Serviceability for two incomes: how lenders assess couples and dependants

How lenders evaluate two incomes in 2026

When you and your partner apply for a home loan together, the lender adds both salaries together — but that sum doesn’t automatically translate into maximum borrowing power. Serviceability is calculated by applying a 3% buffer (set by APRA) above the current interest rate, then deducting living expenses, dependant costs, and other commitments. With the RBA cash rate at 4.35% and the lowest variable rates around 5.69%, the test rate is approximately 8.69%. That squeeze affects couples more than single applicants because costs scale with family size.

In 2026, lenders are also strictly adhering to the Debt‑to‑Income (DTI) cap of 6x introduced in February. Even if your combined income suggests you can service a larger loan, the DTI limit will cut you off if your total debt exceeds six times your gross annual income.

Joint applications: full‑time, part‑time, and casual income

Lenders treat each applicant’s income source differently:

· Both full‑time permanent – Best case. Both incomes are taken at 100%, though probation periods (typically 3–6 months) may cause a deduction or delay.
· One full‑time, one part‑time – The part‑time income is assessed at the actual hourly rate multiplied by guaranteed hours. If the role is ongoing, most lenders accept 100% of part‑time income.
· Casual – Requires a consistent 12‑month history (sometimes 6 months for major lenders). Income is generally averaged over the period, with some lenders applying a 20% haircut for overtime or non‑guaranteed shifts.
· Contract or self‑employed – At least 2 years of tax returns are needed. Some lenders accept 1 year of self‑employed income if the work is in the same industry.

Bonus and commission – Usually only 50–80% is counted, and only after a minimum 2‑year track record.

Key point: If one partner’s income is variable or part‑time, the total borrowing capacity may be significantly less than 2× a single salary. Run a joint borrowing power calculator to see the real number.

Dependant loading: what it costs you

Every child or financial dependent reduces your borrowing power. Lenders apply a “dependant loading” to the Household Expenditure Measure (HEM). The standard loading per dependant (child, adult dependent, or student aged 18+) is:

· $4,500 – $6,500 per year for a child (varies by lender)
· $10,000 – $15,000 per year for a non‑working adult dependent

This is added to the base living expense figure. For two children, expect an extra $9,000 – $13,000 in annual living costs on the application. That translates to a reduction in borrowing capacity of roughly $90,000 – $130,000 for a 30‑year loan at 5.69% (before buffer). With the 3% buffer, the effect is even larger.

Lenders also consider:

· Childcare costs – If both parents work, actual childcare fees are included as a recurring expense.
· School fees, extracurricular activities – These are declared and factored in.
· Age of dependants – Older children may have higher living costs (food, transport) but lower childcare costs.

Strategy: Minimise declared expenses where possible. If your children are not yet in fee‑based activities, don’t inflate costs. Use HEM as a baseline — lenders rarely question the HEM figure if you have no history of heavy spending.

Maternity leave, parental leave, and secondary income

One of the most common concerns for couples is how lenders view a partner on maternity or parental leave. In 2026, most major banks accept that the parent will return to work after leave, provided:

· The employer confirms the role is still available and the return date is within 12 months of application.
· The leave is paid (government Parental Leave Pay plus employer contributions) – the paid amount can be used as income for the period of leave.
· For unpaid leave, some lenders still accept the pre‑leave income if the applicant signs a declaration of intention to return.

However, national lenders have tightened since 2024. If the leave period is longer than 12 months or the role is uncertain, the lender may only consider the lower income during leave. In practice, this can drop borrowing power by 20–40%.

Self‑employed or casual during pregnancy – If the second income was irregular and the applicant is now on unpaid leave, the lender may count only the first income. A solution is to apply before the leave starts, using current income, but that requires careful timing.

The 3% buffer and DTI cap: the real drag on two incomes

The APRA‑mandated 3% buffer is applied to the higher of the actual rate or a floor. With rates at 5.69%, the test rate is 8.69%. For a couple earning $180,000 combined, the maximum loan under a standard 30‑year term with no dependants is about $750,000 – less than if you simply multiplied income by 6 (which would be $1,080,000). The buffer eats into capacity.

In February 2026, APRA also enforced a DTI cap of 6x. This means total borrowings cannot exceed 6 times gross annual income. For a couple earning $150,000, the hard limit is $900,000 — regardless of serviceability. Many couples find the DTI cap binds before the buffer does.

