How Much Do You Need To Earn To Buy In South East Melbourne, What Lenders Actually Check

The income question is almost always the wrong question. Most buyers in South East Melbourne fixate on their salary figure, then wonder why two lenders give them completely different answers using the same number. What lenders are actually measuring is a lot more specific than your pay, and understanding the difference changes what you do next.

House medians across these suburbs run from around $1,280,000 in Moorabbin and Cheltenham to well over $4,000,000 in Toorak, so the income required shifts dramatically depending on what you're buying and where. Units tell a different story: 22 of the 28 suburbs we work across have a unit median under the $950,000 scheme cap, with entry points from $470,000 in Ripponlea to $530,000 in Windsor. Your income target depends on which market you're actually entering.

Our team helps buyers across South East Melbourne work through exactly this calculation, comparing how different lenders read the same income across a panel of 60+ lenders. The home loan structure and the lender you end up with matter as much as the gross figure on your payslip.

How much do you need to earn to buy in South East Melbourne?

There's no single income figure, because lenders assess what you can service at a higher rate than you'll actually pay, not what the repayments are today. APRA requires lenders to add a 3% buffer on top of your actual rate when calculating whether you can afford the loan. With variable rates sitting where they are, that assessment rate lands at roughly 9%, and it's that number doing most of the work on your borrowing limit.

As a rough guide, a borrower with a clean credit file, no existing debts and a 20% deposit needs a gross income of somewhere around $120,000 to $140,000 to borrow $800,000 to $900,000, assessed at that rate. A two-income household combining $80,000 and $60,000 often reaches a similar or higher limit, because the lender sees two income streams and two sets of expenses rather than one. Your own number depends on your debt load, your living costs, and which lender's HEM benchmark applies to your household.

How do lenders actually calculate what you can borrow?

Lenders don't just divide your salary by repayments. They build a full picture of your income, committed expenses, and what your repayments would be at the buffer rate. That picture is more detailed than most buyers expect, and it's where lender policy differences start to matter.

The four inputs every lender uses:

• › Gross income: base salary is taken at 100% for permanent employees. Variable components like overtime, shift penalties and bonuses are typically shaded somewhere between 80% and 100%, averaged over one to two years of history.
• › Committed expenses: credit card limits (assessed as if fully drawn, roughly 3% to 3.8% of the limit per month), car loans, personal loans, HECS repayments. All of these reduce your borrowing power, regardless of your actual balances.
• › Living expenses: lenders use the Household Expenditure Measure as a floor. If your declared expenses are lower than HEM, the lender substitutes HEM. Declaring less than you spend doesn't help.
• › The assessment rate: your repayments are stress-tested at approximately 9%, not your contract rate. That's the buffer APRA requires. Source: APRA.

What income do you actually need for the South East Melbourne property market?

The answer depends on whether you're buying a house or a unit, and which suburb you're in. CoreLogic data shows house medians across these suburbs starting at $1,280,000 in Moorabbin and $1,298,750 in Cheltenham, rising through $1,755,000 in Bentleigh and $2,125,500 in Elsternwick, and reaching $4,960,000 in Toorak. Every single house median in the approved suburb set sits above the $950,000 scheme cap. If you're buying a house here, government guarantee schemes don't apply, and your income needs to service the full purchase without a 5% deposit backstop.

Units are a different market. With medians from $470,000 in Ripponlea and $512,000 in St Kilda through to $935,000 in Bentleigh, 22 of 28 suburbs have a unit median under the $950,000 cap. A buyer combining a 5% deposit with the First Home Guarantee is looking at a realistic path to ownership through a unit purchase in suburbs like Cheltenham, Moorabbin or Carnegie, where unit medians sit in the $580,000 to $700,000 range.

Rough income benchmarks by purchase price (single borrower, 20% deposit, no significant debts):

• › $600,000 to $700,000: roughly $80,000 to $100,000 gross, depending on expense commitments. This is the realistic unit entry range in Cheltenham, Carnegie or Moorabbin.
• › $900,000 to $1,000,000: roughly $120,000 to $145,000 gross. Covers the upper unit market and the lower end of inner suburbs like Windsor and Prahran.
• › $1,300,000 to $1,500,000: roughly $175,000 to $200,000 gross, or a two-income household with combined earnings in that range. Covers entry-level houses in Cheltenham, Moorabbin and Oakleigh.
• › $2,000,000 and above: typically requires combined or high single income well above $250,000, with a substantial deposit. This is where lender policy on income composition, asset position and DTI ratios starts to vary significantly.

Source: CoreLogic (via YIP, June 2026) and APRA.

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What government schemes are available to buyers in South East Melbourne?

Schemes matter most for unit buyers here, because that's the market segment where the price cap is actually reachable. Four pathways are worth knowing about.

Schemes that apply to these suburbs:

• › First Home Guarantee (5% Deposit Scheme): 5% deposit, no LMI, no income test. The price cap across every approved suburb in this area is $950,000. Every house median sits above it; 22 of 28 unit medians sit under it.
• › Family Home Guarantee: single parents only, 2% deposit, no LMI. You don't need to be a first home buyer. The $950,000 cap applies across these suburbs, and you must be genuinely single.
• › Help to Buy (federal shared equity): the government takes an equity share of up to 30% on an existing home and up to 40% on a new build. Income caps apply: $103,000 for a single buyer and $165,000 for a joint application or single parent in 2026-27. The price cap for these suburbs is $950,000.
• › Victorian First Home Owner Grant:$10,000 for new homes only, with a $750,000 price cap. This is realistically an off-the-plan unit story in these suburbs. New builds contracted before 21 April 2027 may also access the temporary off-the-plan stamp duty concession on strata properties.
• › First home buyer duty exemption: full exemption on the land transfer duty at a dutiable value of $600,000 or less, with a partial concession tapering to $750,000. Seven of the 28 approved suburbs have unit medians under $600,000, making this genuinely accessible for unit buyers in suburbs like Ripponlea, Prahran, Windsor and Oakleigh.

