1. What is Home Loan Eligibility?

The home loan eligibility calculator determines how much you can borrow based on your affordable monthly repayments, current interest rates, and loan term. It helps Australian home buyers understand their borrowing capacity before applying for a mortgage.

2. How Does the Calculator Work?

The calculator uses the present value of an annuity formula:

Where:

• \( P \) — Maximum loan amount (AUD)
• \( PMT \) — Affordable monthly payment (AUD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (years × 12)

Explanation: The formula calculates the present value of all future mortgage payments at the current interest rate.

3. Importance of Loan Eligibility Calculation

Details: Knowing your borrowing capacity helps set realistic property price ranges, budget effectively, and improves your chances of loan approval.

4. Using the Calculator

Tips: Enter your comfortable monthly repayment amount, current interest rate (default is 6.74% p.a. as of 2023), and desired loan term (typically 25-30 years).

5. Frequently Asked Questions (FAQ)

Q1: What's the current average home loan rate in Australia?
A: As of 2023, average variable rates are around 6.74% p.a., but this varies by lender and loan type.

Q2: How much can I borrow with a $3,000 monthly repayment?
A: At 6.74% over 30 years, approximately $480,000. Use the calculator for precise amounts.

Q3: Does this include other home ownership costs?
A: No, this only calculates loan principal. Consider stamp duty, rates, insurance, and maintenance separately.

Q4: How accurate is this calculator?
A: It provides a good estimate, but lenders also consider credit score, expenses, and employment history.

Q5: Should I borrow the maximum amount?
A: Not necessarily. Consider future rate rises, lifestyle needs, and potential financial changes.