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Key Highlights

  • If you have not reviewed your home loan in the last two years, you are likely paying more than you need to
  • Refinancing means replacing your existing home loan with a new lender or product. The new loan pays out the old one at settlement
  • A 0.5% rate reduction on a $600,000 loan with 25 years remaining saves approximately $160,000 in total interest
  • The break even point is typically just 2 to 5 months for variable rate borrowers switching lenders, after accounting for discharge and setup fees
  • Fixed rate borrowers should always request an exact break cost figure from their lender before proceeding. This can be tens of thousands of dollars if rates have fallen since you fixed
  • Most cashback offers from lenders ($2,000 to $4,000) cover switching costs entirely, making the break even point immediate for many borrowers
  • A mortgage broker compares 50-plus lenders simultaneously, submits one application, and handles the full process from assessment to settlement at no cost to the borrower
  • Refinancing typically takes 2 to 4 weeks from approval to settlement and is materially simpler than buying a property
  • A free home loan health check with Stanford Financial takes 15 minutes and tells you whether your current loan is competitive and what switching could be worth in real dollars

If you haven’t looked at your home loan in the last two years, there is a reasonable chance you are paying more than you need to. Banks rely on the fact that most borrowers rarely look at their loan once they have it. The rate you signed up for is almost never the best rate available to you today.

Refinancing is the process of switching your home loan to a new lender or product. It can reduce your interest rate, lower your monthly repayments, give you access to features your current loan lacks, or unlock equity you have built up in your property. Done well, it can save tens of thousands of dollars over the remaining loan term. Done poorly, or at the wrong time, the switching costs can outweigh the benefit.

This guide walks you through the full refinancing process step by step: what to check, what to compare, how to calculate whether it’s worth it, and what to expect from application through to settlement. We also cover the mistakes that trip people up, particularly around fixed rate break costs.

Stanford Financial specialises in refinancing. Our brokers compare your current loan against 50+ lenders at no cost, negotiate on your behalf, and handle the paperwork from application to settlement.

When to Refinance

Stanford Financial

Five signs it's time to refinance your home loan

1

Your rate is more than 0.5% above the market

Lenders consistently offer better rates to new customers than existing ones. If you haven't reviewed your rate in 2+ years, you are almost certainly paying a loyalty tax. On a $700,000 loan, 0.5% extra costs ~$3,500 per year.

Potential saving

$3,500+

per year

2

Fixed rate is expiring

When a fixed term ends, the loan reverts to the lender's standard variable rate — often 0.5–1.0% above competitive options. The 30–60 days before expiry is the optimal window to refinance.

Act 60 days before expiry — not after

3

Your property has grown significantly

Moving from 90% to 80% LVR through growth typically removes LMI and unlocks better rates. A $600k property that's now worth $800k means you've crossed this threshold.

Sub-80% LVR opens significantly better tiers

4

Your needs have changed

Buying an investment property, accessing equity for renovations, switching from P&I to IO (or vice versa), or consolidating debt — all valid reasons to restructure your loan.

Life changes often require loan structure changes

5

You want features your lender doesn't offer

Offset accounts, unlimited extra repayments, redraw, split loan capability, or a better digital banking experience — features vary significantly between lenders.

Offset alone can save tens of thousands in interest

When refinancing probably doesn't make sense

If you're selling within 12 months · if break costs on a fixed loan exceed the saving · if your equity is below 20% and the new lender requires LMI · or if your income has dropped significantly since your original loan was written.

book a free home loan health check

When Refinancing Makes Sense (and When It Doesn’t)

Refinancing is worth serious consideration in most of the following situations:

  • Your loan is more than two years old and you have not negotiated a rate reduction in that period
  • Your current rate is more than 0.5% above the most competitive variable rates available for your LVR and loan size
  • Your financial situation has improved since you took out the loan (higher income, reduced debt, or more equity) and you may qualify for a sharper rate
  • You want features your current loan lacks: an offset account, unlimited extra repayments, or a redraw facility
  • You want to access equity for renovations, an investment purchase, or another purpose
  • You want to consolidate expensive personal debt into your home loan to reduce your total repayment burden

When refinancing may not be worth it

  • You are in the final years of your loan. The remaining interest is relatively small and the benefit of a rate reduction is limited
  • You are locked into a fixed rate with significant break costs. Always get the exact figure from your lender before proceeding
  • Your property value has fallen and your LVR has risen above 80%. LMI could apply on the new loan, adding a cost that may eliminate the saving. Use our LMI calculator to check
  • Your income or employment has changed materially and you may not qualify for the same loan terms

The biggest risk in refinancing is acting on a vibe rather than on numbers. Before you do anything, use our refinance savings calculator to see your monthly saving, annual saving, and break even point. If the numbers work, refinancing is one of the best financial actions available to a homeowner.

Refinance Break-Even

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The refinance break-even calculation

How long until refinancing costs pay for themselves · three rate saving scenarios · $600,000 loan

–$1,500 $0 $2k $4k $6k Break-even line 0 5 10 15 20 24 mo 12 mo 6 mo 4 mo 0.25% saving ($125/mo) 0.50% saving ($250/mo) 0.75% saving ($375/mo) Net cumulative saving

Typical upfront cost

~$1,500

discharge + setup fees

Break-even at 0.5%

6 months

on $600,000 loan

5-year net saving

$13,500

at 0.5% saving after costs

What Is Refinancing?

Refinancing means replacing your existing home loan with a new one, either with a different lender or as a different product with your existing lender. The new loan pays out the old one at settlement. From that point, you make repayments to the new lender at the new rate and terms.

There are two main types of refinance:

  • Rate and term refinance: you switch to a lower rate or different loan structure (fixed vs variable, offset account, etc.) without changing the loan amount. This is the most common type.
  • Cash out refinance (equity release): you borrow more than the outstanding balance and receive the difference in cash. This requires sufficient equity and the new, higher loan amount must be serviceable at current lending criteria.

Top Reasons Australians Refinance

ReasonWhat it means in practice
Get a lower rateSave $200 to $600 per month on a $600k loan depending on the rate difference
Access equityFund renovations, an investment property deposit, or a major purchase using equity you have built up
Better loan featuresAdd an offset account, unlock unlimited extra repayments, or remove LMI fees built into the rate
Debt consolidationRoll expensive personal loans or credit cards into the home loan at a lower rate
Shorter loan termMaintain the same repayment on a lower rate to pay the loan off years earlier
Change rate typeSwitch from variable to fixed for certainty, or exit a fixed period once it ends
Remove a partyAfter relationship breakdown or change in circumstances, remove one borrower from the loan
Refinancing Step by Step

Stanford Financial

How to refinance your home loan: step by step

Typical timeline: 2 to 4 weeks from initial assessment to settlement

1 Know your current rate and loan details Check your current rate, remaining balance, loan type, and whether you're in a fixed period with break costs Day 1 2 Speak to a broker and compare the market Broker compares 50+ lenders, models your break-even, and identifies the best option for your situation Day 1–3 3 Gather your documents 2–3 recent payslips · last 2 years tax returns (self-employed) · 90 days bank statements · current loan statement · ID Day 2–5 4 Application lodged with new lender Broker lodges and manages application · lender verifies income, expenses, and property · credit assessment completed Day 5–10 5 Conditional approval and valuation Lender issues conditional approval · property valuation ordered (often desktop valuation, completed in 24–48 hrs) Day 8–14 6 Sign new loan documents Receive and sign formal approval documents · broker reviews terms with you · return signed docs to lender Day 12–18 7 Settlement — refinance complete New lender pays out old loan · mortgage registered · new lower repayments begin on first due date Day 14–28

Typical timeline

2–4 weeks

Your time commitment

~2–3 hours

Broker fee to you

$0

  Step 1    Review Your Current Loan

Before comparing anything else, you need to know exactly what you are starting from. Pull out your most recent loan statement and note the following:

  • Current interest rate: is it the advertised rate, a discounted rate, or a loyalty rate you negotiated? Is it fixed or variable?
  • Outstanding balance: this determines your LVR and what rate you are likely to qualify for with a new lender
  • Remaining term: how many years are left? This affects how much total interest you will save from a rate reduction
  • Monthly fee: some loans charge an ongoing monthly or annual fee. Factor this into your comparison
  • Discharge fee: your lender will charge a fee to formally close the loan, typically $150 to $500
  • Fixed rate period: if you are in a fixed period, note when it ends. Exiting before the end date can trigger break costs (see the break cost section below)

Tip: Many borrowers have not spoken to their current lender in years. Before applying anywhere else, call your lender and ask for a rate review. Sometimes a five-minute call mentioning that you are considering refinancing is enough to get a retention rate that is competitive. If it is, great. If it isn’t, you have a confirmed number to compare against.

