How Much House Can You Actually Afford?
The amount a bank is willing to lend you and the amount you can comfortably afford are two different numbers. Confusing them is a costly mistake.
When buyers ask "how much can I afford?", they often mean "how much will a lender give me?" Those are not the same question. A bank's maximum is a ceiling based on its risk; your true affordability is about the life you want to live while repaying. This guide explains the difference and how to find your own number.
What the Bank Will Lend vs. What You Can Afford
A lender assesses your borrowing capacity — the largest loan it is prepared to offer. It does this by looking at your income, your existing debts, your expenses, and a buffer for interest rate rises.
But borrowing capacity is a maximum, not a recommendation. Borrowing right up to it can leave you "house poor" — technically a homeowner, but with so little left each month that holidays, savings, and small freedoms disappear. True affordability is the repayment that fits your life comfortably, and it is usually below the bank's ceiling.
The Factors That Decide Affordability
- Your stable income — reliable, ongoing income, not occasional or uncertain amounts.
- Your existing debts — car loans, credit cards, and other repayments all reduce what is left for a mortgage.
- Your real living expenses — an honest look at what your life actually costs, not an optimistic guess.
- Your deposit — a larger deposit means a smaller loan and smaller repayments.
- Interest rates — the rate directly sets the repayment, and rates can rise.
A Common Guideline
One widely used rule of thumb suggests keeping home loan repayments to no more than about 30% of your gross income. Beyond roughly that level, households are sometimes described as being in "mortgage stress," with little room left for everything else.
It is only a guideline, not a law — some people comfortably spend more, others should spend less — but it is a useful sanity check. If a purchase would push repayments well beyond this share, it is worth pausing.
Work out a comfortable price range for your situation.
Try the Plantrino Mortgage CalculatorDo Not Forget the Other Costs
Affordability is not only the monthly repayment. Owning a home carries ongoing costs that renting does not: council rates, building insurance, maintenance and repairs, and possibly strata or body corporate fees. Maintenance alone is often estimated at around 1% of the property's value per year. A repayment that looks affordable in isolation can become a strain once these are added.
Finding Your Own Number
- Start from your real budget, not the bank's maximum. Decide what repayment you could pay every month without strain.
- Subtract the other ownership costs so you are comparing like with like.
- Stress-test against higher rates to be sure the number holds up.
- Leave room for life — savings, emergencies, and the things that make a home worth having.
Frequently Asked Questions
Should I borrow the maximum the bank offers?
Usually not. The bank's maximum is a ceiling based on risk, not a comfortable target. Borrowing below it leaves breathing room for rate rises and life.
What is "mortgage stress"?
It is a term often used when repayments take up a large share of income — commonly cited around 30% or more — leaving little for other needs.
Why include maintenance in affordability?
Because it is a real, recurring cost of ownership. A repayment that ignores rates, insurance, and upkeep understates what the home truly costs each year.
How much house you can afford is not the bank's number — it is yours. Start from a repayment that fits your real life, add the ongoing costs of ownership, stress-test it against higher rates, and keep room for everything that is not the mortgage. A home should support your life, not consume it.