Note that the Victorian Homebuyer Fund shared-equity scheme is closed to new participants. Help to Buy is the only open shared-equity pathway for buyers in this area.

Source: Housing Australia and State Revenue Office Victoria.

What reduces your borrowing capacity more than buyers expect?

The gap between what you think you can borrow and what a lender will offer is almost always explained by one of three things that buyers underestimate going in.

The three biggest capacity reducers:

• › Credit card limits: lenders assess cards as if fully drawn, at roughly 3% to 3.8% of the limit per month. A $20,000 limit you never touch costs you around $600 to $760 in monthly committed expenses on a lender's assessment. Reducing or closing cards before applying is one of the few things that improves capacity quickly.
• › HECS/HELP debt: the repayment is treated as an ongoing commitment, not the balance. A buyer on $100,000 with a HECS debt faces a compulsory repayment that reduces their borrowing capacity as if it were a regular loan repayment. Paying out a small HECS balance shortly before applying sometimes lifts capacity; for a large balance the deposit is usually better preserved.
• › The APRA DTI cap: from February 2026, lenders must limit the share of new lending above a debt-to-income ratio of 6 times gross income to 20% of their new loan book. If a lender has used much of that quota for the quarter, a high-income buyer with significant debts may be declined or deferred even where the serviceability numbers pass. Investors feel this cap most, because investor applications sit at higher DTI ratios on average. Lender timing can genuinely matter.

Source: APRA.

When does chasing a higher borrowing limit not make sense?

There's a point where borrowing at your maximum creates a situation that's genuinely hard to sustain. If the repayments at the assessment rate feel manageable but the actual repayments at your real rate leave almost no buffer for rate rises, school fees, a job change, or a property that needs work, you're holding your financial life together very tightly. That's not a borrowing-capacity problem; it's a purchase-price problem.

The more useful question for most buyers isn't "what's the maximum I can borrow?" but "what repayment am I comfortable carrying for the next five to seven years if my circumstances change?" Working backwards from that figure gives a more durable purchase price than working forwards from a lender's ceiling. For a South East Melbourne buyer targeting the inner south-east suburbs around Elsternwick, Bentleigh or Hampton, that's often the difference between a unit and a house, or between two suburbs.

How does a mortgage broker help you work out where you stand in South East Melbourne?

The reason lender choice moves the number is that credit policy isn't uniform. Three decisions differ meaningfully between lenders for an income-and-capacity question, and they're not published side by side anywhere.

• › How overtime and variable income is counted: some lenders take consistent overtime at full value once the history is there; others shade it to 80% regardless. On a buyer relying on $30,000 to $40,000 of annual overtime, that single policy difference can change the borrowing ceiling by $80,000 or more.
• › How expenses are modelled: if your declared expenses sit above HEM, most lenders use your actual number. A buyer with high childcare, school fees or medical costs who applies to a lender that substitutes HEM aggressively can find their capacity comes out higher than expected, even though nothing about their situation changed.
• › Where they sit against the DTI quota: a lender near its 20% high-DTI quota for the quarter may decline a file that would have been approved a month earlier. Knowing which lenders have room and which are near the cap is something a broker tracking the panel sees; a buyer applying direct cannot.

Comparing across our panel finds the lender whose policy fits your income shape, not just the one with the headline rate.

What goes wrong when buyers try to estimate this themselves?

The most common errors aren't about income at all. They're about the inputs buyers don't know to account for.

Where buyers lose ground on the capacity question:

• › Using the contract rate, not the assessment rate: online calculators often use the actual interest rate. Lenders use approximately 9%. A buyer who works backwards from "what I can repay at today's rate" will overestimate their ceiling by a significant margin in the current environment.
• › Forgetting card limits: most buyers think about their car loan and their HECS. Very few think to include the $15,000 credit card they carry a zero balance on. That limit reduces borrowing capacity the same way a drawn card does.
• › Treating both incomes as equally weighted: on a joint application, lenders assess both incomes but only one set of household expenses. That's genuinely positive for capacity. But if one income is casual, recently started, or includes a high variable component, it may not count at full value, and the joint ceiling comes in lower than the simple sum suggests.
• › Applying to the wrong lender first: a credit enquiry stays on the credit file for five years. Applying to a lender that doesn't fit your income shape produces a decline and a visible enquiry, both of which make the next application harder. The order of applications matters more than most buyers realise.

Frequently Asked Questions

Your Next Steps

Knowing what you need to earn is only the starting point. The real question is how your actual income, debts and deposit position translate into a borrowing ceiling with the lenders who are most likely to say yes, and that answer differs by lender, by quarter, and by how your income is structured. Getting it wrong at the application stage costs you time, credit file marks, and sometimes the property.

Ready to find out which lenders will work best for your situation? Contact the EverLend team or call 03 7036 3356. We'll canvas our 60+ lender panel and find the most suitable options for your circumstances.

About the author Evelyn Clark Director, Mortgage & Finance Broker Evelyn Clark is the Director and a Mortgage & Finance Broker at EverLend, the St Kilda brokerage she founded. She believes educating clients leads to better financial outcomes, which is why EverLend runs the You Have My Interest podcast, webinars and workshops. She helps first home buyers, upsizers and investors across South East Melbourne compare options across a panel of 60+ lenders. Meet Evelyn →

EverLend · South East Melbourne · Ever Lend Pty Ltd (ACN 625 080 515), authorised under Australian Credit Licence 517192 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.