  Step 2    Know Your Equity Position

Your equity is the difference between your property’s current market value and your outstanding loan balance. Equity determines your Loan to Value Ratio (LVR), which is the single most important factor in what rate you will be offered by a new lender.

LVR = Outstanding Loan Balance ÷ Current Property Value

As a general guide:

  • LVR under 60%: best rates available. Very strong negotiating position
  • LVR 60 to 80%: competitive rates, no LMI. The standard tier for most refinancers
  • LVR 80 to 90%: rates are higher and LMI may apply on the new loan
  • LVR above 90%: refinancing becomes difficult and LMI costs could eliminate the saving

To estimate your current property value, use recent comparable sales in your suburb or a tool like CoreLogic’s free estimator. For a formal valuation, most lenders will arrange this as part of the refinancing process at no cost to you.

Accessing equity

If your LVR is below 80%, you have accessible equity. You can borrow against it without LMI and use the funds for any legitimate purpose, commonly renovations, an investment property deposit, or debt consolidation. The new loan amount is your outstanding balance plus the equity you want to access, which must keep the combined LVR at or below 80% (or above 80% if you are willing to pay LMI on the difference).

Example: Property worth $850,000. Outstanding loan: $450,000. LVR: 53%. Accessible equity to 80% LVR: $850,000 × 80% − $450,000 = $230,000. You could refinance to a new loan of up to $680,000 and receive $230,000 in cash at settlement, with no LMI payable.

  Step 3    Compare Your Options

This is where most people go wrong: comparing only on interest rate. A lower headline rate is important, but it is not the whole picture. Here is what to evaluate:

Interest rate type

Variable RateFixed Rate
Rate moves with RBA and lender decisionsRate is locked for 1 to 5 years
Unlimited extra repayments (most lenders)Extra repayments often capped at $10,000/yr
Full offset account accessOffset account usually not available
No break costs to exitBreak costs can be large if exiting early
Less certainty in repayment amountCertainty of repayment for fixed period

Many borrowers opt for a split loan: part fixed for certainty, part variable for flexibility, extra repayments, and offset access. The split can be any proportion and is a practical way to hedge.

Loan features

  • Offset account: a transaction account linked to the loan that reduces the balance interest is charged on. See our offset account calculator to model the saving for your balance
  • Redraw facility: access extra repayments you have already made, useful but less flexible than an offset
  • Extra repayments: can you make unlimited extra repayments without penalty? This is critical if you intend to pay down faster
  • Portability: can the loan move with you if you sell and buy another property? Useful if you are likely to move

The full cost comparison

Compare loans on their comparison rate, which incorporates the interest rate plus most fees into a single annual percentage. A loan with a lower interest rate but a high annual fee can end up more expensive in total. Always check:

  • Upfront establishment fee (often $0, but some lenders charge $300 to $600)
  • Ongoing monthly or annual fee
  • Redraw or offset account fees
  • Discharge fee payable when you eventually close the loan

A broker with access to 50+ lenders can run a genuine full comparison of each loan on total cost, not just the headline rate. This is time-consuming to do yourself accurately, and banks have no incentive to show you their competitors’ products.

  Step 4    Calculate Your Break Even Point

Switching lenders costs money upfront. The break even point is the number of months until your accumulated monthly savings equal the total switching cost. After that point, every month is pure saving.

The formula is straightforward:

Break even months = Total switching cost ÷ Monthly saving

For example:

  • Current rate: 7.00% on $600,000 outstanding with 25 years remaining
  • New rate: 6.20%
  • Monthly saving: approximately $298
  • Discharge fee: $350, new loan setup: $500, total switching cost: $850
  • Break even: $850 ÷ $298 = 2.9 months

After 2.9 months, you are ahead. Total interest saved over the remaining 25 years is approximately $89,000, even after switching costs.

Use our free refinance savings calculator to enter your exact figures and see your monthly saving, annual saving, total interest saved, and break even timeline.

When cashback changes the equation

Many lenders offer cashback incentives for refinancers, typically $2,000 to $4,000. When cashback equals or exceeds your total switching cost, your break even point is immediate, meaning you are in front from day one. However, cashback offers typically require you to keep the loan for a minimum period (usually two years) or repay the cashback if you switch again. Factor this into the comparison.

  Step 5    Apply With Your New Lender

Once you have identified the loan and confirmed the numbers make sense, it is time to apply. Most lenders require the following documents:

Documents you will need

  • Last two payslips (or last two years’ tax returns if you are self employed)
  • Last three months’ bank statements showing salary credits and living expenses
  • Statement of your existing home loan showing current balance and repayment history
  • Evidence of property ownership (council rates notice or title search)
  • Most recent mortgage repayment receipts or statements
  • Photo ID (passport or driver’s licence)
  • Details of any other assets (savings, investments, vehicles)
  • Details of any other liabilities (car loans, credit cards, personal loans)

What happens during assessment

The new lender will assess your application against their current lending criteria: income, expenses, existing debts, property value, and LVR. They will conduct a credit check (one enquiry on your credit file) and usually order a property valuation. The credit check will cause a small, temporary dip in your credit score.

Assessment typically takes 3–10 business days for a straightforward refinance at most lenders. Complex applications (borrowers who are self employed, multiple properties, or unusual income structures) can take longer.

If you apply through a broker, the broker prepares the application on your behalf, selects the lender most likely to approve at the best rate based on your profile, and liaises with the lender throughout assessment. You typically submit documents once rather than multiple times to multiple lenders.

  Step 6    Settlement and Discharge

Once your application is approved, the new lender issues a formal approval (unconditional letter of offer). You sign the loan documentation and the settlement process begins.

How the handover works

  1. You sign the new loan documents and return them to the new lender
  2. The new lender contacts your current lender to arrange discharge of the existing loan
  3. Your current lender prepares a discharge authority and calculates the payout figure
  4. Settlement is booked. Your conveyancer or the lenders’ settlement teams coordinate a settlement date
  5. On settlement day, the new lender pays out the old loan in full. The mortgage is discharged from your current lender and registered with the new lender
  6. Your first repayment to the new lender is typically due 30 days after settlement

The full process from application approval to settlement typically takes 2–4 weeks. There is no simultaneous property transaction to coordinate (unlike a purchase), which makes refinancing materially simpler than buying. Most borrowers describe the process as less stressful than expected.

If you are using an offset account on the current loan, ensure you transfer any offset balance before settlement, as it will not automatically transfer to the new lender.

Discharge Fees and Break Costs: What to Watch Out For

The costs of refinancing are generally modest for variable rate borrowers but can be substantial for those exiting a fixed rate loan.

CostTypical AmountNotes
Discharge fee$150 to $500Charged by your current lender to close the loan and release the mortgage. Most lenders charge this regardless of loan type.
Application / setup fee$0 to $600Some new lenders charge an establishment fee. Many competitive lenders charge nothing. Check the PDS.
Legal / settlement$200 to $400Some lenders include this in their fee structure. Clarify with your broker.
Fixed rate break cost$0 to $50,000 or moreOnly on fixed loans exited before the fixed period ends. Can be very large. See below.
Cashback (offset)Up to $4,000+Many lenders offer cashback to refinancers. Deducted from your net switching cost.

 

Fixed Rate Break Costs: The Most Important Number to Get Right

If you are on a fixed rate home loan and want to refinance before the fixed period ends, your lender can charge a break cost (also called an economic cost or early repayment fee). This is not a standard penalty. It is a calculation based on the difference between your contracted fixed rate and current wholesale funding rates for the remaining fixed term, applied to your outstanding balance.

If rates have fallen significantly since you fixed, the break cost can be tens of thousands of dollars. If rates have risen since you fixed, the break cost may be zero or close to it.

Always contact your current lender and request an exact break cost figure before signing anything with a new lender. Break costs must be disclosed on request under the National Consumer Credit Protection Act. Do not estimate this number — get it in writing.

In many cases, it is worth waiting until the fixed period ends before refinancing. If the fixed period ends in 6 months, the break cost of exiting now needs to be compared against 6 months of the higher rate versus the lower rate. The break cost would need to be lower than 6 months of rate differential savings to make early exit worthwhile. A broker can model this for you precisely.

Refinancing Costs Explained

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What does refinancing actually cost?

Typical costs when switching lenders in Australia · April 2026

STANDARD COSTS — ALWAYS APPLY $0 $375 $750 $1,125 $1,500 Discharge fee (existing lender) $300–$450 New loan setup fee (new lender) $250–$300 Govt. registration fees (title office) ~$200 OFTEN WAIVED BY NEW LENDER Valuation fee (often waived) $0 – $300 Application fee (often waived) $0 – $600 WATCH OUT FOR THESE Fixed rate break cost (variable — calculate first) $0 to $50,000+ — check before proceeding

Typical total (variable rate loan)

$750 – $1,500

After any new lender waivers. Most lenders waive valuation and application fees to win the business.

