Living Expenses Calculator

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What is your living arrangement?
What is your lifestyle??

Do you match the household expenditure measure?

Preparing your home loan application can be a daunting task, especially when you’re trying to work out your living expenses on a weekly or monthly basis.

Use the living expenses calculator to find out how your spending compares to the average monthly cost of living in Australia.

Will it stop you from getting a mortgage?

How does the calculator work?

This calculator uses your family size, location and lifestyle to estimate your living expenses based on the Household Expenditure Measure (HEM).

This is the same method used by the Australian Bureau of Statistics (ABS) and by most Australian banks when assessing your borrowing power for a mortgage application.

The result should be used as a general guide only, as your living expenses can vary significantly depending on how you choose to spend your money.

If you’re new to Australia then you can learn more about how to buy a home in our non-residents section.

What items are expensive in Australia?

The cost of living in Australia is significantly higher than most countries, including other developed countries.

In particular, you’ll find that the following items are much more expensive:

  • Housing (rent and house prices)
  • Alcohol
  • Tobacco
  • Petrol

However, Australians tend to have a much higher income so it’s still possible to enjoy a good lifestyle.

Which expenses are included?

The calculator takes all basic living expenses into account such as groceries, utilities, phone, public transport/car and entertainment.

The cost of renting or mortgage repayments is calculated separately so you can replace the figure with your own estimate after you decide where you’d like to live.

Example of HEM living expenses measure

The cost of living can vary signficant depending on the make up of your household.

Below are some example results of the living expenses calculator which include the cost of monthly mortgage repayments based on average Australian house prices:

  • Living cost in Australia for one person: $2,835 per month
  • Average living expenses for a couple: $4,118 per month
  • Average monthly living expenses for a family of 4: $5,378

Input your own details to find out how your living expenses really compare with the national average.

The most expensive cities in Australia

The most expensive cities in Australia are Sydney and Melbourne.

Perth and Canberra are also relatively expensive but it’s people living in the other capital cities such as Brisbane and Adelaide that have some of the lowest living expenses in Australia.

An exception to this is if you live in a very remote area such as a mining town.

You may find that your average cost of living is high due to the cost of bringing goods and services to your community.

Why do banks use the HEM?

Under the National Consumer Credit Protection Act 2009, Australian banks must make allowances for living costs when they run borrowing power or serviceability assessments for applicants.

This goes above any debts or liabilities they have.

The industry regulator, the Australian Prudential Regulation Authority (APRA), doesn’t provide specific dollar figures for banks to adhere to so for years they were using the Henderson Poverty Index or Henderson Poverty Line and added an allowance.

In 2012, the Commonwealth Bank (CBA) switched to the Household Expenditure Measurement and other banks followed.

Banks don’t just rely on the HEM

Most Australian banks certainly rely on the HEM as a guide but they also use their own measures, adding a buffer based on their own risk appetite.

Another way banks mitigate risk is by using an assessment rate or interest rate buffer.

By assessing your borrowing capacity at a higher rate, they can determine whether you’ll still be in a comfortable financial position should interest rates rise.

Banks don’t publish these rates and HEM buffers.

Luckily, a mortgage broker can help you prepare your mortgage application so you can maximise your borrowing power with the right lender.

Want to find out more?

A lot has actually changed when it comes to calculating living expenses.

  • Bob M

    I calculated my living expenses and it seems my servicing could end up being a bit tight so is there any way that I can increase my borrowing capacity?

  • Hi Bob,

    Here are some ways you can use to improve your borrowing power:
    – Cancel your credit cards or reduce their limits to what you actually use.
    Switch your current loans to interest only. However, this is acceptable to some lenders only.
    – Fix the rate on your current loans. Again, this is acceptable to some lenders only.
    – If you choose a lender that can include overtime, bonus and other income in their assessment, you automatically can increase your borrowing power if you earn a lot through them.
    – Find a lender that can allow you to borrow more.
    For more information, you can check out the Improve My Borrowing Power page:

  • Howard

    We’re a family of 2 with 2 dependents and your calculator showed a monthly expenditure of $3k and also said that if we can afford another $197 a week, we can qualify for a home loan. However, we actually have a monthly expenditure of around $2k so does this mean we should be able to get a mortgage?

  • Hey Howard,

    The calculator uses input data based on the Household Expenditure Measure (HEM), which is used by most Australian banks when assessing your loan application. This means that the banks may likely assess you based on a higher monthly expenditure and so reduce your borrowing power and chance of approval. Please call us on 1300 889 743 and speak with one of our expert mortgage brokers to discuss your situation and loan needs in detail.

  • Franz

    Hi HLE

    How do banks calculate living expenses? Is it based on expected expenses post-settlement or current living expenses from the past 3 months, for example? For example, I don’t pay council now but will be expected to do so once our house has finished construction (9 months after settlement). Another example is that we pay mother in law for babysitting but expect to pay for child care long after the loan has settled. Do we have to declare that expense when applying for a home loan?

  • Hi Franz,

    What’s normal is to declare what you are paying now and then make comments about what is changing in the future.