Example:
· Combined income $160,000
· DTI cap = $960,000
· Serviceability at 8.69% with 2 dependants ≈ $700,000
· Actual borrowing likely limited by serviceability, not DTI. But for high‑income couples ($250k+), DTI can be the tighter constraint.

How the First Home Buyer Guarantee (FHBG) changes affect couples (July 2026)

From 1 July 2026, the FHBG eliminates the income cap entirely — a major change that benefits dual‑income couples who previously were ineligible. The scheme allows 5% deposit with no LMI, and the government guarantees up to 15% of the property value.

Price caps for the scheme (2026–27):
· Sydney – $1,500,000
· Brisbane – $1,000,000
· Melbourne – $950,000
· Perth – $850,000

For a couple each earning $70,000 (combined $140,000), the old $125,000 individual cap (since removed) would have barred them. Now they qualify. The 5% deposit requirement is a 5% of the purchase price — for a $1M apartment in Sydney, that's $50,000. Much easier to save with two incomes, especially if you can minimise rental costs in the lead‑up.

Caution: Lenders still need to service the loan. A 95% LVR loan at 5.69% + 3% buffer will be tight, especially with dependants. Use the FHBG calculator on this site to see if you meet the serviceability test.

Common mistakes couples make on applications

· Not declaring all dependants – Lenders will discover them on credit reports or through Centrelink references. Omission can lead to decline.
· Assuming both incomes are weighted equally – If one income is casual/self‑employed, the lender may discount it. Always get a pre‑assessment.
· Ignoring the DTI cap – Even with perfect serviceability, going over 6x income will likely be rejected by banks using APRA’s macro‑prudential guidance.
· Applying during a leave period without documentation – Provide employer letters and return‑to‑work plans.

FAQ

Q: We have two children and combined income of $130,000. How much can we borrow?
A: Using a test rate of 8.69% and with dependant loading (~$11,000/year extra), your maximum loan is around $550,000 – $600,000. The DTI cap of 6x would limit you to $780,000, but serviceability is the tighter constraint. Without dependants, you could borrow about $680,000.

Q: My partner is on 12‑month paid maternity leave receiving $1,200 per fortnight from Centrelink. Does that count as income?
A: Yes, most lenders accept Centrelink Parental Leave Pay as income, provided the leave is authorised and return to work is confirmed. Your partner’s pre‑leave salary is not counted during the leave period. Total household income for serviceability would be your salary + $31,200/year from Centrelink.

Q: What if I have two dependants and one is a non‑working adult (e.g., parent)?
A: The loading for a non‑working adult is higher — typically around $12,000 – $15,000/year. That alone can reduce borrowing capacity by $120,000+. Some lenders may exclude the loading if the adult has their own income, even if small.

Q: Does the FHBG remove the income cap completely from July 2026?
A: Yes. As confirmed by Housing Australia, from 1 July 2026 there is no income limit for the First Home Buyer Guarantee. Price caps still apply per city. A couple earning $250,000 can use the scheme, provided the property price is under the cap.

Q: We want to borrow $900,000 with combined income $160,000. Is that too high?
A: At 8.69% test rate, monthly repayment is about $7,000. HEM for two adults plus one child is about $55,000/year ($4,583/month). Total monthly outgoings = $11,583. Your net household income (after tax) is roughly $11,000/month. That leaves a deficit — the lender will likely decline. You’d need either a higher deposit (lower LVR) or a lower loan amount (~$720k).

Sources

1. APRA – Serviceability buffer announcement (February 2026)
2. RBA – Cash rate target (April 2026)
3. Housing Australia – First Home Buyer Guarantee policy updates (July 2026)
4. NSW Revenue Office – Property price caps for FHOG/FHBG (2026–27)
5. Australian Banking Association – Lending guidelines for parental leave

Next steps

Your borrowing power with two incomes is higher than a single applicant, but dependants and the 3% buffer can limit it more than you expect. Use our borrowing power calculator to see your real capacity. If you’re ready to apply, start your application now and we’ll match you with lenders who specialise in couple and family applications.

Open borrowing power calculator
[Apply now — data‑open‑widget]

Related guides

· How much can I borrow in 2026?
· APRA serviceability buffer explained for 2026
· Why your borrowing power dropped in 2026