How Much Can I Borrow If I Have Good Income?

Understanding the amount you can borrow to purchase a home depends on several factors. A good income is a great starting point. However, lenders assess an applicant’s current monthly expenses and other debt before rendering a decision. To provide a better idea of your potential borrowing capacity based on income, we provide an example.

In 2020, the median home price in Australia hovered at $550,000. In addition, the average salary hung around $90,000. Lenders lend between two times to five times a homebuyer’s income. Plus, the average interest rate stood at 3%.

A $550,000 mortgage at a 3% interest rate over 30 years delivers a monthly repayment of $2,320. If you earn $90,000 annually, a lender will consider this mortgage for you. You’re netting $7,500 monthly, which is at least two times the monthly repayment amount.

The picture changes a bit when a lender inserts the applicant’s monthly expenses. To remain above the income threshold, expenses should net you a disposable income of at least $4,600. 

A homebuyer can earn $100,000 in gross income and not qualify for favourable home loan terms. If their expenses are too high, they fall into the risk category. In 2021, non-bank lenders like Mortgage House have the freedom to finagle mortgage terms. 

Good Income and Mortgage Borrowing Conclusion

Non-bank lenders like Mortgage House evaluate all home loan applications. A good income helps an applicant’s case. To dig in deeper, our loan specialists factor in expenses too. For more information, try our online mortgage calculator and call our team.