    What’s really important for paying your loan is that you consider large expenses that cannot be easily cancelled. For example if someone is paying private school fees then this is a major expenses and must be considered when we calculate someone’s ability to pay a loan.

    It’s ok to make realistic adjustments to your lifestyle expenses. For example you could include gym fees and foxtel as an expense but make a comment that you are cancelling these so that you have sufficient funds to pay your home loan.

  • Jessica Coles

    Hi HLE
    I am on centrelink (mother of two) I got my home loan through ANZ, I purchased the house putting down a 20% deposit. Purchase price of $85,000. I renovated the outside of my home to use equity to borrow money to renovate the inside. I currently owe $81,000 all up. I expect my home to be valued at atleast $140,000 that’s if I get a valued on a bad day but anywhere to about $180,000.
    I’d like to purchase an investment property (no more then $100,000 renovated and finished). I am aware that ANZ has stopped accepting parenting payment single and was wondering if you know of any banks or unions that still accept parenting payment single as an income that would be interested in helping me? Thank you in advance

  • Hi Jessica,
    It depends on the age of your children to work out what the banks will allow. I believe you’re referring to FTB A & B?
    The problem you may have is that if that’s your sole source of income and you then receive rent income the banks are unlikely to accept it as they would be worried that your benefits would be reduced because you have the rent income.
    The location may also be a concern for some lenders
    If you’re also working then we can definitely assist. If not then it would be case by case, but in most cases we can’t help.

  • Jessica Coles

    Okay, thank you for that. I’m speaking to bank at the moment who accepts centrelink payments so I’ll see if I meet all their other criteria aswell. I’ll see how I go and get back to you. Thank you again :)

  • Leigh D

    Hi HLE,

    My fiancé and I will be moving into our own home soon, I have calculated that after car repayments and house repayments come out of our wages we will have around $890 to live on per week, is this enough for us to survive comfortably?

  • Hi Leigh,
    It could be enough to live off of. If you’re a couple with no children then that looks ok. Banks assess your loan at a rate around 7.25% so they require there to be a healthy buffer before they approved a mortgage for you.
    You should complete your own budget as a banks estimate of your living expenses is just a generic guide. Some people live a high life or have lower expenses.

  • Declan Murphy


    Nice post and I like the living expense calculator. The
    Finance Site’s are there available for calculating home loans and other
    details. This calculators are really helpful.


  • kds

    Hi HLE,

    financially independant and do not want to be a part of my housing loan liability.In view of the same whether banks will consider only mine living expenses or for both?

  • Hi kds
    Most banks would assess your living expenses to be for a couple regardless of your partner’s financial position. Some of our lenders can make an exception to this if we can provide payslips or other evidence to show that your partner is not financially dependent on you.

  • Pirate_Pete_4740

    Hello Jessica.

    Can I ask – where did you buy your house?


  • Graham

    I’d appreciate knowing whether it’s possible for seniors to get into a home loan (70)? Joint income is $70k pa.

  • Hi Graham,
    Yes it is possible however we’d need to know the full details to be sure. In particular we need to answer the question “how will the home loan be repaid without hardship?”. Do you have a plan to pay it off before retirement? Or do you have assets you can sell to pay off the loan?

  • precilla

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    Which will be used to grant loans between individuals in the short and long term from
    €2000 to €500,000 to all serious persons being in real need, the rate of
    Interest is 2% per annum. I grant financial loans, real estate loan, investment loan,
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    Person not serious abstain

    More information
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  • Matrix

    Why the borrowing capacity figures calculated by us and bank don’t match?

  • Hi Matrix,
    That’s because banks typically add a couple percentage points or higher on the actual interest rate in order to mitigate risk. They want to determine whether you will be in a comfortable financial position in case of interest rates rise or not.
    Banks don’t publish these rates. But, we can prepare your mortgage application so you can maximise your borrowing capacity with the most suitable lender. So, please call us at 1300 889 743 and know out more.

  • Christiano

    My real estate agent says that the government is looking into how banks calculate a borrower’s loan repayment ability by assessing their income and expenses. I want to buy my first home this year. How will this affect my borrowing power? What changes should I expect? Most of my income goes to rent and bills so is there anything I can do to better my chances at getting a home loan?

  • The big four banks – ANZ, CBA, Westpac and NAB – are very much reliant on the Household Expenditure Method (HEM) when assessing living expenses.

    However, this is going to change as the banks are looking to increase the number of expense categories, up to 12 categories with some lenders!
    Hi Christiano,
    The Australian Securities and Investments Commission (ASIC) is leading the charge against the formulaic spending patterns of the applicant.

    Westpac is one of the first movers and will soon introduce a new ‘Financial Acknowledgement’ form, which will require you to detail the income, expenses and liabilities/debts you provided to your mortgage broker.

    If you’re spending excessively in areas which can be avoided, you should plan to cut it and stick to a budget.

    For example, you can reduce the limit on your credit card or cancel them altogether if you find you’re either not using the limit or you’re using the card on an irregular basis.

    If possible, also consider cutting entertainment costs like dining out, going to the pubs or heading to the cinema several times a month.

    Basically, if you can show that these expenses can be cut from your budget today, that’s a good sign to the bank that you can support a home loan.