Savings .com.au

How much money can I borrow?

When taking out a home loan, everyone’s existing and future financial situations are going to be somewhat unique – so let’s first take a look at what the lending industry thinks before investigating the additional factors that are likely to be applicable to you as an individual.

The lending industry indirectly recommends that people not borrow more than 80% of the property value through the general application of policies which enforce that borrowers pay for Lenders Mortgage Insurance (LMI) in order to be approved for a loan worth more than that.

Effectively, they are saying that buyers should have at least a 20% property deposit saved. A 20% deposit on a $450,000 house is $90,000!

Essentially, lenders are protecting themselves from a situation where:

  • a borrower ‘defaults’ on the mortgage (unable to pay or ‘service’ the loan), forcing the bank to repossess the property AND
  • the value of the property has fallen to be worth less than what’s owed on the mortgage

In this situation, the lender might not be able to fully recover what’s owed to it by selling the repossessed property – resulting in a loss for the lender.

Can’t afford a 20% deposit?

You may still be able to be approved for a home loan with a deposit of under 20% of the property’s value. For many lenders, the minimum required deposit is often 5%.

But there are two things you should consider when applying for a home loan with a deposit under 20%:  

  1. Lender’s mortgage insurance: Typically, borrowers that don’t have a deposit of at least 20% are required to pay for LMI, which can add tens of thousands to the cost of the mortgage, depending on the lender and what loan-to-value ratio (LVR) percentage you have.  
  2. Guarantors: If you can get one of your family members to act as a guarantor, you may be approved for the mortgage without having to pay LMI. To be successful, the family member must be able to demonstrate either their own capacity to repay your loan and be willing to be liable for your home loan if you default on a payment or to put their own property equity forward as collateral.

How much should you borrow for a mortgage?

No matter which path you take with your deposit and securing a loan approval, it’s essential to calculate your personal finances to give you a better idea of just how much you should (not ‘could’) borrow. Here are five things to consider before taking out a mortgage.

1. Household income

When assessing your finances, ask yourself what kind of lifestyle you want. Are you single? Married? Have a baby on the way? Do you like designer shoes or do you eat out regularly? Ask yourself if you’re willing to make sacrifices and if so, where are you going to reduce your spending? Your household income is one of the first things a lender will look at when determining if you’re eligible for a home loan. If you can show a record or budget of your spending habits per week, this can help prove you’ll be able to meet the repayments required.

2. Credit rating

A credit rating, or credit score, is the next thing a lender will look at to determine how much a risk you are as a borrower. Many people don’t ever check their credit rating and are surprised when their application gets refused. It’s a good habit to check your credit rating once a year to make sure you’re either on the right track or working towards improvement.

3. Property price and value

The next thing a lender will assess is the type of property you’re interested in and what purpose you’re buying the property for. Is it an investment property or are you looking to live in the home as an owner-occupier?

Another important thing to consider is the value or potential future value of the property you’re purchasing. Are you buying a house, apartment or land?

These questions will all have an impact on your borrowing power.

4. Home insurance

Home insurance is designed to protect your property from damage caused by events out of your control. As your home is your biggest investment, it’s important you ensure you’re able to afford home insurance before applying for a home loan.

5. Other costs

Similar to home insurance, there are a number of costs (both upfront and ongoing) associated with buying and owning a property. A few of these include stamp duty, LMI (if applicable), home loan establishment fees, legal and inspection costs, council rates, water utility rates and general property maintenance.

Buying a home is a big decision and should not be taken lightly. Assessing your borrowing capacity is just one of the ways to determine how much you can borrow for a home loan, but working out how much you should borrow will always be a personal decision based on a raft of other individual factors including how much risk you can tolerate and how much you are willing to sacrifice to ensure that you can make the most of your valuable property purchase.


Looking for a home loan?

Buying a home or looking to refinance? The table below features home loans
with some of the lowest interest rates on the market for owner occupiers.

