How to Secure a Home Loan on a $90,000 Income in Australia

Understanding Borrowing Capacity on a $90,000 Income

A $90,000 annual income provides a solid foundation for obtaining a home loan. Lenders in Australia typically use a borrowing power calculator to determine how much you can borrow. This includes assessing your income, expenses, existing debts, and credit score. On average, Australian lenders might offer a loan amount of around four to five times your annual income, translating to a potential borrowing capacity of $360,000 to $450,000. However, this can vary based on your financial circumstances and the lender's policies.

Factors Influencing Loan Approval

1. Credit Score

Your credit score is a crucial factor in the loan approval process. A higher score can not only increase your borrowing capacity but also secure a more favourable interest rate. Ensure your credit report is in good order by paying off existing debts and minimizing new credit applications before applying for a home loan.

2. Deposit

Having a substantial deposit can enhance your chances of loan approval. While the standard deposit requirement is 20% of the property value, some lenders offer loans with a lower deposit if you meet certain criteria or are eligible for a lender's mortgage insurance (LMI).

3. Debt-to-Income Ratio

Lenders prefer a debt-to-income ratio of 30% or less. If your existing debt levels are high, consider consolidating or paying down debts to improve your ratios and overall loan eligibility.

Practical Tips for Securing a Home Loan

1. Budgeting and Saving

Create a comprehensive budget to manage and reduce your expenses, allowing you to save more towards your deposit. Automated savings plans can help ensure you consistently set aside funds each month.

2. Reduce Liabilities

Pay off personal loans and credit card debts where possible. Reducing liabilities makes you a more attractive candidate to lenders.

3. Explore Government Schemes

Take advantage of government incentives like the First Home Owner Grant (FHOG) or the First Home Loan Deposit Scheme (FHLDS) if you're a first-time buyer. These can significantly reduce the financial burden of purchasing a home.

Common Mistakes to Avoid

1. Overestimating Borrowing Capacity

Avoid the mistake of overestimating your borrowing capacity. It's essential to be realistic about what you can afford to avoid financial strain.

2. Neglecting the Fine Print

Always read the fine print of loan agreements. Pay attention to fees, interest rates, and loan terms to ensure you're getting the most suitable deal.

How Esteb and Co Can Help

At Esteb and Co, we specialise in helping individuals secure the best possible home loan tailored to their financial situation. Our expert mortgage brokers will guide you through each step, from understanding your borrowing capacity to choosing the right lender and loan product. We provide personalised advice and support to ensure your home buying process is as smooth and successful as possible.