How to work out how much you could borrow as a first home buyer

Two numbers matter when you are saving for a first home, and they are not the same number. The first is what a lender may be willing to lend you. The second is what you can repay comfortably while still living the life you want — travel, kids, a career change, a car that eventually dies. Borrowing calculators almost always answer the first question. This guide is about reading the answer properly, understanding which inputs produced it, and stress-testing it before you treat it as a budget.

It will not give you a figure. Any figure produced without your full income, debts, expenses and household situation is a guess, and a guess is not a plan.

What a borrowing estimate is actually measuring

A borrowing estimate is a serviceability calculation. It takes your income, subtracts your committed outgoings and an assessment of your living costs, and works out whether the remainder covers a mortgage repayment at a given interest rate and loan term. Whatever loan size produces a repayment you can "cover" is your estimated borrowing capacity.

That is a lender's risk question, not your affordability question. The calculator's output tells you the point at which a lender's model stops being comfortable — not the point at which your life stops being comfortable. Keep that gap in mind, because every sanity check below exists to close it.

The inputs that move the number most

Borrowing capacity is surprisingly sensitive. A change in one input can shift the result by tens of thousands of dollars, which is why two calculators that look similar can disagree.

Input	Why it moves the result	What to check
Income type	Base salary, overtime, commissions, casual or contract income and self-employed income are often treated differently	Whether the estimate uses your guaranteed income or a blended average
Existing debts	Card limits, personal loans, car finance and study debts reduce the income available for repayments	Whether card limits or card balances were entered — lenders differ
Living expenses	Some lenders use your declared spending, others use a benchmark for a household like yours	Which method was used, and whether your real spending is higher
Dependants	Children and other dependants reduce assessed surplus	Whether your actual household was entered
Deposit and costs	Stamp duty, conveyancing and other purchase costs reduce what is left for the loan	Whether costs were deducted from your deposit
Interest rate and term	Longer terms lower the repayment and raise the borrowing figure; rates move the repayment directly	Which rate and which term were assumed
Number of applicants	Two incomes and two sets of debts change the calculation entirely	Whether joint income was included correctly

Note the pattern: most of these are inputs you supply. If the input is optimistic, the estimate is optimistic.

How to sanity-check the estimate

Run three separate checks. They answer different questions, and none of them replaces the others.

1. The repayment check

Take the loan size the calculator suggested and price it as a repayment. The MoneySmart mortgage calculator lets you work out repayments for a given loan amount, rate and term, and it can also model repayments before and after an interest-only period. MoneySmart's own guidance makes the point that small differences in your mortgage interest rate can make a big difference to the long-term cost of a home loan — which is the practical reason not to treat a rate assumption as a rounding detail.

Useful exercise: run the repayment at the rate you expect, then run it again at a higher rate. If the higher repayment is one you could not absorb, your borrowing limit is lower than the calculator's. That is not a failure; it is the number you should actually shop with.

2. The deposit and price cap check

Government schemes can change the deposit maths, and they come with their own ceilings. Help to Buy has a Maximum Purchase Price Calculator on firsthomebuyers.gov.au that estimates the price of a home you may be able to buy through the scheme, based on your deposit, an estimated loan from a Participating Lender, the maximum Commonwealth Government contribution, and the applicable State or Territory price caps.

Two instructions on that calculator are worth copying into your own planning. First, you enter your deposit after deducting stamp duty and any other purchasing costs you need to cover — money spent on costs is not deposit. Second, property price caps apply by State or Territory, and they differ between them; the calculator and the Help to Buy property price cap page are the places to confirm the cap that applies where you are buying, including Western Australia, South Australia and the Australian Capital Territory.

If a scheme's price cap sits below the price of the homes you are inspecting, your borrowing estimate is not the binding constraint — the cap is. Establish that early, before you spend weekends at open homes.

3. The buffer check

Ask what happens to your repayment if your circumstances change: one income instead of two, a rate rise, a child, a move to part-time work or study. A borrowing estimate that only works when everything goes right is not a borrowing limit, it is a bet. Write down a repayment figure you could still pay in a bad year and use that to set your own ceiling, even if a lender would approve more.

Where government schemes fit

Two Australian Government programs are commonly relevant to first home buyers, and both are described on the official First Home Buyers site: the Australian Government 5% Deposit Scheme and the Australian Government Help to Buy Scheme. Help to Buy material on the site is authorised by the Australian Government, Canberra.

They work differently, and that difference matters more than the headline. One affects how much deposit you need to avoid certain costs; the other involves the government contributing to the purchase alongside you, within price caps and lender participation rules. Because eligibility, contribution levels and caps are set by government and change over time, treat the official site as the source of truth rather than a summary you read once. Confirm three things before you rely on either: whether you meet the eligibility criteria, whether your lender participates, and whether the property price cap covers the homes you are targeting.

Questions to take to a lender

Once you have your own number, take these with you. The answers are where the estimate becomes real.

• Which income did you assess — and did you treat overtime, bonus or casual income at full value?
• Did you use credit card limits or balances?
• Did you use my actual expenses or a household benchmark?
• What interest rate and loan term does this estimate assume?
• Is this the rate I would pay, or a higher assessment rate?
• Do stamp duty and other purchase costs reduce my usable deposit in your calculation?
• Would the figure change if I applied jointly?
• Does this estimate assume any government scheme or guarantee — and what happens if I am not eligible?

Your next step

Do this in order. Write down your deposit after stamp duty and purchase costs — that is the figure the official Help to Buy calculator asks you for, and it is the figure that survives contact with reality. Run the MoneySmart mortgage calculator on a loan you think you need and read the repayment, not the loan amount. Then add a buffer and decide your own ceiling.

Once you have that ceiling, the useful comparison is not "who lends the most" but "which loan structure and rate suit a repayment you have already decided you can live with". You can browse current home loan options on /money/home-loans/, or use /match/ if you would rather start from your situation and see what fits it.

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This article is general information only. It is not personalised legal, tax, credit or financial advice, and it does not predict or promise loan approval, savings or any other outcome. Borrowing capacity, interest rates, fees, eligibility criteria, scheme rules and property price caps change and vary between lenders, states and territories. Confirm current details with the lender and with the relevant government program before you act, and consider speaking to a licensed professional about your own circumstances.