Rates
Features
Fees
Other
Lender
Variable
Go to site
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure

loans.com.au – Variable Home Loan P&I <90%

  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Go to site
Disclosure
Variable
Go to site
Built and funded by CommBank
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Disclosure
Built and funded by CommBank

Unloan – Variable Rate Home Loan LVR < 80%

  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Go to site
Disclosure
Variable
Go to site
100% offset
  • Easy application. Fast approval. 100% offset.
  • Unlimited additional repayments free of charge.
  • Redraw available - Access additional payments.
Disclosure
100% offset

Ubank (part of NAB) – Flex variable home loan - 100% offset

  • Easy application. Fast approval. 100% offset.
  • Unlimited additional repayments free of charge.
  • Redraw available - Access additional payments.
Go to site
Disclosure
Variable
Go to site
  • No application, ongoing monthly or annual fees.
  • Available for refinance or purchases. Quick and easy online application process.
  • Dedicated loan specialist throughout the loan application.
  • Discounted interest rate for 5 years for homes with an eligible solar system
Disclosure

loans.com.au – Solar Home Loan P&I <90%

  • No application, ongoing monthly or annual fees.
  • Available for refinance or purchases. Quick and easy online application process.
  • Dedicated loan specialist throughout the loan application.
  • Discounted interest rate for 5 years for homes with an eligible solar system
Go to site
Disclosure
Variable
Go to site
  • Check your eligibility in as little as one minute
  • Apply online in as little as 15 minutes
  • Dedicated home loan experts are available to help
Disclosure

Macquarie Bank – Offset Home Loan (Owner Occupier, Principal and Interest, max LVR 60%)

  • Check your eligibility in as little as one minute
  • Apply online in as little as 15 minutes
  • Dedicated home loan experts are available to help
Go to site
Disclosure
Variable
Go to site
Disclosure

Ubank (part of NAB) – Neat home loan - max. 80% LVR (Owner occupied, Principal and interest)

    Go to site
    Disclosure
    Variable
    Go to site
    Disclosure

    Macquarie Bank – Basic Home Loan (Owner Occupier, Principal and Interest, max LVR 80%)

      Go to site
      Disclosure
      Variable
      More details

      Greater Bank – Ultimate Discount Home Loan Package

        More details
        Variable
        More details

        AMP – Essential Home Loan (Owner Occupied, Principal and Interest, $750,000+, <= LVR 90%)

          More details
          Variable
          Enquire now
          Disclosure

          ANZ – Simplicity PLUS Home Loan (Principal and Interest) (LVR < 70%) (New Customer) Special offer

            Enquire now
            Disclosure
            Variable
            More details

            BCU Bank – OMG! Home Loan - LVR of >80% and <=95%

              More details
              Variable
              More details

              Bank of Queensland – Owner Occupied Economy Discount Rate (max 90% LVR)

                More details
                VariableN/A
                More details

                Regional Australia Bank – Home Loan without Offset - OO,PI LVR 90% or less

                  More details
                  Variable
                  More details

                  IMB Bank – Budget Home Loan (Principal and Interest) (LVR 90%-95%)

                    More details
                    VariableN/A
                    Enquire now
                    Disclosure

                    Commonwealth Bank – Extra Home Loan (Principal and Interest) (LVR 60%-70%)

                      Enquire now
                      Disclosure
                      VariableN/AN/A
                      Enquire now
                      Disclosure

                      Westpac – Flexi First Option Home Loan (Promo) - Principal & Interest (LVR 70-80%)

                        Enquire now
                        Disclosure
                        Variable
                        Enquire now
                        Disclosure

                        NAB – Tailored Home Loan Variable Rate - Principal and Interest LVR 60% or less

                          Enquire now
                          Disclosure
                          Variable
                          Go to site
                          • Available for purchase or refinance, min 10% deposit needed to qualify.
                          • No application, ongoing monthly or annual fees.
                          • Quick and easy online application process.
                          Disclosure

                          loans.com.au – Variable Home Loan with Offset P&I <90%

                          • Available for purchase or refinance, min 10% deposit needed to qualify.
                          • No application, ongoing monthly or annual fees.
                          • Quick and easy online application process.
                          Go to site
                          Disclosure
                          VariableN/A
                          More details

                          P&N Bank – Basic Variable Home Loan >90% and =<95%

                            More details
                            Variable
                            More details

                            Great Southern Bank – Basic Variable - Owner Occupier Principal & Interest (LVR is above 80% and less than or equal to 90%)

                              More details
                              • Available for purchase or refinance, min 10% deposit needed to qualify.
                              • No application, ongoing monthly or annual fees.
                              • Quick and easy online application process.

                              Go to site
                              Important Information and Comparison Rate Warning

                              Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 15, 2025. View disclaimer.

                              Important Information and Comparison Rate Warning