What is HEM and how does it affect your mortgage in Australia?

HEM (Household Expenditure Measure) is a minimum living cost benchmark published quarterly by the Melbourne Institute. APRA requires all banks and lenders to apply at least HEM when assessing whether you can afford a mortgage — even if you declare lower expenses. It covers food, utilities, transport, clothing, and everyday spending. It does not cover rent, school fees, or health insurance, which are assessed separately.

How it affects your borrowing

HEM is a serviceability floor. If you declare $1,800/month in living expenses but HEM for your household is $3,200, the lender uses $3,200. This reduces the surplus income available to service a mortgage and therefore reduces your maximum loan. Couples with dependants have significantly higher HEM than singles — often $1,500–$2,000/month more.

Worked example

HEM benchmarks by household type — metropolitan (indicative)

Single, no dependants≈ $2,480/month

Single, 1 dependant≈ $3,050/month

Couple, no dependants≈ $3,680/month

Couple, 1 dependant≈ $4,200/month

Couple, 2 dependants≈ $4,680/month

Couple, 3+ dependants≈ $5,200/month

Key factors

HEM figures are not publicly published — lenders license them from the Melbourne Institute. GetReal uses indicative estimates.
Regional HEM is lower than metropolitan HEM — GetReal determines your location from your postcode.
The higher of your declared expenses or HEM is used — you cannot beat the floor by declaring lower spending.
Rent, school fees, and private health insurance are added on top of HEM in the serviceability calculation.

See how this affects your specific situation

Calculate your serviceability ceiling

Frequently asked questions

Can I negotiate the HEM applied to my application?

No — HEM is a regulatory floor. You cannot negotiate it below the benchmark for your household type. You can (and should) declare your actual expenses if they are higher than HEM, as lenders use the higher figure.

Does HEM account for childcare?

HEM covers basic living expenses. Childcare is often treated separately as a committed expense — lenders may add actual childcare costs on top of HEM. Policies vary by lender.

Is HEM different in regional areas?

Yes — HEM benchmarks are lower for regional and rural areas. GetReal determines your location type (metropolitan vs regional) from your postcode using ABS ASGS classifications.

Why does GetReal apply HEM even if I enter lower expenses?

Because that's what lenders do — APRA requires it. GetReal mirrors lender behaviour so its estimates are as realistic as possible.

This page is part of GetReal's methodology documentation. Figures are updated when underlying data in our Supabase database changes. This is not financial advice.