Fixed rate — always calculate first

$0 – $50k+

Break cost depends on remaining term, loan balance, and the difference between your rate and current wholesale rates. Ask your lender for the exact figure before proceeding.

How a Mortgage Broker Makes Refinancing Easier

Most Australians who refinance do so through a mortgage broker, and for good reason. Refinancing involves comparing dozens of products, negotiating with lenders, assembling documents, managing the assessment process, and coordinating settlement. A broker handles all of this.

What a broker does that you cannot easily do yourself

  • Access to 50+ lenders — Banks only show you their own products. A broker with a full panel can compare major banks, specialist lenders, and boutique institutions simultaneously
  • Negotiation — Brokers submit volume to lenders and have negotiating leverage to access rates not publicly advertised
  • Credit file management — Multiple direct applications to multiple lenders each create a credit enquiry. A broker identifies the right lender first and typically submits one application
  • Application quality — A poorly presented application gets declined or results in a worse rate. A broker packages your application to meet the lender’s criteria
  • Paperwork coordination — The broker liaises between the new lender, your current lender, and settlement teams. You sign where instructed
  • Free to you — Mortgage brokers are paid by the lender at settlement. There is no charge to the borrower for a standard refinance

Stanford Financial’s refinancing service

Stanford Financial is a Springfield Central brokerage with multiple industry awards and access to over 50 lenders. Our Lending Director, Steven Beach, reviews every refinancing scenario personally. We serve Brisbane, Ipswich, Logan, Gold Coast and clients across Australia.

We start every refinance assessment the same way: a free home loan health check that compares your current loan against the market, tells you what rate you should be paying, and shows you the exact numbers before you commit to anything.

  • No obligation, no fee, no impact on your credit file until you decide to proceed
  • MFAA Diversified Business and Newcomer Award 2022
  • Access to major banks, specialist lenders, and boutique institutions
  • Refinancing completed remotely for borrowers across Australia

Frequently Asked Questions

How often can I refinance my home loan?

There is no legal limit on how often you can refinance. Practically, refinancing too frequently can affect your credit score, reset cashback clawback periods, and incur repeated switching costs. Most financial professionals suggest reviewing your loan every 2 to 3 years. If your rate is materially uncompetitive, reviewing sooner is worth it regardless of when you last refinanced.

Yes, briefly. When you apply for a new home loan, the new lender performs a credit enquiry, which appears on your credit report and typically reduces your score by a small amount for a short period. A broker typically submits one application to the most suitable lender based on your profile, which is more efficient than applying to multiple lenders directly.

Most lenders require a property valuation as part of the refinancing process. This is typically arranged and paid for by the new lender at no cost to you, or included in the application fee. The valuation determines your current LVR, which affects the rate you are offered and whether LMI applies. In some cases, lenders accept an automated valuation rather than a full physical inspection, which speeds up the process.

Yes, but LMI may apply if your LVR is above 80%. This adds a cost to refinancing that may erode or eliminate the benefit of the lower rate. Use our LMI calculator to check the LMI cost at your current property value and loan balance before proceeding. Some lenders offer cashback that can offset LMI costs in specific scenarios.

Refinancing typically takes 2 to 6 weeks from application to settlement. The main variables are the speed of the new lender’s credit assessment, valuation turnaround, and coordination with your existing lender for discharge. Refinancing is materially simpler than a new purchase as there is no contract deadline, no conveyancer managing a settlement workspace, and no simultaneous sale to coordinate. Your broker manages the process on your behalf.

Yes. If your property has increased in value since you purchased, or you have paid down a significant amount of principal, you may have equity you can access by refinancing to a higher loan amount. Common uses include home renovations, investment property deposits, and debt consolidation. The funds are typically paid into your nominated account at settlement. See our refinancing loans page for more detail on equity access.

Refinancing Mistakes to Avoid

Stanford Financial

6 common refinancing mistakes — and how to avoid them

1

Only comparing the interest rate — ignoring fees and features

A 0.1% lower rate doesn't help if it comes with a $395 annual fee, no offset account, and capped extra repayments. Always compare the comparison rate and total cost, not just the headline rate.

Fix: compare the total cost of the loan including fees, offset value, and flexibility

2

Not checking for break costs first

Refinancing out of a fixed rate loan without calculating the break cost first can result in a bill of $10,000 to $50,000+ — far exceeding any rate saving for years.

Always request the exact break cost figure from your lender before proceeding

3

Applying to multiple lenders directly

Every direct application creates a hard credit enquiry. Three or four enquiries in a short period signals financial stress to lenders and can reduce your credit score materially.

A broker assesses eligibility before lodging any enquiry

4

Resetting to a 30-year term

If you've had your loan for 8 years and refinance into a new 30-year loan, you've added 8 years of interest. Match the new loan term to your remaining original term or shorter.

Keep the same end date or shorten it — never extend without reason

5

Changing jobs right before applying

Lenders want to see stable employment. Changing jobs (especially industries or from PAYG to self-employed) immediately before a refinance application can lead to a decline or require a longer wait.

Refinance before changing jobs if both are planned

6

Waiting too long after your fixed rate expires

When a fixed rate expires, you roll onto the lender's revert rate — typically 0.5–1.0% above competitive variable rates. Every month you wait after expiry is money left on the table. Start the process 60 days before your fixed term ends.

Put your fixed rate expiry date in your calendar now — and contact a broker 60 days before

The right approach: Use a broker to compare the market before lodging anything · confirm break costs if on a fixed rate · match your new loan term to your remaining original term · act 60 days before fixed rate expiry.

Book a Free Home Loan Health Check

If you have not reviewed your home loan in the last two years, you owe it to yourself to find out what you are actually paying versus what you could be paying. A 0.5% rate difference on a $600,000 loan saves approximately $160,000 over 25 years. That is not rounding error. That is material.

A free home loan health check with Stanford Financial takes 15 minutes and gives you a clear answer: is your current loan competitive, and if not, what is a better option worth to you in real dollars? There is no obligation to proceed and no credit file impact unless you choose to apply.

Call 0483 980 002 or book your free assessment online. We typically respond within one business day.

Reviewed and Verified

Stanford Financial Steven Beach Steve

All content published on this website has been reviewed and verified by Steven Beach, Lending Director at Stanford Financial. With over 20 years of experience in finance and lending, Steve ensures that every article, guide, and resource accurately reflects current lending practices, lender policies, and the real-world outcomes he sees working with Australian borrowers every day. His hands-on experience across home loans, investment lending, and specialist finance means the information you read here is grounded in genuine industry expertise – not just theory.

Key Highlights

  • The standard deposit most lenders prefer is 20% of the property’s purchase price but this is not the only pathway into the market
  • Borrowing more than 80% of the property value typically triggers Lenders Mortgage Insurance (LMI), which can add tens of thousands of dollars to your loan costs
  • Queensland first home buyers purchasing a new home can currently access a $30,000 First Home Owner Grant for contracts signed before 30 June 2026
  • The First Home Guarantee allows eligible buyers to purchase with just a 5% deposit and no LMI — with no income caps and no limit on places as of October 2025
  • From 1 May 2025, first home buyers in Queensland pay zero stamp duty on new homes and vacant land, with no property value cap
  • For established homes, a full stamp duty concession applies on properties up to $709,999, with a partial concession up to $800,000
  • A family member can act as a guarantor, allowing some buyers to purchase with a much smaller deposit or even no deposit at all
  • Your deposit is just one part of the picture, you also need to budget for stamp duty (if applicable), conveyancing fees, building and pest inspections, and moving costs
  • A mortgage broker can help you identify which government schemes you qualify for, how to stack them, and which lenders accept the smallest deposits with the best terms

Saving for a home deposit is one of the biggest financial goals most Australians will ever take on. But before you start calculating how long it will take to reach a magic number, it’s worth understanding that “how much deposit do I need” has a more nuanced answer than most people realise.

The amount you need depends on whether you’re buying new or established, whether you qualify for government assistance, whether you want to avoid LMI, and how your lender assesses your overall position. In Queensland especially, the combination of available grants, stamp duty concessions, and federal guarantee schemes has made a smaller deposit more viable than at almost any point in recent history.

This guide breaks down exactly what you need to know, with current Queensland figures confirmed as at March 2026. If you’re also trying to understand your overall borrowing position, our guide on how much you can borrow for a home loan covers the lender assessment process in detail.

