Understand the system before you talk to any bank or broker.
This site explains how home loans actually work in Australia. Use the calculators, check your state grants, and understand the process before you sit down with anyone. Completely free.
- How banks actually calculate how much you can borrow
- Every government grant and stamp duty concession by state
- The home loan process from decision to settlement
- The First Home Guarantee (5% deposit, no LMI)
- Free calculators built on standard bank logic
- A 9-part video course, free, no signup needed
- 2026 lending rule and grant updates
Every type of Australian borrower
First Home Buyers
Understand grants, stamp duty concessions, deposit requirements, pre-approval, and the full process before you speak to a single lender. No obligations.
Next Home Buyers
Understand how equity release works, what selling and buying simultaneously involves, and how your existing mortgage affects your next borrowing capacity.
Refinancers
Find out what your current rate is actually costing you, how much equity you have, and what switching would involve. The calculators do the numbers for you.
Property Investors
Model serviceability for investment loans, understand how rental income is assessed, and calculate the real borrowing impact of an investment portfolio.
How the home loan system actually works
A plain-English introduction to borrowing power, government grants, and what most first home buyers get wrong.
Video transcript ⌄
Introduction
Hi, I’m Ross McFarlane, welcome to How To Home Loan. This site exists to help you understand how home loans actually work in Australia before you talk to any bank or broker. In the next few minutes, I’ll explain the system, what affects your borrowing power, and what most people get wrong.
What this site covers
This site covers three main things. First, how to calculate your actual borrowing power. Second, government grants and stamp duty concessions across all Australian states. Third, the complete home loan process from decision to settlement.
How banks calculate borrowing power
Banks use a serviceability formula that includes your income, existing debts, living expenses, and interest rate buffers. Credit cards, car loans, and HECS debt all count against you. Banks also use the Household Expenditure Measure to estimate living costs. They then test whether you could still afford repayments if rates increased by 3%.
Government support varies by state
As of 2026, Queensland and Tasmania are offering $30,000 First Home Owner Grants, but only until June 2026. South Australia is the only state with no property value cap on the grant. The state guides on this site break down exactly what is available in each state, what you are eligible for, and how to apply.
Common misconceptions
Pre-approval does not mean you are approved. It is conditional and expires after 90 days. Just because a bank approves you for a certain amount does not mean you should borrow that much. The First Home Owner Grant is not available for established homes in most states.
Conclusion
Everything on this site is free whether you work with a broker or not. Use the borrowing power calculator, check your state grant page, and explore the guides to understand the process.
Calculators built on real bank logic
These calculators use the same serviceability formulas Australian banks apply. Not estimates, not marketing figures.
Borrowing Power Calculator
Calculate how much you can borrow based on your income, deposit, existing debts, and living expenses using standard bank assessment criteria.
Use calculator →First Home Buyer Grants Calculator
See which grants and stamp duty concessions apply to you based on your state, property type, and purchase price. Updated for 2026.
Use calculator →Stamp Duty Calculator
Calculate stamp duty costs for every Australian state and territory, including first home buyer concessions and exemptions.
Use calculator →Deposit and LMI Calculator
Calculate exactly how much deposit you need, what LMI will cost at different deposit levels, and how to avoid it entirely.
Use calculator →Mortgage Repayment Calculator
Calculate monthly repayments for any loan amount, rate, and term. Model principal and interest versus interest-only scenarios.
Use calculator →Investment Property Calculator
Model borrowing capacity for investment loans including how rental income is assessed and how negative gearing affects serviceability.
Use calculator →The Math of Lending
Most first home buyers are surprised to discover how different a bank’s assessment is from their own estimate. This is what actually happens when a lender reviews your application.
The Serviceability Buffer
Banks do not assess your ability to repay at the current interest rate. They add a minimum 3% buffer on top of the loan rate and test whether you can still afford the repayments at that higher rate.
If the loan rate is 6.2%, the bank assesses your repayments at 9.2%. This is set by APRA and applies across all Australian lenders.
The HEM Model
Banks use the Household Expenditure Measure (HEM) as a benchmark for living costs, set by location, income level, and household composition.
If your declared living expenses are lower than HEM, most lenders use HEM anyway. Your real spending habits directly affect what you can borrow.
LMI and the 20% Threshold
Lenders Mortgage Insurance (LMI) is charged when your deposit is below 20% of the purchase price. It protects the lender, not you, but you pay the premium.
The First Home Guarantee allows eligible buyers to purchase with 5% deposit and no LMI, with the government guaranteeing the remaining 15%.
What Counts Against You
Banks include all existing debts: personal loans, car loans, credit cards at the full limit regardless of your balance, and HECS/HELP debt.
A credit card with a $10,000 limit reduces borrowing power even if the balance is zero. HECS debt is assessed as a percentage of gross income.
First Home Buyer Grants by State and Territory
Grant amounts, eligibility rules, and stamp duty concessions differ significantly across Australian states and territories. The rules also change regularly, so check the current figures for your state before making any decisions.
Each guide covers the current grant amount, property value caps, eligibility rules, how to apply, and how the grant interacts with stamp duty concessions.
9 videos. Everything you need to know.
A structured course for people who want to understand the home loan system before they walk into a bank or call a broker. Free. No signup required.
- 1How banks calculate borrowing power
- 2The deposit: how much you actually need
- 3Understanding LMI and how to avoid it
- 4Government grants and how to access them
- 5Getting pre-approval: what it means and what it does not
- 6The home loan process step by step
- 7Fixed vs variable: how to think about it
- 8Hidden costs and how to budget for them
- 9What to do before you talk to anyone
The complete guide, in print.
A physical book covering every element of buying your first home in Australia. Borrowing power, grants, the loan process, choosing the right loan structure, and what every first home buyer gets wrong.
Written in plain English. No product recommendations. No agenda. Just the system, explained clearly.
Join the book waitlist →First Home Buyer Guides
Getting started
Grants and government schemes
Avoiding mistakes
Built by a licensed Australian mortgage broker
This site exists because most first home buyers make the most important financial decision of their lives without properly understanding the system they are navigating.
The calculators, guides, and video content on this site are built to fix that. Not to generate leads or sell a product, but to make sure you understand how borrowing power is calculated, what grants are available, and what the loan process actually involves before you speak to anyone.
Everything here is free whether you ever work with a broker or not.
Ross McFarlane, licensed Australian mortgage broker
Credit Representative 526725 | Australian Associated Advisers Pty Ltd trading as Keylend | ACL 392169
Adelaide, South Australia. Operating Australia-wide.
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Clarity before commitmentUnderstand the system, the numbers, and the process before you book an appointment with anyone.
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Current and accurateGrant amounts, lending rules, and government schemes are reviewed and updated regularly. Always verify final eligibility with official sources.
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No product recommendationsThis site does not recommend specific lenders or products. It explains how the system works so you can make informed decisions.