Understanding how much you can borrow is the first step in your Melbourne property journey. With median house prices varying dramatically from suburb to suburb, knowing your borrowing capacity helps you target the right properties and avoid the heartbreak of falling in love with something out of reach.
This guide breaks down borrowing capacity for three common salary levels in Melbourne — with real numbers, current suburb examples, and the factors that influence every lender’s decision.
How Lenders Calculate Your Borrowing Capacity
Australian lenders don’t simply look at your salary. They apply a detailed serviceability assessment that considers:
Gross annual income:your salary before tax, including regular bonuses and overtime
Living expenses:assessed using the Household Expenditure Measure (HEM) as a benchmark
Existing debts:credit card limits, car loans, HECS-HELP, personal loans — all reduce your capacity
Dependants:each dependant typically reduces borrowing capacity by $20,000-$30,000
Interest rate buffer:lenders assess repayments at 3% above the actual loan rate (APRA requirement)
| 💡 Key Point: With current variable rates around 6.0-6.5%, lenders assess your ability to repay at 9.0-9.5%. This buffer is why your borrowing capacity may be lower than you expect. |
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Borrowing Capacity by Salary — Melbourne 2026
The figures below assume: 10% deposit, no existing debts, no dependants, and standard living expenses. Individual results vary significantly based on your specific circumstances.
| Annual Salary | Est. Borrowing Capacity | Melbourne Budget Range | Suitable Suburbs |
|---|---|---|---|
| $80,000 | $420,000 – $480,000 | $460k–$530k (with deposit) | Werribee, Melton, Pakenham, Frankston |
| $100,000 | $520,000 – $600,000 | $580k–$660k (with deposit) | Reservoir, Footscray, Heidelberg, Ringwood |
| $120,000 | $630,000 – $720,000 | $700k–$800k (with deposit) | Brunswick, Preston, Coburg, Box Hill |
| $150,000 | $790,000 – $900,000 | $870k–$1M (with deposit) | Inner north, inner west, bayside units |
| ⚠️ These figures are indicative only. Actual borrowing capacity depends on your complete financial profile. Use our calculator for a personalised estimate. |
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Get a more accurate estimate with our Borrowing Power Calculator.
What Melbourne Suburbs Can You Afford in 2026?
Budget Under $500,000
Melbourne still has opportunities under $500,000 — primarily units and apartments in growth corridors and established outer suburbs.
Melton and Melton South — newer 2-bedroom townhouses and units from $380,000
Werribee and Hoppers Crossing — established 2-bedroom units from $380,000-$440,000
Pakenham and Berwick — outer east units from $400,000-$480,000
Frankston — coastal lifestyle, 2-bedroom units from $420,000-$490,000
Budget $500,000 – $700,000
This range opens up established suburbs with solid infrastructure, transport links and genuine community amenity.
Footscray and Sunshine — inner west value, 2-3 bed apartments from $500,000
Reservoir and Thomastown — north-east growth, houses from $580,000
Ringwood and Mitcham — eastern suburbs, units and townhouses from $560,000
Heidelberg and Bundoora — northern corridor, units from $520,000
Budget $700,000 – $900,000
This budget unlocks established inner and middle-ring suburbs with strong capital growth track records.
Brunswick and Coburg — inner north lifestyle, townhouses from $700,000
Preston and Northcote — cafe strip lifestyle, houses from $750,000
Box Hill and Doncaster — eastern suburbs, houses from $720,000
Williamstown and Altona — bayside lifestyle, townhouses from $750,000
5 Ways to Increase Your Borrowing Capacity
Reduce credit card limits before applying — even unused limits reduce what lenders will lend
Pay down or close personal loans and car finance — each liability reduces your capacity
Avoid Buy Now Pay Later services in the 3 months before applying
Save a larger deposit — moving from 10% to 20% eliminates LMI and reduces the loan size
Apply with a co-borrower — adding a second income significantly increases capacity
Check your monthly repayments at different borrowing levels with our Mortgage Repayments Calculator.
The Role of a Mortgage Broker in Maximising Your Capacity
Different lenders apply different policies when assessing income, debts and expenses. A mortgage broker with access to 40+ lenders can identify which lender will assess your specific profile most favourably — often resulting in significantly higher borrowing capacity than if you approached a single bank directly.
Brokers can also identify add-backs (allowable deductions that increase your assessable income) for self-employed borrowers, and strategies to present your application in the strongest possible light.
Frequently Asked Questions
Yes — lenders include HECS-HELP repayments as a liability when assessing serviceability. A $50,000 HECS debt can reduce borrowing capacity by $40,000-$60,000 depending on the lender. Some lenders treat HECS more generously than others.
Yes — combining incomes with a co-borrower significantly increases borrowing capacity. Two incomes of $80,000 each will typically support far more than double the single-income capacity, as shared living expenses reduce the serviceability impact.
Yes — casual employment is assessed differently to permanent employment. Most lenders require 12 months of casual employment history and will use an average of your income over that period. Some lenders are more accommodating than others.
Lenders update their serviceability calculators when the RBA cash rate changes and when APRA updates its guidance. This means borrowing capacity changes over time — what you could borrow 12 months ago may differ from today.
Online calculators give a useful indicative figure, but the actual amount depends on lender-specific policies. A mortgage broker can give you a more accurate pre-approval figure based on the specific lenders they work with.
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