a verified badge on each one that matches.