How much can you actually borrow, and at what cost

The ceiling is not your salary

The first instinct most buyers have is to run an income-multiple in their head. Something like "I earn A$140k, I can probably borrow eight times that, so A$1.1m." That number is rarely right. The actual ceiling on what an Australian buyer can borrow is a chain of five constraints, each of which can be the binding one depending on the buyer's situation.

This chapter walks through each constraint in the order it bites, with a calculator embedded against each one. By the end of the chapter the buyer has a single number: the maximum purchase price the buying-power constraints allow. That number caps every later chapter. Steps 1 through 5 are bounded by this number. Without it, the buyer ends up shortlisting suburbs the financing won't actually clear.

Constraint 1, APRA serviceability buffer

APRA (the Australian Prudential Regulation Authority) sets a serviceability buffer that lenders must apply when assessing how much a borrower can repay. As of late 2026 the buffer is 3.0 percentage points above the actual loan rate, applied against gross income net of existing commitments and a stress-tested cost-of-living estimate (the Household Expenditure Measure, or HEM).

What this means in dollar terms. A buyer borrowing at a 6.5% variable rate is assessed by the lender as if the rate were 9.5%. Run the assessment at the higher rate and the borrower's serviceability ceiling is roughly 18-22% lower than at the actual rate. On a A$140k income with one car loan and standard expenses, that's a swing from about A$1.05m borrowing capacity to A$830k.

The buffer was raised from 2.5% to 3.0% in 2021 and has not moved since. Treat it as the most binding constraint for any buyer borrowing more than 70% of the purchase price.

Constraint 2, Deposit, LMI, and the 80% / 90% / 95% LVR thresholds

The deposit cap is more nuanced than "you need 20%." Three thresholds matter:

• 80% LVR (20% deposit + costs). No Lenders Mortgage Insurance. The lender's risk premium is zero. Most competitive interest rates available here.
• 80-90% LVR (10-20% deposit + costs). LMI applies. Premiums range from roughly 0.5% to 2.5% of the loan amount, capitalised onto the loan. On a A$1.0m purchase with 15% deposit, LMI is around A$10-20k.
• 90-95% LVR (5-10% deposit + costs). LMI premiums escalate to 3-4% of the loan amount. Some lenders won't go above 90% LVR for investment loans at all, only for owner-occupier.

The "+ costs" matters. Stamp duty, legal fees, building-and-pest, lender fees, and adjustment for council rates all run roughly 4-7% on top of the purchase price. A buyer with A$200k in cash buying at A$1m is at 84% LVR after costs, not 80%. The buying-power calculator linked from this chapter handles the costs correctly; running the LVR off purchase price alone is a common error.

Constraint 3, Lender concentration limits

Once a buyer holds two or more properties with the same lender, the lender starts treating the portfolio as a concentration risk. Common patterns:

• Maximum 4-6 properties per lender before the lender either declines or applies sharply higher rates.
• Cross-collateralisation traps. Properties sit as combined security for combined debt. Selling one requires the lender's release. Avoidable by structuring each property's loan against only that property's security.
• Investor-loan mix limits. APRA caps the proportion of investor loans a lender can write versus owner-occupier; some lenders periodically pause investor lending entirely.

A buyer building toward more than one property should plan the lender split before the first purchase. Re-financing into a second lender for property #2 is straightforward. Restructuring after cross-collateralisation has happened is painful and sometimes locks in a sub-optimal structure for years.

Constraint 4, Stamp duty (the silent six-figure tax)

Stamp duty is the largest single transaction cost the buyer pays. The amount varies dramatically by state and by buyer category. Run the per-state calculator linked below for the buyer's exact situation. Indicative numbers on a A$1.2m purchase as of 2026:

Three observations the buyer should bake into the goal-setting from Chapter 1:

1. The A$15-20k differential between states can swing the entire investment thesis. NSW vs QLD on a A$1.2m purchase is roughly A$15,000. 2. Foreign buyer surcharges push the marginal stamp duty rate to 12-15% in some states. A non-resident buyer needs to bake that into the buying-power calculation; the buying-power calculator linked below handles foreign-buyer scenarios. 3. First-home-buyer concessions are state-specific and threshold-bound. NSW removed the threshold cap above A$1m; VIC's concession tapers; QLD's exemption has a hard cap at A$800k. Always check the current state-revenue-office page; rules change yearly.

