It's the question every first-home buyer types into Google at 11pm: how much do I actually need to earn to buy a house here? The honest answer is that your salary is only half the story — your deposit does just as much heavy lifting, and the bank tests you against a rate far higher than the one you'll actually pay.
This guide walks through the real math banks use, shows how income and deposit work together, and gives you ballpark income figures for different price points — so you can see where you stand before you talk to a broker.
As a rough rule, most buyers need a household income somewhere near one-sixth to one-seventh of the purchase price once you have a 20% deposit. A larger deposit lowers the income you need; a smaller one raises it. The number that matters most isn't your interest rate — it's the bank's higher test rate.
Two numbers decide everything: deposit and serviceability
Every mortgage approval comes down to two gates you have to pass at the same time.
The first is your deposit. Most buyers aim for 20% to avoid a low-equity premium, though first-home buyers can sometimes get in with 10% or less. A bigger deposit means a smaller loan — and a smaller loan is far easier to service.
The second is serviceability: can you afford the repayments on your income after your living costs and other debts? Banks don't assess this against today's advertised mortgage rate. They stress-test you against a much higher "test rate" to make sure you'd cope if rates rose.
The bank test rate — the figure that trips people up
When a lender assesses your application, they don't use the ~6% (or whatever is advertised) that you'll actually pay. They add a buffer and assess your repayments at a test rate that's typically several percentage points higher. That's why buyers are often shocked that they qualify for less than they expected.
If today's rate is around 6% but the bank tests you at roughly 8–9%, your "affordability" is calculated on repayments you're not actually making. Plan around the test rate, not the headline rate — it's the number standing between you and approval.
How much house does your income buy?
The table below is an illustration only — it assumes a 20% deposit, minimal other debt, and a stress-tested repayment. Real figures depend on your outgoings, dependants, credit commitments and the lender. Treat it as a starting point, not a promise.
| Purchase price | 20% deposit | Loan needed | Rough household income guide |
|---|---|---|---|
| $600,000 | $120,000 | $480,000 | ~$90,000–$110,000 |
| $800,000 | $160,000 | $640,000 | ~$120,000–$145,000 |
| $1,000,000 | $200,000 | $800,000 | ~$150,000–$180,000 |
| $1,200,000 | $240,000 | $960,000 | ~$180,000–$215,000 |
The pattern holds fairly steadily: with a 20% deposit, the income you need lands somewhere around a sixth to a seventh of the purchase price. Push your deposit higher and those income figures drop; go in with a slim deposit and they climb, plus you may face a low-equity premium on top.
Buying solo vs buying with a partner
Almost all of the higher price points above assume a combined household income. A single buyer on one salary faces a steeper climb, because living costs don't halve when you're on your own but the bank still has to see the repayments comfortably covered.
This is exactly why so many solo buyers look at smaller homes, apartments, townhouses, or bringing in a co-buyer or guarantor. There's no shame in starting smaller — the goal is to get onto the ladder without stretching past the test rate.
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Score This Property Free →Five ways to need less income (or buy sooner)
- Grow your deposit. Every extra dollar of deposit shrinks the loan you have to service — the single most effective lever you control.
- Clear short-term debt. Car loans, buy-now-pay-later and credit-card limits all reduce your borrowing power, sometimes dramatically.
- Use KiwiSaver. For most first-home buyers, KiwiSaver is the biggest chunk of the deposit. Check your eligibility early.
- Consider a co-buyer or guarantor. A second income or a family guarantee can change what you qualify for.
- Look at first-home support. Low-deposit lending options exist for eligible first-home buyers — a broker can tell you what you qualify for.
Getting approved for a number and comfortably affording it are two different things. If an unpermitted deck or a flood notation surfaces after you've stretched to your maximum, you'll have no room to negotiate or absorb the cost. Leave yourself a buffer.
Income is only the entry ticket
Qualifying for the loan gets you to the table. What protects you after that is knowing exactly what you're buying. Two properties at the same price can carry wildly different risk — one clean title and consented, the other with an unpermitted addition, a drainage easement and a flood notation that quietly costs you tens of thousands.
With a 20% deposit, aim for a household income around a sixth to a seventh of the purchase price — and always plan around the bank's higher test rate, not the advertised one. A bigger deposit is the fastest way to need less income. Then make sure the house you can afford is a house worth buying.