I've helped dozens of first-home buyers navigate the Australian property market, and the one question that always comes up is: how much income do I actually need to buy a $650,000 house? The short answer is, it depends on your deposit, interest rates, and where you're buying. But let me walk you through the real numbers, not just the generic advice you see on every website.
How Lenders Calculate Your Borrowing Power
Australian banks follow a strict serviceability assessment. They don't just look at your salary; they stress-test your ability to repay at a rate much higher than the current one. Right now (2025), most lenders apply a buffer of 3% above the actual rate. So if the advertised rate is 6%, they'll test you at 9%.
Key Rule of Thumb: Most borrowers can get a loan of about 4.5 to 5.5 times their gross annual income. For a $650,000 property, assuming a 20% deposit ($130,000), you need a loan of $520,000. That implies a gross income of around $95,000 to $115,000.
But keep in mind, this multiplier shrinks if you have other debts (car loans, credit cards, HECS). I once had a client earning $120k who could only borrow $480k because of a $30k car loan. Lenders are brutal with existing liabilities.
Down Payment and LVR Requirements
Your deposit (down payment) directly affects the income needed. Here's a quick table showing the deposit required and the loan amount at different LVRs for a $650,000 house:
| Deposit % | Deposit Amount | Loan Amount | LVR |
|---|---|---|---|
| 5% | $32,500 | $617,500 | 95% |
| 10% | $65,000 | $585,000 | 90% |
| 20% | $130,000 | $520,000 | 80% |
| 30% | $195,000 | $455,000 | 70% |
With a 5% deposit, you'll also need Lenders Mortgage Insurance (LMI), which adds thousands to upfront costs. I personally advise clients to aim for at least a 10% deposit—it opens up better rates and lower required income. With a 20% deposit, you escape LMI entirely, and your required income drops significantly.
Stamp Duty and Other Upfront Costs
Here's where most calculators mislead you. They forget stamp duty. In Australia, stamp duty varies by state. For a $650,000 property, here's what you'd pay (as of mid-2025, without first-home buyer concessions):
| State | Stamp Duty (approx) |
|---|---|
| New South Wales | $24,000 - $27,000 |
| Victoria | $26,000 - $30,000 |
| Queensland | $18,000 - $21,000 |
| Western Australia | $18,500 - $21,500 |
| South Australia | $21,000 - $24,000 |
| Tasmania | $20,000 - $23,000 |
| ACT | $20,500 - $23,500 |
| Northern Territory | $23,000 - $26,000 |
On top of stamp duty, budget for conveyancing ($1,000–$2,500), building and pest inspection ($600–$1,200), and loan application fees ($0–$1,000). That's easily another $5,000–$10,000. So your total upfront cash needed for a $650k house with 20% deposit is: $130,000 + stamp duty (~$25k) + costs (~$7k) = ~$162,000.
I've seen buyers get caught short by $20k because they forgot to include these. Always build a buffer.
Income Scenarios for Different Australian Cities
A $650k house means very different things in Sydney vs. Adelaide. Let's look at what that price gets you and the income needed:
| City | Typical Property (at $650k) | Estimated Income Needed (10% deposit, 6% rate) |
|---|---|---|
| Sydney | 1-bed apartment in outer suburbs | $145,000+ |
| Melbourne | 2-bed apartment in middle ring | $130,000+ |
| Brisbane | 3-bed house 20km from CBD | $115,000+ |
| Perth | 3-4 bed house 15km from CBD | $105,000+ |
| Adelaide | 3-bed house 10km from CBD | $95,000+ |
These numbers assume you have no other debts. If you have a HECS debt of $30k, add about $10k to the required income. Lenders factor in HECS repayments once you earn above the threshold.
Impact of Interest Rates on Required Income
Interest rates are the biggest variable. At 6% vs 7%, the difference in monthly repayments on a $520k loan is about $300/month. That might not sound huge, but lenders use that 3% buffer. So a 1% hike in the actual rate can require $10k–$15k more in annual income.
Let me show you a realistic scenario:
| Interest Rate | Monthly Repayment (P&I, 30yr) | Annual Income Needed (20% deposit, no other debts) |
|---|---|---|
| 5.5% | $2,953 | $106,000 |
| 6.0% | $3,118 | $112,000 |
| 6.5% | $3,287 | $118,000 |
| 7.0% | $3,459 | $125,000 |
Right now we're hovering around 6% to 6.5%. I'd recommend stress-testing yourself at 7% to be safe. If you can't handle those repayments on your income, maybe look at a cheaper property or save a bigger deposit.
Frequently Asked Questions
This guide is based on my experience as a mortgage broker in Australia for over 10 years. Numbers are approximate and current as of 2025. Always verify with your lender.
Reader Comments