“On a $120,000 salary, most borrowers can access between $550,000 and $700,000. The exact amount depends on debts, commitments, and specific lender models.”
Borrowing capacity on a $120,000 salary is not a single number. It varies by lender, by your debt profile, by whether you’re applying solo or with a partner, and by how the lender treats any existing financial commitments.
The serviceability calculation
Lenders assess your ability to service the loan not at the current rate, but at your assessed rate plus APRA’s 3% serviceability buffer. At a current variable rate of approximately 6.4%, the assessment rate used is around 9.4%. On a $120,000 gross salary with no dependants and no existing debt, that typically supports a loan of approximately $600,000–$680,000 depending on the lender.
What reduces the number
Each $10,000 credit card limit reduces borrowing capacity by approximately $25,000–$35,000 regardless of whether you carry a balance. Car loans, personal loans, HECS-HELP debt, and rental commitments all reduce assessed income or increase assessed expenses. Dependants reduce net disposable income estimates, further affecting the calculation.
What improves the number
Closing unused credit cards before applying is one of the most consistently effective steps a borrower can take. Each $5,000 reduction in credit limits typically adds $10,000–$15,000 to borrowing capacity. A clean PAYG employment history — two or more years with the same employer — also supports the maximum across most lenders.
The lender variation
Different lenders apply different living expense benchmarks and income shading. On a $120,000 salary, the difference in maximum borrowing capacity between the most conservative and most generous lenders on the panel can be $80,000–$120,000 — a material difference for a first home buyer targeting a specific price point.
→ You may wish to speak with a licensed mortgage broker to assess your personal circumstances. This is general information only. Individual circumstances vary and scheme details change regularly. Verify current eligibility, caps, and terms with official sources before making decisions. Speak with a licensed mortgage broker for advice tailored to your situation. All loans are subject to lender approval.
Sources: APRA, Letter to ADIs — Mortgage Serviceability, October 2021 (apra.gov.au); JMD Mortgages, Serviceability Buffer Explained, March 2026; ASIC MoneySmart, Borrowing Power Calculator.
