Estimated borrowing capacity for a $120K gross annual salary based on Australian lender assessment criteria. Includes scenarios for single applicants, couples, borrowers with dependants, and those with HECS-HELP debt.
Lenders assess your capacity at a stressed rate (currently around 9% — your actual rate plus a 3% APRA buffer). The table below shows estimated maximum borrowing across common household scenarios.
| Scenario | Max Borrowing | Monthly Repayment (6.5%) | Property Budget (20% deposit) |
|---|---|---|---|
| Single, no kids, no HECS | $795,404 | $5,027/mo | $994,255 |
| Single, no kids, with HECS | $745,691 | $4,713/mo | $932,114 |
| Couple (equal income), no kids | $1.8M | $11,312/mo | $2.2M |
| Couple, 2 kids | $1.4M | $8,798/mo | $1.7M |
| Single, 1 kid | $745,691 | $4,713/mo | $932,114 |
Single on $120K: Maximum borrowing of approximately $795,404. With a 20% deposit, this supports a property budget of around $994,255.
APRA requires lenders to assess your ability to repay at a rate at least 3 percentage points above the loan product rate. With current variable rates around 6.0–6.5%, the assessment rate sits at approximately 9.0–9.5%. This buffer exists to protect you (and the lender) from future rate increases. It is the single biggest factor limiting borrowing capacity in 2026.
| Deposit | LVR | Max Property (Single) | Max Property (Couple) |
|---|---|---|---|
| 20% | 80% | $994,255 | $2.2M |
| 10% | 90% | $883,782 | $2.0M |
| 5% | 95% | $837,267 | $1.9M |
Note: A 5% deposit requires LMI (unless covered by the First Home Guarantee) and may not be offered by all lenders. The 20% deposit figures assume no LMI and represent the most straightforward lending scenario.
HECS-HELP (now called HELP) debt reduces your borrowing capacity because lenders include the compulsory repayment in their assessment. At a $120K salary, the compulsory HECS repayment rate is approximately 4% of your income, which is $4,800 per year or $400/month. This reduces maximum borrowing by approximately $49,713 compared to a borrower without HECS.
If you can afford to pay off your HECS debt before applying for a mortgage, the improved borrowing capacity may be worth more than the debt amount. Run the numbers for your specific situation.
At a $120K salary with a 20% deposit, here is how your borrowing capacity compares to median house prices in each capital city:
| City | Median House | Your Budget (Single) | Affordable? |
|---|---|---|---|
| Sydney | $1.2M | $994,255 | No (consider units) |
| Melbourne | $890,000 | $994,255 | Yes |
| Brisbane | $810,000 | $994,255 | Yes |
| Perth | $680,000 | $994,255 | Yes |
| Adelaide | $700,000 | $994,255 | Yes |
| Hobart | $590,000 | $994,255 | Yes |
| Canberra | $870,000 | $994,255 | Yes |
| Darwin | $510,000 | $994,255 | Yes |
Or use our borrowing capacity calculator to model your exact situation with custom inputs.