Deposit Requirements by LVR

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Deposit required at each LVR tier — $700,000 QLD property

What changes as your deposit grows · April 2026

Loan split ($700,000) 95% LMI applies 5% Loan: $665,000 Deposit: $35,000 + LMI: ~$27,000 Total upfront: ~$62,000 90% LMI applies 10% Loan: $630,000 Deposit: $70,000 + LMI: ~$13,000 Total upfront: ~$83,000 85% LMI applies 15% Loan: $595,000 Deposit: $105,000 + LMI: ~$6,500 Total upfront: ~$111,500 80% No LMI ✓ 20% Loan: $560,000 Deposit: $140,000 LMI: $0 — none payable Total upfront: ~$140,000 Your deposit Home loan The 80% threshold matters most Crossing from 90% to 80% LVR eliminates LMI entirely and unlocks the best available rates
book a free assessment

The Standard Deposit: Why Lenders Love 20%

Most lenders in Australia assess home loans against a Loan to Value Ratio (LVR), that is, the size of your loan expressed as a percentage of the property’s value. A 20% deposit means an 80% LVR, which is the threshold most lenders treat as the boundary between standard and higher-risk lending.

When you borrow above 80% LVR, meaning your deposit is less than 20%, the lender typically requires you to pay Lenders Mortgage Insurance (LMI). LMI is not insurance for you; it protects the lender if you default. The cost can be significant.

On a $700,000 property with a 5% deposit, LMI could add approximately $25,000 to $30,000 to your loan costs. On a $900,000 property, that figure could exceed $40,000.

This is why 20% has long been held up as the gold standard deposit, it removes LMI from the equation entirely. But as we’ll explain below, there are several legitimate pathways to purchase with a smaller deposit without carrying that cost.

LMI Cost by LVR

Stanford Financial

Lenders Mortgage Insurance (LMI): how much does it cost?

Indicative LMI at different LVRs and purchase prices · Helia/Genworth rates · April 2026

$35k $25k $15k $5k $0 $16k $8k $4k $500,000 $21k $11k $5.5k $650,000 $27k $13k $6.5k $700,000 $35k $17k $900,000 95% LVR (5% deposit) 90% LVR (10% deposit) 85% LVR (15% deposit) 20% deposit (80% LVR) = $0 LMI — at any purchase price

LMI estimates are indicative only based on Helia/Genworth published rate cards. Actual LMI varies by lender, borrower profile, and loan type. LMI can be capitalised into the loan — meaning you don't need to pay it upfront — but it does increase your total loan balance and interest paid.

Can I Buy a House With Less Than 20% Deposit?

Yes, and many Queenslanders do. Here are the main scenarios:

10% Deposit (90% LVR)

A 10% deposit is a common entry point for buyers who don’t yet have 20% saved. LMI will apply, though the cost is lower than at 5% LVR. Some lenders are more competitive than others at 90% LVR. Our low deposit home loans page covers what to expect at this level, and a broker can identify which lenders offer the best rates and terms for your situation.

5% Deposit via the First Home Guarantee

The First Home Guarantee is a federal government scheme that allows eligible buyers to purchase with just a 5% deposit, with the government guaranteeing the remaining 15% of the standard 20% threshold. This means the lender treats your loan as if you have a 20% deposit, so no LMI is payable.

As of 1 October 2025, the scheme was significantly expanded:

  • No income caps – the previous thresholds of $125,000 for individuals and $200,000 for couples have been removed entirely
  • No cap on places – unlike previous years where annual places were limited, the scheme now has unlimited places
  • Higher property price caps for Queensland – Brisbane, Gold Coast, and Sunshine Coast: up to $1,000,000. The rest of QLD: up to $700,000

This is one of the most significant expansions of first home buyer assistance in Australian history, and it means far more Queenslanders now qualify than before.

2% Deposit via the Family Home Guarantee

The Family Home Guarantee is designed for eligible single parents or single legal guardians of at least one dependent. It allows purchase with as little as a 2% deposit, with the government guaranteeing up to 18% of the property’s value, again, with no LMI payable. Speak to a Stanford Financial broker to confirm your eligibility.

No Deposit via a Guarantor Loan

Some buyers are able to purchase with no deposit at all using a guarantor home loan, where a family member, typically a parent, uses the equity in their own property to guarantee part of your loan. This can allow you to borrow up to 100% of the purchase price in some cases. The guarantor’s property is used as additional security, and once you’ve built sufficient equity in your own home, the guarantee can be released.

This approach works well for first home buyers who have strong income but haven’t yet had time to save a full deposit. Our first home loan page covers this in more detail, and our team can walk you through whether it’s appropriate for your family’s circumstances.

Low Deposit Scheme Options

Stanford Financial

QLD low-deposit schemes: how to buy with less than 20%

Federal

First Home Guarantee

5% deposit · no LMI · no income cap

Minimum deposit

5% = $35,000

on $700,000 purchase

✓

LMI waived — government guarantees the gap

✓

No income cap (removed October 2025)

✓

New and established homes eligible

✗

Must be owner-occupier (not investment)

✗

Must not have previously owned property

LMI saving on $700k at 95% LVR: ~$27,000

Federal

Family Home Guarantee

2% deposit · single parents and legal guardians

Minimum deposit

2% = $14,000

on $700,000 purchase

✓

LMI waived on 2–20% deposit range

✓

New and established homes

✗

Single parent/guardian with at least one dependent

✗

Income cap: $125,000/yr

✗

Can have previously owned property

Lowest deposit of any major government scheme

Federal

Regional First Home Buyer

5% deposit · regional QLD areas

Minimum deposit

5% — no LMI

for regional QLD postcode locations

✓

Ipswich, Springfield, Toowoomba eligible

✓

New and established homes

✗

Must have lived in the region for 12+ months

✗

First home buyers only

Relevant for Springfield / Ipswich corridor buyers

Lender

Profession LMI waivers

Doctors, nurses, accountants, teachers, ADF

LVR allowed without LMI

Up to 90–95%

depending on profession and lender

✓

Medical: up to 95% LVR no LMI (CBA, ANZ, Westpac)

✓

ADF: DHOAS scheme + specialist lender access

✓

Accountants (CA/CPA): up to 90% no LMI

✗

Must qualify under specific lender criteria

Ask your broker — profession waivers are underused

Can schemes be stacked? Yes — First Home Guarantee (no LMI) + FHOG $30,000 (contract before 30 June 2026) + QLD stamp duty exemption (new home) can be applied simultaneously, reducing your effective upfront cash to as little as $5,000 on a $700,000 new build.

QLD-Specific Help: Grants and Concessions in 2026

Queensland is one of the most generous states in Australia when it comes to first home buyer assistance. Here is a current summary of what’s available as at March 2026.

Queensland First Home Owner Grant (FHOG)

The Queensland Government currently offers a $30,000 First Home Owner Grant to eligible buyers purchasing or building a new home. Key conditions:

  • Amount: $30,000 for contracts signed between 20 November 2023 and 30 June 2026. After 30 June 2026, the grant reverts to $15,000
  • Property type: New homes only – the property must never have been previously occupied or sold as a place of residence. This includes house and land packages, off-the-plan purchases, and owner-built homes
  • Price cap: Total value of the home (including land and contract variations) must be under $750,000
  • Residency: You must move in within 12 months of settlement or construction completion and live there as your principal place of residence for at least six months
  • Eligibility: At least one applicant must be an Australian citizen or permanent resident aged 18 or over, and must be a genuine first home buyer who has not previously owned residential property in Australia

Important: The $30,000 grant applies only to new homes. If you’re buying an established property, you won’t be eligible for the FHOG — but you may still qualify for significant stamp duty concessions, and the First Home Guarantee applies to both new and established purchases.

Stamp Duty (Transfer Duty) Concessions for First Home Buyers

Queensland’s stamp duty concessions for first home buyers were significantly improved from 1 May 2025:

  • New homes and vacant land: Zero stamp duty with no property value cap. This applies to new builds, house and land packages, and vacant land where you intend to build your first home
  • Established homes up to $709,999: A full concession of $17,350 applies, which effectively reduces stamp duty to nil for most properties in this range
  • Established homes $710,000 to $800,000: A partial concession applies on a sliding scale — you pay some stamp duty, but less than the standard rate
  • Established homes $800,000 and above: No concession applies; standard stamp duty rates are payable

First Home Super Saver Scheme (FHSS)

The federal First Home Super Saver Scheme allows you to make voluntary contributions into your superannuation and then withdraw up to $50,000 of those contributions (plus associated earnings) for a home deposit. Contributions are taxed at 15% going in, rather than your marginal income tax rate, making it a tax-effective way to build your deposit. The FHSS is available for both new and established homes and can be combined with the FHOG and First Home Guarantee.

