How much can you borrow for a home on one income?

The short answer: your borrowing power is roughly your income minus your living expenses and existing debts — then stress-tested by the lender at an interest rate 3 percentage points above the actual rate (the APRA serviceability buffer). On a single income, especially with children, that number comes out lower than a couple's — but eligible single parents can buy with as little as a 2% deposit and no LMI through the single-parent stream of the Australian Government 5% Deposit Scheme (formerly the Family Home Guarantee). The exact figure is personal, so the numbers that matter are yours.

Meet Mel

Mel is in her late thirties, with two kids — seven and ten — and a part-time admin job she fits around school pickups. Her income is one wage plus support, and she's saved about $52,000, some of it with help from her mum. She's looking in Melbourne's outer north and out toward Geelong, at three-bedroom places around $480,000, and she has one line she won't cross: the kids stay in their school.

The maths started the day a broker glanced at her single income and, without quite saying it, made her feel it wasn't enough. She left with a number that felt smaller than her life — and no honest explanation of how it was built, or what could move it.

Mel isn't a real person — but her situation is. Every rule and number in this story is real and linked to its source below.

What "borrowing power" actually measures

Borrowing power isn't a mystery the bank keeps in a drawer. It's a fairly mechanical sum: your income, minus your living expenses, minus your existing debts and commitments — and then a test of whether what's left can cover the repayments with room to spare. Lenders call that last part serviceability: not just "can you pay this today," but "can you still pay it if things get harder."

That framing matters, because it means the number isn't a judgement on you. It's a calculation — and calculations have inputs you can sometimes change.

The buffer that shrinks the headline number

Here's the part almost no one explains to first home buyers. When a lender tests your repayments, they don't use today's interest rate. They add a serviceability buffer of 3 percentage points on top and check that you could still afford it at that higher rate. This is a rule from the banking regulator, APRA, and as of 2026 it's still set at 3%.

So if a loan is advertised at, say, 6%, you're being assessed as though you're paying around 9%. That's why the amount a bank will lend often feels lower than what you'd expect from the sticker rate — the buffer is doing exactly what it's designed to do: leave you a cushion for when rates rise or life changes.

Why one income, with kids, is assessed harder

Two things weigh on Mel's number, and it helps to see them plainly rather than take them personally.

• Living expenses are assumed, not just declared. Lenders benchmark your household costs against a minimum measure (the Household Expenditure Measure), and dependent children raise that assumed figure. Two kids cost money to feed and clothe, and the assessment reflects it — on one income, there's simply less headroom left over.
• Existing debts count — even ones you don't use. A car loan, a personal loan, a HECS/HELP balance, and even an unused credit card limit all reduce borrowing power, because the lender assumes the limit could be drawn down. A $10,000 card you never touch can still shrink your number.

None of this means a single income isn't "enough." It means the number is built from inputs — and some of those inputs are movable.

The lever built for Mel's situation: the 5% Deposit Scheme (formerly the Family Home Guarantee)

This is where Mel's picture changes. The Australian Government 5% Deposit Scheme — its single-parent stream, formerly the Family Home Guarantee — is a federal scheme built specifically for eligible single parents (and single legal guardians) with at least one dependent child. Under it:

• You can buy with as little as a 2% deposit, and
• You pay no Lenders' Mortgage Insurance, because Housing Australia guarantees part of the loan (up to 18% of the property's value).
• It's open whether you're a first home buyer or a previous owner — which matters for parents starting again after a separation.

Places are limited and released each financial year, and price and income caps apply and change, so the current rules live with Housing Australia. But the effect is significant: on a $480,000 home, a 2% deposit is $9,600 — well within Mel's $52,000, leaving a real buffer for stamp duty, conveyancing and the costs of moving with two kids.

What actually moves the number

Because borrowing power is a calculation, small changes to the inputs can shift it — the mechanics, not advice for your situation:

• Reducing or closing unused credit card limits removes a phantom debt from the assessment.
• Clearing a small personal or car loan frees up the repayment the lender was counting against you.
• Stable, documented income — even part-time — is read more favourably than income the lender has to second-guess.

The exact effect depends on the lender, so the honest move is to model it with a calculator like Moneysmart's and then talk to a broker who'll show their working.

How it played out

Mel's real borrowing number was lower than a dual-income couple's — that part was true. But it was also not the whole story. With the Family Home Guarantee, she didn't need a 20% deposit at all, and her $52,000 comfortably covered the 2% and the costs on a three-bedroom place inside the school zone.

The question that settled it wasn't "how much can I borrow?" It was quieter: which repayment still lets us breathe in a bad month — and keeps the kids where they are? An older, smaller home in the zone, or a newer one further out and a new school run. When she could see the two numbers honestly, side by side, the decision stopped feeling like a verdict on her and started feeling like a choice she was allowed to make.

If you're like Mel

This is exactly the maths Havenli does with you — what you could realistically borrow on your income, which schemes you actually qualify for (the Family Home Guarantee among them), what a specific home would cost to own, and whether a suburb keeps you in the school zone on a street you can trust at night. General guidance, every figure linked to its source — and when you're ready, Havenli helps you find a broker who won't make you feel small. See how Havenli works, read the deposit side of the story, or see how the maths shifts for a couple.

This story is general information, not financial, legal or taxation advice — Mel isn't a real person, her numbers are illustrative, and your circumstances will differ. Scheme rules, caps, buffers and lending criteria change; always confirm the current details with the official sources linked above, and talk to a licensed professional for advice on your situation.