What Salary Do I Need to Afford a 400K House?
In Australia, the average income is between $55,000 and $85,000. If you want to secure a $400,000 home loan to purchase a house, most lenders will require you to make somewhere between $66,000 and $100,000 per year. However, this amount will depend on what factor your lender multiplies your salary by.
How Can I Estimate How Much I Can Afford?
There are a few ways you can estimate your borrowing power before applying for a home loan. The easiest way is to use an online borrowing calculator tool. You will need to have the following information handy:
- How much money you make before taxes
- Your monthly living expenses, including how much you spend on housing, food, transportation, clothes, etc.
- Your current debts and loans
Once you put the information in the correct boxes, the calculator should tell you the absolute maximum you can borrow. It is important to note that this amount can differ depending on how lenders assess the information.
Another way to estimate your borrowing power is by taking 30% of your income, adding in your deposit, and factoring in an average interest rate of 2.75% on a 30-year loan term.
Can I Increase My Borrowing Capacity?
Suppose you can’t quite afford a $400,000 home but want to buy it anyway because it’s your dream home. There are a few ways you can increase your borrowing power. These include:
- Cancelling credit cards you don’t use
- Paying off any existing debts and loans you have
- Saving money for a deposit larger than 20%
- Finding a guarantor
Before you purchase a home, consult with the lending specialists at Mortgage House. We may be able to help you improve your borrowing power, allowing you to purchase the home of your dreams.