At a Glance: Key Schemes for QLD First Home Buyers

Scheme What It Offers Property Cap (QLD) Key Condition
QLD First Home Owner Grant $30,000 cash grant Under $750,000 New homes only; contracts before 30 June 2026
First Home Guarantee Buy with 5% deposit, no LMI $1M (Brisbane/GC/SC); $700K (rest of QLD) New or established; no income cap
Family Home Guarantee Buy with 2% deposit, no LMI Same as FHBG Single parents/guardians only
Stamp Duty (new home) Zero transfer duty No cap New homes and vacant land from 1 May 2025
Stamp Duty (established) Up to $17,350 concession Up to $709,999 (full); $800,000 (partial) First home buyers only
First Home Super Saver Withdraw up to $50,000 from super No cap Voluntary super contributions only

How to Stack Government Assistance: A Real QLD Example

One of the most powerful things about the current Queensland assistance landscape is that many of these schemes can be used together. Here is an example showing how a first home buyer purchasing a new home in the Springfield/Ipswich corridor could structure their purchase.

Scenario: First home buyer purchasing a new house and land package for $620,000 in Springfield Central, QLD, using the First Home Guarantee and applying for the FHOG.

ItemEstimated Amount (on $620,000 new build)
5% deposit required (First Home Guarantee)$31,000
Stamp duty on new home$0 (full exemption from 1 May 2025)
Queensland First Home Owner Grant (applied at settlement)−$30,000
Conveyancing fees (estimate)$1,500 – $2,000
Building and pest inspection$500 – $700
Loan application / lender fees (estimate)$0 – $600
LMI cost$0 (waived via First Home Guarantee)
Total estimated net cash needed beyond grant offset~$3,000 – $5,000


In this scenario, the $30,000 grant effectively offsets almost the entire 5% deposit, meaning a buyer in this price range could enter the market with very limited cash savings beyond standard purchase costs. Stanford Financial is based in Springfield Central and regularly helps buyers in this corridor navigate exactly this kind of purchase structure.

The grant is typically paid at settlement by your lender on your behalf through the Queensland Revenue Office. Your broker and conveyancer will coordinate this process – you don’t need to handle it separately. If you’re in Ipswich or surrounds, our Ipswich mortgage brokers can help you through the same process.

Beyond the Deposit: Other Upfront Costs to Budget For

Your deposit is the largest single upfront cost, but it’s not the only one. Here is a full picture of what you’ll need to budget for when buying in Queensland:

  • Stamp duty (transfer duty): Nil for eligible first home buyers purchasing new homes or land from 1 May 2025. Concessions apply to established homes under $800,000
  • Conveyancing fees: Typically $1,200 to $2,500 depending on complexity. Stanford Legal, part of the Stanford Group, provides competitive conveyancing services and works alongside Stanford Financial to streamline the process for our clients
  • Building and pest inspection: Around $400 to $800. Non-negotiable for established properties; important even for new builds approaching practical completion
  • Loan application fees: Varies by lender. Many lenders charge nil for standard applications, though some charge $300 to $600
  • Lenders Mortgage Insurance (LMI): Nil if you qualify for the First Home Guarantee or have a 20% deposit. Otherwise potentially $10,000 to $40,000+ depending on purchase price and LVR. See our low deposit home loans page for more on how LMI works
  • Moving costs: Typically $500 to $2,500 depending on distance and volume
  • Utility connection and setup costs: Budget $200 to $500 for connection fees across electricity, gas, internet, and water

As a general guide, plan to have your deposit plus an additional 3% to 5% of the purchase price available to cover purchase costs, unless stamp duty is waived in your situation.

Do I Need ‘Genuine Savings’?

Many lenders require that a portion of your deposit comes from what they call ‘genuine savings’ — that is, money you have accumulated yourself over a period of time (typically three to six months). This demonstrates that you have the financial discipline to service a home loan.

Genuine savings typically includes:

  • Regular deposits into a savings account over at least three months
  • Superannuation contributions under the First Home Super Saver Scheme
  • Term deposits or managed investment accounts

The following are generally not considered genuine savings by most lenders:

  • A lump sum gift from a parent or family member (though gifted funds can supplement genuine savings)
  • Tax refunds received as a lump sum
  • The First Home Owner Grant itself

If you don’t yet meet a lender’s genuine savings requirement, a Stanford Financial broker can help identify which lenders have more flexible policies or how to structure your savings over the coming months to maximise your eligibility.

What Counts as Genuine Savings

Stanford Financial

What counts as your deposit? Genuine savings vs gifted funds

Lenders treat different deposit sources differently — especially at higher LVRs

Accepted as genuine savings

No conditions — lenders accept these fully

✓

Regular savings in bank account

Held for 3+ months, regular contribution pattern

✓

Term deposits

Matured or active — demonstrates saving discipline

✓

First Home Super Saver (FHSS)

ATO-released super contributions count as genuine

✓

Sale of assets (shares, vehicle, crypto)

Documented sale proceeds accepted

✓

Equity in existing property

Used as security or cash-out for deposit

Conditional or not accepted

Lender-specific rules apply

~

Gifted funds from family

Accepted by many lenders with a statutory declaration, but often can't form 100% of deposit at 90%+ LVR

~

FHOG grant ($30,000)

Paid at settlement — cannot be used to meet the initial deposit at exchange

✗

Borrowed funds (personal loan)

Not accepted as deposit — increases total debt assessed

~

Lump sum received recently

Large undocumented deposit into account raises questions — must be explainable

✗

Vendor finance / deposit bonds (for genuine savings test)

Accepted at exchange but don't satisfy genuine savings requirement

The genuine savings rule — what most lenders require at 90%+ LVR

5%

of the purchase price must come from genuine savings

3 months

minimum time the funds must have been held in your account

Varies

by lender — some accept 100% gifted at 80% LVR

How Much Should I Aim to Save?

The honest answer is: it depends on your strategy. Here is a simple framework:

  • If you’re eligible for the First Home Guarantee: Aim for 5% of the purchase price plus purchase costs (minus any grant). For a $600,000 home, that’s approximately $30,000 in deposit plus $3,000 to $5,000 in costs. The $30,000 FHOG offsets much of this if buying new
  • If you want to avoid LMI without a government scheme: Save 20% of the purchase price plus costs. For a $600,000 home, that’s $120,000 in deposit plus $5,000 to $10,000 in costs
  • If you’re using a guarantor: You may need little to no deposit, but you’ll still need cash for purchase costs, typically $3,000 to $8,000 depending on the purchase price and whether stamp duty applies

These are general guides. Your specific requirements will depend on the property, the lender, and your individual circumstances. Whether you’re buying your first home, an investment property, or looking to refinance an existing loan, a free assessment with Stanford Financial will give you a clear picture of exactly what you need based on your actual situation.

Frequently Asked Questions

Can I use the Queensland First Home Owner Grant as my deposit?

The Queensland Government does not recommend relying on the grant as your deposit. The timing matters: the grant is typically paid at settlement, whereas your deposit is required at contract signing or exchange. Some lenders may factor in the incoming grant when assessing your overall position, but you will generally need genuine savings available upfront. Speak to a Stanford Financial broker about how to sequence your funds correctly.

Yes, the First Home Guarantee applies to both new and established properties. You do not need to buy a new home to access the 5% deposit scheme – though only new home buyers are eligible for the $30,000 First Home Owner Grant. An established home purchase with a 5% deposit through the guarantee would still attract zero or reduced stamp duty if the property falls within the relevant concession thresholds.

Not directly. You cannot access your regular superannuation contributions for a home deposit. However, if you make voluntary contributions to your super, you can withdraw up to $50,000 of those voluntary contributions under the First Home Super Saver Scheme. This is separate from your compulsory employer contributions, which remain locked until retirement.

If you have previously owned an investment property but never lived in it, you may still be eligible for the First Home Owner Grant and stamp duty concessions in Queensland. However, the rules are specific: you must not have previously received a First Home Owner Grant in any Australian state or territory, and you must not have owned a property that you lived in. This is an area where getting advice from a broker and conveyancer before you apply is important to avoid inadvertently disqualifying yourself. Our investment loan page has further information on how investment property ownership is treated by lenders.

If you have adverse credit history – defaults, missed payments, or a prior bankruptcy – most lenders will require a larger deposit, often 20% or more, regardless of LMI considerations. Some specialist lenders will consider applications with blemished credit at a higher LVR, but the rate and fee structure will differ. Our bad credit home loans page explains what options are available, and a broker can assess your specific credit position before you apply.

At a savings rate of $1,000 per month into a high-interest savings account, saving a 5% deposit on a $600,000 home would take approximately two and a half years. Saving a 20% deposit at the same rate would take around ten years. This is one of the main reasons government schemes exist — to allow buyers to enter the market sooner rather than saving while prices move beyond reach. Understanding your full borrowing capacity alongside your deposit target gives you a complete picture of where you stand.

