This is a series post - helping to navigate the steps of buying the property. First step in finding out in venturing into the property journey is to decide on setting a budget. This is something that you may have heard before - but where do you go and how do you set up a budget?
How Much Can We Really Afford? — A First-Home Budgeting Story
It started one Saturday morning — over coffee, chicken wraps packed, realestate.com.au tabs open, and two very sleep-deprived people (me and Mrs.) whispering so we can get going.
We weren’t dreamers. Just two people hoping to get our foot in the property market — with some savings, a whole lot of questions, and a deep desire to stop going to inspections and coming back disappointed.
We’d seen places we loved — and we’d also seen the price tags that crushed those dreams like a wrecking ball.
And that’s when it hit us.
Before we scroll another listing or speak to another agent, we needed to ask:
“What can we really afford?”
Not the amount the bank might lend us. Not what the agent thinks we can stretch to.
But something grounded. Calm. Rational. Ours.
So we sat down and mapped it out - not just with emotions, but with real numbers.
Here’s what we did (and what you can too):
1. Know your income — net, not gross
Forget what you earn before tax. Your budget should be based on what actually lands in your account.
“Can we still breathe after mortgage, bills, and groceries?” Do not over stretch yourself too thin.
That’s your starting point.
2. Track your actual living expenses for 3 months
It’s boring, but so valuable. How much goes into food, childcare, transport, subscriptions, health, fun and blah blah?
You’ll likely realise:
Where you’re overspending
What’s fixed and what’s flexible
And most importantly, how much room you have left for repayments
3. Set a comfort-zone mortgage repayment
Ask:
“What’s the maximum we’d be OK paying monthly — without lifestyle suffocation?”
Use that number to reverse-calculate your borrowing power, rather than starting from how much the bank offers you. Use mortgage calculators or talk to a mortgage broker - while they’ll be working hard to get the max for you - but you set a limit on how much you want to. Do not go in for what all bank could offer you - rather you take what’s something that you’d be comfortable with.
4. Account for incidental / hidden costs
Stamp duty
Legal fees
Building & pest inspection
Moving costs
New furniture or appliances
Connection fees for internet, gas, water
Build these into your upfront costs bucket. Some of these may be menial - but having it and some will essentially won’t let you stretch too thin. Also, do not upgrade or buy everything at once - add incremental gratitude - have a list and get them one by one. Some things can definitely wait - if you don’t have a dining table - on the day you move in or in that month - you still can eat from couch. Make some small adjustments.
5. Don’t forget the emergency buffer
Life doesn’t pause after you buy a house.
Keep aside 3–6 months of living expenses (if possible) even after deposit and costs are paid. This helps you breathe if job changes, repairs, or curveballs hit. There could be a burst water pipe or something that might come which you’ve not planned and or accounted for - so, it’s safe to keep some aside.
6. Consider future life changes
Will there be:
A baby in the near future?
One partner taking time off work?
A job change or a move?
Build a small buffer for what’s next, not just what’s now.
7. Think long-term: Fixed or variable? Offset account?
These are the mechanics — but worth thinking early. A slightly higher rate with more flexibility might be worth it for your peace of mind. And variable lets you switch easily. Fixed gives you a comfort of knowing how much you have to pay every month. Go with what works best for you and your family.
Set your home-buying budget like you’re planning a marathon, not a sprint.
You need stamina. And you want to enjoy the view - not just at the finish line, but all the way through.