20 Oct 2021

How Much Income is Needed for a 300K Mortgage?

Mortgage

To afford a $300,000 mortgage, you need to make between $50,000 and $75,000 a year. The average Australian earns somewhere between $55,000 and $85,000 a year, which means a 300K mortgage is affordable for most Australians. While you may think you should be able to afford a larger mortgage with a $50,000 a year income, most experts recommend you only spend 30% of your disposable income on your mortgage repayments to avoid financial stress. 

How Does My $50,000 a Year Salary Translate to a $300,000 Mortgage?

As mentioned above, you may think you should be able to afford a more expensive home with a $50,000 salary. However, most brokers and lending specialists will discourage you from purchasing a more expensive home with this income because:

  • You only want to spend 30% of your disposable income on your mortgage or housing costs, allowing you to save for emergencies, increase your savings, and to make it easier for you to afford your living expenses if your circumstances change. 
  • If you make $50,000 a year, you only make $4,100 a month. 
  • Using 30% of this $4,100 a month for mortgage repayments amounts to about $1,200 a month in mortgage repayments. 
  • If you factor in an average interest rate of 2.75% over an average loan term of 30 years, your loan amount is at $305,000. 
  • However, this doesn’t take into account your deposit, which could add an extra 10-20%, or any debts you could lower how much you can borrow. 

If you want to purchase a $300,000 home, consult with the brokers at Mortgage House. We can not only help you improve your borrowing power, but we can also help you find the ideal home loan for your current financial situation.

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