Total Upfront Costs QLD

Stanford Financial

Total cash needed to buy a home in QLD: full upfront cost breakdown

20% deposit · existing home · non-first buyer · includes all upfront costs · April 2026

Cost item $500,000 $650,000 $750,000 $800,000 Deposit (20%) $100,000 $130,000 $150,000 $160,000 Stamp duty (existing home) $8,750 $12,475 $15,575 $17,350 Conveyancing / legal $1,500–$2,000 $1,500–$2,200 $1,800–$2,500 $1,800–$2,500 Building + pest inspection $500–$700 $500–$700 $600–$800 $600–$800 Loan establishment fee $0–$600 $0–$600 $0–$600 $0–$600 Govt. fees (mortgage reg.) ~$300 ~$300 ~$350 ~$350 Practical buffer (removalist etc) $2,000–$5,000 $2,000–$5,000 $2,000–$5,000 $2,000–$5,000 Total cash required (approx.) ~$115,000 ~$149,000 ~$173,000 ~$183,000 First home buyer (new home) + all schemes stacked 5% dep. + no LMI + no stamp duty + $30k FHOG ~$4,000 ~$7,000 ~$10,000 ~$12,000 After FHOG $30,000 applied at settlement · contract before 30 Jun 2026 · new build only

Stamp duty based on QLD standard rates for existing residential property, non-first buyer. Legal/conveyancing costs vary by firm. All figures are estimates — request a personalised upfront cost summary from your broker before exchanging contracts.

How Stanford Financial Can Help

Working out how much deposit you need is only the first step. Knowing which schemes you actually qualify for, how to structure your application to maximise your position, and which lenders will give you the best outcome at your deposit level — this is where a mortgage broker’s expertise makes a tangible difference.

At Stanford Financial, our brokers are based in Springfield Central and work with clients across Queensland and Australia wide. We have access to over 50 lenders and will assess your full picture at no cost to you, with no obligation to proceed.

If you’re planning to buy in the next six to eighteen months, the earlier you book an assessment, the better – there are practical steps you can take now to maximise your deposit, protect your credit file, and position yourself for the strongest possible application when the time comes. You can read more about how we work on our process page.

Ready to find out exactly what you need? Book a free, no-obligation assessment with Stanford Financial today. Call us on 0483 980 002 or contact us online.

Reviewed and Verified

Stanford Financial Steven Beach Steve

All content published on this website has been reviewed and verified by Steven Beach, Lending Director at Stanford Financial. With over 20 years of experience in finance and lending, Steve ensures that every article, guide, and resource accurately reflects current lending practices, lender policies, and the real-world outcomes he sees working with Australian borrowers every day. His hands-on experience across home loans, investment lending, and specialist finance means the information you read here is grounded in genuine industry expertise – not just theory.

Key Highlights

  • Your borrowing capacity is not a fixed number, it is calculated individually based on your income, living expenses, existing debts, credit history, and deposit size
  • Most lenders will consider lending between four to six times your gross annual income, though this is a starting point, not a guarantee
  • Lenders use the Household Expenditure Measure (HEM) as a minimum benchmark for living expenses even if your actual spending is lower, lenders will apply HEM as the floor
  • Credit card limits are assessed at their full limit, not your current balance reducing or closing unused credit cards can significantly increase your borrowing capacity
  • Buy Now Pay Later accounts such as Afterpay and Zip are treated as debts by lenders and will reduce how much you can borrow
  • HECS-HELP debt reduces your assessable income and affects borrowing capacity, even if repayments feel manageable
  • A mortgage broker can assess your position across 50-plus lenders simultaneously without triggering multiple credit enquiries on your file
  • First home buyers may be eligible for the First Home Guarantee, allowing a 5% deposit without paying LMI
  • Getting a pre-approval before you start house hunting clarifies your budget and strengthens your position when making an offer
  • Stanford Financial offers a free assessment with no obligation to proceed

If you have started thinking about buying a home, chances are the first question you have asked yourself is: how much can I actually borrow? It is one of the most important things to understand before you start inspecting properties, and getting a clear picture early can save you a lot of time, stress, and disappointment down the track.

The honest answer is that your borrowing capacity is not a single fixed number. It is calculated based on a combination of your income, your expenses, your existing financial commitments, and the policies of the lender you approach. Two people on the same salary can end up with very different borrowing limits depending on how their finances are structured.

In this guide, we walk you through exactly how lenders assess your borrowing capacity, what factors make the biggest difference, and how working with a mortgage broker can help you put your best foot forward.

Borrowing Capacity by Income

Stanford Financial

Estimated borrowing capacity by annual income

Single applicant · no existing debts · standard living expenses · 6.5% assessed rate (includes 3% stress buffer) · April 2026

Annual income $0 $200k $400k $600k $800k $1M $50,000 ~$230,000 $70,000 ~$330,000 $90,000 ~$430,000 $120,000 ~$580,000 $150,000 ~$730,000 $180,000 ~$870,000 $200,000 ~$970,000+

These are estimates only. Actual borrowing capacity depends on your expenses, existing debts, number of dependants, credit score, and the lender's specific assessment policy. Use the Borrowing Power Calculator or speak to a broker for a personalised figure.

book a free assessment

What Is Borrowing Capacity?

Borrowing capacity refers to the maximum amount a lender is willing to offer you for a home loan, based on their assessment of your ability to make repayments comfortably. It is sometimes referred to as your borrowing power or serviceability.

Lenders are not just asking whether you can afford the loan today. They are also stress testing whether you could continue to make repayments if interest rates were to rise, or if your personal circumstances were to change. This is a regulatory requirement under responsible lending obligations, and it is the reason two people earning the same income can receive quite different borrowing assessments.

What Factors Determine How Much You Can Borrow?

There are several key inputs that lenders use when calculating your borrowing capacity. Understanding each one helps you see where you have room to improve your position before you apply.

Your Income

Your gross income is the starting point. This includes your base salary, any overtime or allowances, rental income if you own investment property, and in some cases, government payments such as Family Tax Benefit. For self-employed applicants, lenders typically look at your last two years of tax returns to establish your average income.

Not all income is treated equally. Lenders generally apply a shading factor to variable income such as bonuses, commissions, and casual wages, using only a percentage of those amounts in their calculations. This is especially relevant for self-employed borrowers, where documenting income clearly and compliantly can make a significant difference to the outcome. A mortgage broker can help you understand exactly how your income will be assessed by different lenders.

This is one of the most significant factors in modern lending assessments. Since the introduction of tighter responsible lending standards following the Royal Commission into Banking in 2019, lenders have scrutinised living expenses far more carefully than they once did.

Most lenders use a benchmark called the Household Expenditure Measure (HEM) as a floor for living expenses. HEM is a nationally recognised dataset that estimates reasonable living costs based on your household size and location. Even if your actual expenses are lower than HEM, many lenders will use the HEM figure in their calculations.

Your bank statements from the last three to six months will generally be reviewed as part of the application process, so consistent patterns of high discretionary spending can affect your outcome.

Every financial commitment you currently have reduces the amount a lender is willing to offer you on a new home loan. This includes:

  • Car loans and personal loans
  • Credit card limits (note: lenders assess the full credit limit, not just your current balance)
  • Buy Now Pay Later accounts such as Afterpay and Zip
  • HECS-HELP debt
  • Any existing mortgages, including investment property loans

One of the most common and most impactful ways to increase your borrowing capacity before applying is to reduce or close unused credit cards and cancel any Buy Now Pay Later accounts you no longer need. Each of these liabilities is factored into your assessment regardless of whether you actually use them.

Your credit score reflects how reliably you have managed financial obligations in the past. A strong credit history demonstrates to lenders that you are a lower risk borrower, which can improve not only your borrowing capacity but also the interest rate you are offered.

 

Late payments, defaults, and multiple credit enquiries in a short period can all have a negative effect on your score. If you are planning to apply for a home loan in the next six to twelve months, it is worth checking your credit report and addressing any issues early. You can access your credit report for free through agencies such as Equifax, Experian, and illion.

The size of your deposit relative to the purchase price is known as your Loan-to-Value Ratio, or LVR. A lower LVR meaning a larger deposit generally results in better loan terms and a higher borrowing capacity, as it reduces the lender’s risk. Most lenders prefer an LVR of 80% or below. If you are working with a smaller deposit, our low deposit home loan options may be worth exploring.

If your deposit is less than 20% of the purchase price, you will typically be required to pay Lenders Mortgage Insurance (LMI), which is a one-off premium that protects the lender in the event of default. LMI can add several thousand dollars to the upfront cost of your purchase, although in some cases it can be capitalised into the loan. First home buyers may also have access to government schemes that allow purchasing with a 5% deposit without paying LMI.

Lenders factor in the number of dependants in your household when assessing your living expenses. More dependants generally means higher assumed household costs, which reduces the income available for loan repayments. This does not mean that families cannot borrow well. It simply means that having accurate information about your household structure is important when your application is assessed.

