Mortgage Stress Test Calculator

What is mortgage stress?

You're considered to be in mortgage stress when your mortgage repayments exceed 30% of your gross household income. At this level, there's limited room to cover other living expenses or absorb unexpected costs.

Severe mortgage stress is typically defined as repayments exceeding 50% of gross income.

APRA's 3% serviceability buffer

The Australian Prudential Regulation Authority (APRA) requires banks to assess your ability to service a loan at your actual rate plus 3%. This buffer is designed to protect borrowers from rate rises and was introduced (and later raised from 2.5%) to cool the property market.

Even if rates don't rise by 3%, you should be able to comfortably meet the stressed repayment.

Debt-to-income ratio

Banks also consider your Debt-to-Income (DTI) ratio — total debt divided by gross annual income. Most Australian lenders are cautious above a DTI of 6×, and APRA monitors banks' exposures to high-DTI loans.

How to reduce mortgage stress risk

• Keep repayments below 25–30% of gross income
• Build a cash buffer of 3–6 months repayments in an offset or savings account
• Lock in a fixed rate if you're concerned about rate rises
• Reduce other debts before taking on a mortgage
• Pay down principal aggressively in early years while rates are manageable