Constraint 5, The four government schemes

Four schemes can change the maths materially for owner-occupier first-home buyers. They don't help investors.

First Home Super Saver Scheme (FHSS)

Buyers can withdraw up to A$50,000 of voluntary super contributions (plus deemed earnings) for a first-home deposit. The withdrawn amount is taxed at the buyer's marginal rate minus 30 percentage points, typically a 10-17% effective tax rate. That's sharply better than holding the deposit in a high-interest savings account.

FHSS is not a deposit booster. It's a tax-efficient way to save. The contributions still come out of the buyer's after-tax income; the benefit is the lower marginal tax rate on the withdrawal compared to direct saving.

Home Guarantee Scheme (Home Guarantee, Family Home Guarantee, Regional First Home Buyer Guarantee)

Three sub-schemes, each with a separate cap and eligibility ladder:

• Home Guarantee. First home buyers borrow 95% of purchase price with the government guaranteeing the LMI portion. No LMI premium. Income caps + place caps + regional price caps apply.
• Family Home Guarantee. Single parents borrow up to 98% of purchase price with no LMI. Tighter eligibility.
• Regional First Home Buyer Guarantee. Regional-only variant of the Home Guarantee.

Schemes are administered by the National Housing Finance and Investment Corporation. The annual place cap fills early in the financial year. Buyers planning to use the scheme should be ready to lodge once new-year places open in July.

Stamp duty concessions (state-specific)

Already covered in Constraint 4. Each state runs its own concession. NSW's First Home Buyer Assistance Scheme (FHBAS) is the most generous on the threshold side; VIC's concession tapers more aggressively above A$600k.

State-level grants

Most states still run a First Home Owner Grant of A$10-15k for new builds (not established homes). The grant is paid at settlement. Treat it as a minor adjustment to the deposit, not a planning tool.

Putting it together: the buying-power calculation

The buying-power calculator embedded in this chapter takes inputs across all five constraints (income, expenses, deposit, target LVR, foreign-buyer status, scheme eligibility) and produces three numbers:

• Maximum purchase price the lender will approve (constrained by APRA buffer + LMI threshold + concentration limits).
• Maximum monthly cashflow drag at the stress-tested rate (1.5 percentage points above current rate).
• All-in transaction cost (stamp duty + LMI + legal + lender fees + adjustments).

The buyer copies these three numbers into the goal-setting brief from Chapter 1. Steps 1-5 only show suburbs and properties that fit inside these caps. This eliminates the most common waste of effort in property research: falling in love with a price bracket the financing won't clear.

Common mistakes at the financing step

• Anchoring on the actual rate, not the stress-tested rate. Running buying-power off the 6.5% rate produces a fantasy number; lenders assess at 9.5%.
• Forgetting the +5% costs. Deposit alone doesn't cover the purchase. A buyer with A$200k thinks they can buy at A$1m; after costs they're at 84% LVR, paying LMI, and possibly above their lender's investor cap.
• Confusing FHSS with a grant. FHSS reduces the tax on the buyer's own savings; it doesn't add money the buyer didn't earn.
• Missing the foreign-buyer surcharge. A non-resident buyer in NSW pays an extra 9% surcharge duty on top of standard stamp duty. Always verify residency status before running the calculator.
• Not planning the lender split. Buying property #1 + #2 with the same lender locks the buyer into that lender's policies for the next property. Plan the split before the first purchase.

Now do this on your scenario: run two calculators

Run the buying-power calculator first to find the price ceiling. Then run the per-state stamp-duty calculator for your target state to see the all-in cost. Save both outputs into the buyer profile from Chapter 1. Steps 1-5 will inherit the cap automatically.