Enter your household’s income before tax, what you already pay each month on other debts, and your deposit. Lenders cap how much of your income can go on housing and on all debts combined; the lower of those two limits sets the most you can borrow.
| Limit | Monthly budget | Loan it allows |
|---|
Lenders commonly use two debt-to-income ratios on gross monthly income:
Front-end (housing) ratio: mortgage repayment + rates/property tax + insurance ≤ 28% of income.
Back-end (total debt) ratio: housing costs + all other debt repayments ≤ 36% of income.
The smaller of the two budgets, minus property costs, is what’s left for the mortgage repayment. That repayment is turned into a loan amount with the standard amortisation formula, loan = payment × (1 − (1 + r)−n) ÷ r, where r is the monthly interest rate and n the number of monthly repayments. Add your deposit to get the price.
Example: on 120,000 a year (10,000 a month), 28% is 2,800 and 36% is 3,600 − 400 of other debts = 3,200, so the 2,800 housing limit applies. Take off 450 for rates and insurance and 2,350 a month is left, which at 5.5% over 30 years supports a loan of about 414,000. With a 100,000 deposit that’s a home of about 514,000.
Some countries also cap total borrowing as a multiple of income. New Zealand banks, for example, have been limited since July 2024 in how much they lend to owner-occupiers above six times their gross income (check the current rules, as they can change). Enter a multiple to apply that as a third limit.
A common rule is that housing costs shouldn’t exceed 28% of your gross income and all debts 36%. As a rough guide, with a 5–6% interest rate that usually works out to a loan of about 3.5–4 times your gross income, plus your deposit.
Your monthly debt repayments divided by your gross monthly income. Lenders use it to judge whether you can handle a new loan. The “back-end” ratio includes the new mortgage plus car loans, credit cards and student loans.
Yes, if you’re buying together and both on the loan: enter your combined household income and both people’s debts.
The same monthly budget pays for less loan when more of each payment goes to interest. At 7% instead of 5.5%, a 2,350 monthly repayment supports about 353,000 instead of 414,000 over 30 years.
One-off costs like legal fees, inspections, moving and any stamp duty or transfer taxes, plus ongoing maintenance and body-corporate or HOA fees. Keep some savings aside for them on top of your deposit.
