When purchasing a house, the most important thing is how much you can afford to mortgage it. It is often the difference between living comfortably and having to work hard. 

While experts disagree on how much, most agree that you should have enough money to pay your mortgage payments. How much should your monthly income go towards your mortgage payments. Let’s take a closer look.

What percentage of your income should you dedicate to your mortgage payment?

Many lenders and mortgage experts adhere to the 28% limit – meaning your monthly mortgage repayments should not exceed 28% of your gross monthly income or the amount you earn before taxes are deducted. This percentage will keep you below the 30% mortgage stress threshold.

Experts suggest that you may be at risk of mortgage stress if your mortgage payments exceed 30% of your monthly income.

To illustrate, the average weekly income of full-time working adults in Australia is $1,714, according to last May’s seasonally adjusted figures from the Australian Bureau of Statistics (ABS). To get the median monthly income, we need to multiply this number by four – the number of weeks in a month – then multiply the product by .28 to get the 28% limit and .3 to find the mortgage stress threshold.

$1,714 x 4x 0,28 = $6.856x 0.28= $1.919.68 (limit 28%)

$1,714x4x 0.28 = $6.856×0.3 = $2.56.80 (30% threshold).

These guidelines will allow an average Australian worker to budget $1,920 for monthly mortgage payments and not exceed $2,000. This is to avoid mortgage stress.

However, it is worth noting that each person’s financial situation is different and there are some who can allot more than 30% of their income to their monthly mortgage and still live comfortably.

The home loan calculators will allow you to see exactly what you’re spending each month.

What is the average Australian’s monthly spending on a mortgage?

According to ABS’ October lending indicator, the national average mortgage size is $453,133. It is possible that the amount may be higher or lower depending on where you live. Here is a state-by-state breakdown of new lending amounts based on ABS’ seasonally adjusted data:


Mortgages are average in size

New South Wales






South Australia


Western Australia




Australian Capital Territory


Northern Territory


National average


According to the 2016 Census of Housing and Population data, the average Australian borrows $1755 per month. As the August census is coming up, this number will likely change. Here’s the median monthly mortgage repayment per state and territory, according to the latest census:


Monthly mortgage payment average

New South Wales






South Australia


Western Australia




Australian Capital Territory


Northern Territory


National average


What should you do if you’re experiencing mortgage stress?

Plan your monthly mortgage payments as you would other financial obligations. However, there are certain life-changing events – such as job loss, illness, death of a loved one, divorce, or birth of a child – that can affect your ability to manage your home loan payments.

If it is difficult to pay your mortgage payment without putting yourself at risk, you have many options. These options include:  

1. Talk to your lender

Your lender should be notified if you experience mortgage stress. Your lender may be able to suggest ways to lower your mortgage payments. This could include changing the terms of the loan or reducing the amount.

2. Reexamine your expenses

It is smart to redraw your budget. Take a look at your spending habits to see where there are savings opportunities. This will allow you to avoid unnecessary spending. 

3. Transferring to an interest-only payment

To pay only the interest on your loan, you can adjust your finances. This will give you enough time to adjust your financial situation until you can afford monthly mortgage payments. A five-year interest-only period is typical. Your lender may be able to extend the time period. You will however pay more interest over the loan’s term. Additionally, your home’s equity will not increase during the interest-only period.

4. Refinancing your loan.

Refinance your mortgage in order to save money or to get lower interest rates. Refinance of your mortgage may require you to have good credit.

5. Consolidating your debt.

If you have enough equity in your home, consolidating your debt can be done. Instead of making smaller payments you can pay it off in one lump sum. This will simplify your finances and reduce interest rates.