What Lenders Assess

Stanford Financial

The five factors lenders use to calculate your borrowing capacity

1

Income

Gross salary, rental income, business profits, government payments. Casual and overtime income discounted — typically 80% of non-base amounts.

Higher income = higher capacity

2

Living expenses

Lenders use the higher of your declared expenses or the Household Expenditure Measure (HEM) benchmark for your household size.

More dependants = lower capacity

3

Existing debts

Credit cards assessed at 3–3.5% of the limit (not balance), car loans, personal loans, HECS repayments, and other mortgages all reduce capacity.

Each $10k CC limit costs ~$50–60k borrowing

4

Deposit and LVR

Your deposit determines the LVR. Above 80% LVR usually triggers LMI. Above 90–95% LVR many lenders won't lend at all regardless of income.

Bigger deposit = more lender options

5

Credit score and history

Lenders check your Equifax or Experian credit score and review your repayment history. Defaults, missed payments, and multiple recent credit applications all reduce approval prospects.

Credit score ranges (Equifax)

0–459
Below avg 460–660
Average 661–734
Good 735–852
V. Good 853–1200
Excellent

How much can you typically borrow?

As a general rule of thumb, most lenders will consider offering between four to six times your gross annual income, subject to your expenses and existing debts. For example, a household with a combined income of $150,000 might qualify for somewhere between $600,000 and $900,000, though the actual figure will depend on your individual financial profile and the lender’s policies.

This is a rough guide only. Your actual borrowing capacity can differ significantly from these estimates, which is why speaking with a mortgage broker is the most reliable way to get an accurate figure.

Understanding the Household Expenditure Measure (HEM)

The Household Expenditure Measure is a standard benchmark used by the majority of Australian lenders when assessing living expenses. It is based on research into typical Australian household spending patterns and is segmented by household size, income level, and postcode.

In practice, this means even if your personal spending is quite lean, the lender may use HEM as the minimum expense figure in their serviceability calculation. Conversely, if your actual declared expenses exceed HEM, which they may if you have a high lifestyle spend, the lender will use your actual figures.

Understanding HEM is important because it explains why two borrowers with similar incomes but different household sizes may receive quite different borrowing assessments. Your mortgage broker can help you understand which category you fall into and how this affects your specific outcome.

How a Mortgage Broker Can Help Maximise Your Borrowing Capacity

One of the most practical advantages of working with a mortgage broker is that they can assess your borrowing capacity across multiple lenders simultaneously, rather than being limited to a single institution’s criteria. Different lenders apply different policies when it comes to income shading, expense assessment, and treatment of certain liability types, and these differences can result in meaningfully different borrowing outcomes. You can learn more about our process and how we work with you from first assessment through to settlement.

At Stanford Financial, we take the time to understand your full financial picture before approaching any lender. We look at how your application will be viewed by different institutions, and we help you structure it in a way that presents your situation most effectively. This might involve:

  • Advising you to reduce or close unused credit card limits before applying
  • Identifying lenders who treat your type of income more favourably
  • Helping self-employed borrowers present their income clearly and compliantly
  • Clarifying how your HECS debt or existing commitments are affecting your capacity
  • Identifying whether you qualify for a professional package product with better terms

With access to a panel of more than 50 lenders, we are not tied to any one institution. Our job is to find the product and lender that suits your goals.

Meet our team to see who will be supporting you through the process.

Common Mistakes That Reduce Your Borrowing Capacity

There are several common financial habits that can reduce your borrowing capacity without you realising it. Being aware of these before you apply can make a real difference to your outcome.

Too many credit cards or high limits. Even if your credit card balances are zero, lenders count the full credit limit as a potential liability. A $20,000 credit card limit can reduce your borrowing capacity by as much as $80,000 to $100,000, depending on the lender.

Buy Now Pay Later accounts. BNPL services such as Afterpay and Zip are now widely recognised by lenders as consumer debts. Even with small outstanding balances, these accounts are included in your liability assessment.

Irregular or undocumented income. Income that is not clearly documented through payslips or tax returns can be difficult for lenders to assess, which may result in a lower income figure being used in the calculation. This is particularly relevant for self-employed borrowers and contractors.

Applying with multiple lenders simultaneously. Each credit enquiry made by a lender is recorded on your credit file. Multiple enquiries in a short period can signal financial stress to lenders and reduce your score. Working with a broker allows you to be assessed across multiple lenders without triggering multiple credit enquiries upfront.

Not accounting for all income. Many borrowers underreport income by forgetting to include rental income, government payments, overtime, or other allowable earnings. Ensuring your income picture is complete can meaningfully increase your borrowing capacity.

How Debts Reduce Borrowing Capacity

Stanford Financial

How existing debts reduce your borrowing capacity

$120,000 income · standard living expenses · each debt added cumulatively · estimated impact

$0 $100k $200k $300k $400k $500k $600k No debts $580k + $10k credit card –$60k $520k + car loan $500/mo –$60k $460k + HECS $40k bal. –$70k $390k + personal loan $300/mo –$60k $330k + 2nd CC $15k limit $270k Total reduction: $310k

Without debts

$580,000

Total reduction

–$310,000

With all debts

$270,000

How Borrowing Capacity Changes With Income

To give you a practical sense of how borrowing capacity shifts with different income levels, here are four illustrative examples. These are estimates based on typical lender serviceability calculations and assume standard expenses, no existing debts, and a 20% deposit. Your actual result may differ based on your specific circumstances.

Household Income

Estimated Borrowing Range

Typical Monthly Repayment*

Notes

$80,000 p.a.

$320,000 to $480,000

~$1,700 to $2,550/mo

Single income, no dependants

$100,000 p.a.

$400,000 to $600,000

~$2,100 to $3,200/mo

Single income, typical household

$150,000 combined

$600,000 to $900,000

~$3,200 to $4,800/mo

Dual income, couple

$200,000 combined

$800,000 to $1,200,000

~$4,250 to $6,400/mo

Dual income, strong serviceability

*Repayment estimates based on a 6.5% variable rate over a 30-year term. For illustrative purposes only. Your actual rate and repayments will vary.

Interest Rate Stress Test

Stanford Financial

How the 3% stress buffer affects your assessed borrowing capacity

APRA requires lenders to assess serviceability at your actual rate plus 3% — April 2026

Actual rate +3% stress buffer 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% Actual: 6.5% Assessed: 9.5% +3% buffer Interest rate used in serviceability assessment

Why the buffer exists

APRA requires lenders to confirm you can still service the loan if rates rise by 3%. This protects borrowers from taking on debt that works at today's rate but breaks under normal rate cycle pressure.

The practical impact

Borrowing capacity is calculated as if rates are already at 9.5% even though your actual repayments will be at 6.5%. This is why your maximum loan is lower than the repayments calculator suggests at current rates.

Steps to Take Before You Apply

If you are planning to apply for a home loan in the next few months, there are several steps you can take right now to improve your borrowing capacity and strengthen your application.

  • Review and reduce your credit card limits and cancel any cards you do not actively need
  • Close Buy Now Pay Later accounts you no longer use
  • Avoid taking on any new debt in the six months before your application
  • Avoid multiple credit enquiries by working with a broker rather than applying directly to multiple lenders
  • Build up genuine savings history, as consistent saving behaviour signals financial discipline to lenders
  • Gather your financial documentation early, including payslips, tax returns, bank statements, and identification
  • Check your credit report and address any errors or defaults before you apply

The more organised and financially stable your profile looks at the time of application, the better your outcome is likely to be.

Borrowing FAQs

How much can I borrow for a home loan?

The amount you can borrow for a home loan depends on several factors, including your income, expenses, existing debts, and credit history. At Stanford Financial, we evaluate your financial situation to determine the maximum loan amount you qualify for, ensuring it aligns with your repayment capability. You can schedule a consultation with one of our loan advisors for a precise assessment by visiting our contact page.

Yes. Adding a co-borrower such as a partner or spouse means their income is included in the assessment, which typically increases your combined borrowing capacity. However, their existing debts, credit history, and living expenses will also be factored in. In most cases, a joint application results in a meaningfully higher borrowing limit than a solo application.

A formal pre-approval application will result in a credit enquiry being recorded on your file, which can have a minor and temporary impact on your score. However, this is generally a small and manageable effect for borrowers with otherwise healthy credit profiles. Conditional or indicative assessments, the kind that Stanford Financial can provide in the early stages, do not require a formal enquiry, so you can explore your options without affecting your credit file before you are ready to proceed.

Yes. HECS-HELP debt is treated as a committed expense in lender assessments because the repayment is automatically deducted from your income once you earn above the threshold. This effectively reduces your net assessable income. For borrowers with significant HECS debt, particularly those in specialist professions such as medicine, dentistry, and pharmacy, this can have a noticeable effect on borrowing capacity. A broker can help you understand the impact and identify lenders who treat this liability more favourably.

Some changes can have an almost immediate effect. Reducing or cancelling credit card limits and closing BNPL accounts, for example, can improve your position in a matter of weeks. Building up your savings history typically takes a few months to demonstrate to lenders. Addressing credit file issues such as clearing defaults can take longer, but the improvement to your borrowing position is often significant. If you have had credit difficulties in the past, our bad credit home loans page outlines some of the options available to you. Speak with one of our brokers for advice tailored to your specific circumstances.

If you are building a new home, the lending process works a little differently. Rather than receiving the full loan amount upfront, funds are released in stages as construction progresses. You can read more about how this works on our construction loans page.

How to Increase Borrowing Capacity

Stanford Financial

Actions that increase your borrowing capacity — and by how much

Indicative impact on a $120,000 income single applicant · April 2026

Action Capacity impact Est. increase Close $10k credit card (close, not just pay off) +$50,000–$60,000 Pay off car loan ($500/mo) (clear balance before applying) +$55,000–$65,000 Add a co-borrower ($80k) (joint application) +$250,000–$300,000 Reduce declared expenses (accurately, not dishonestly) +$30,000–$50,000 Use a different lender (policy differences vary ~10–15%) +$40,000–$80,000 Voluntary HECS repayment (on $40k HECS balance) +$60,000–$80,000 Close BNPL accounts (Afterpay, Zip, etc.) +$15,000–$25,000 smaller larger impact

Broker advantage: different lenders can produce borrowing capacity estimates that vary by $50,000 to $100,000 on the same income and debts. Stanford Financial compares 50+ lenders to find the one whose assessment model produces the best outcome for your specific profile.

Ready to Find Out What You Can Borrow?

Understanding your borrowing capacity is the first and most important step in your home buying journey. At Stanford Financial, we work with more than 50 lenders across Australia to help you find the right loan at the right terms, and we do it at no cost to you.

Whether you are a first home buyer trying to understand your position, an investor looking to grow your portfolio, or someone simply wanting to know what is possible, our team is here to help.

Book a free assessment with Stanford Financial today and take the first step with confidence. Get in touch here or on 0483 980 002.

Reviewed and Verified

Stanford Financial Steven Beach Steve

All content published on this website has been reviewed and verified by Steven Beach, Lending Director at Stanford Financial. With over 20 years of experience in finance and lending, Steve ensures that every article, guide, and resource accurately reflects current lending practices, lender policies, and the real-world outcomes he sees working with Australian borrowers every day. His hands-on experience across home loans, investment lending, and specialist finance means the information you read here is grounded in genuine industry expertise – not just theory.

Key Highlights

  • Home equity is the difference between your property’s current market value and your remaining mortgage balance and for many Australians, it is a substantial and underutilised asset
  •  Lenders typically allow you to borrow up to 80% of your home’s value minus what you still owe, giving you usable equity that can act as a deposit on an investment property
  • Equity can be accessed through refinancing, a home equity loan, or a line of credit without needing to sell your home
  • Investment properties accessed through equity can generate rental income and potential tax benefits, but maintaining a financial buffer for rate changes and vacancies is essential
  • Stanford Financial can assess your equity position and guide you through the right structure for your circumstances, at no cost to you

At Stanford Financial, we understand the aspiration to grow your investments and offer a guiding hand in using your home equity to purchase additional property.

Expanding your property portfolio is an exciting venture that can open a world of opportunities. For many Australians, the key to unlocking this path lies within their current home. Your home is not just a place of comfort and memories, it is also a valuable asset that can help achieve multi-property ownership.

What Is Home Equity?

Home equity is the difference between your property’s current market value and the balance of your mortgage. For instance, if your home is valued at $500,000 and you owe $300,000 on your mortgage, your equity is $200,000. This equity builds up over time as you pay down your mortgage and as your property’s value appreciates.

In Australia’s growing real estate market, homeowners often find themselves sitting on a substantial amount of equity, which can be a great tool in property investment. It’s like having a financial ace up your sleeve that you may not realise you possess.

The Process of Accessing Equity

Accessing the equity in your home isn’t a standard process for everyone as it begins with understanding just how much equity you have. This is where a property valuation comes in.

In Australia, property values can fluctuate based on various factors, from market trends to home improvements. Getting a professional valuation or a market appraisal from a real estate agent gives you a current idea of your property’s worth and these are often free of charge.

Once you know your home’s value, subtract your current mortgage balance from this amount to determine your accessible equity. It’s important to note that lenders often allow you to borrow up to 80% of your home’s value minus the debt you owe (without incurring Lenders Mortgage Insurance). 

For example, if your home is valued at $500,000, 80% of its value is $400,000. If you owe $300,000, your accessible equity could be up to $100,000.

This Is Where Stanford Financial Come In

With an idea of your accessible equity, the next step is to approach a trusted mortgage broker like Stanford Financial. We will assess your financial situation, including your income, debts, and credit history, to determine how much banks could be willing to lend you.

There are different ways to access equity, such as through a home equity loan, line of credit, or by refinancing your current mortgage. Each option has its benefits and considerations, and the right choice depends on your financial goals and circumstances.

Together we will decide on the best financial product for your goals and we will go through the application process. This typically involves providing detailed financial information and possibly an additional property valuation. Upon approval, the lender will provide the funds or credit facility, which you can then use towards purchasing your next property.

With the equity accessed, it’s crucial to have a clear plan for your property investment. Consider factors such as property location, type, rental yields, and long-term capital growth prospects. Remember, while accessing equity can be a powerful tool for growing your property portfolio, it’s important to do so with careful planning and consideration of the risks involved. Consulting with mortgage brokers like us at Stanford Financial can provide personalised guidance tailored to your specific financial situation and goals.

Maximising Equity for Property Investment

When contemplating the use of home equity to purchase additional property, it’s essential to consider the full range of benefits, assess your personal financial situation, acknowledge the potential risks, and understand the importance of professional advice. This comprehensive approach ensures that you make a well-informed and strategic investment decision.

Benefits of Using Equity to Buy Another Property

Using equity to invest in property can offer several advantages, including potential tax benefits. For instance, tax deductions may be available for property investment-related expenses, or you might benefit from negative gearing.

Additionally, leveraging equity can be a catalyst for growth in your investment portfolio, enabling you to acquire additional properties more quickly than if you were saving for a full deposit. If invested wisely, the new property can generate rental income, potentially leading to an increased cash flow, opening doors to further investment opportunities.

Along with assessing the benefits of using equity to buy another property, it is equally important to determine your current financial health and future objectives. Considerations such as your income stability, existing debts, and long-term financial goals are pivotal.

This evaluation helps in determining how effectively using equity aligns with your overall investment strategy and retirement planning. Understanding the risks is also critical. Property investment can be affected by factors like market volatility, changes in interest rates, and unforeseen maintenance costs, so maintaining a financial buffer is crucial. This buffer ensures you can manage the extra loan repayments and additional property upkeep, even in challenging circumstances.

Given the complexities and significant implications of using equity for property investment, the value of professional financial guidance cannot be ignored. Stanford Financial mortgage brokers offer personalised guidance based on your unique financial situation, risk tolerance, and long-term aspirations.

They can help you decipher the subtleties of different loan products, comprehend the tax implications and your investment strategies. This expert guidance ensures that your decision to invest using equity is not only well-informed but also aligns with your overall financial goals.

Using Equity Is A Strategic Path to Purchasing Additional Property in Australia

While leveraging home equity to purchase additional property can be an effective strategy, it requires a balanced and forward-thinking approach. Considering the advantages, understanding your financial situation, being aware of the risks, and seeking professional advice are all critical steps in ensuring that you leverage your home equity effectively and responsibly.

As you try to decide if using your home equity to expand your property portfolio is the right way to go, remember that such financial decisions are as unique as your personal circumstances.

At Stanford Financial, we specialise in helping you change your financial situation and achieve your goals. Our team is dedicated to educating and empowering you with information that aligns with your specific financial landscape, ensuring that every step you take is informed, strategic, and conducive to your long-term success.

Whether you’re taking your first steps into property investment or looking to expand your existing portfolio, we’re here to help. Reach out to us today.

 

Reviewed and Verified

Stanford Financial Steven Beach Steve

All content published on this website has been reviewed and verified by Steven Beach, Lending Director at Stanford Financial. With over 20 years of experience in finance and lending, Steve ensures that every article, guide, and resource accurately reflects current lending practices, lender policies, and the real-world outcomes he sees working with Australian borrowers every day. His hands-on experience across home loans, investment lending, and specialist finance means the information you read here is grounded in genuine industry expertise – not just theory.

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