Does a bank look at how much you spend on food when assessing eligibility?
If you’re applying for a home loan — or thinking about it — you might wonder: does how much I spend on groceries and meals count? The short answer: yes — at least partially. In Australia, banks and mortgage lenders generally do look at living-expenses data, which includes food, as part of their decision-making. But the process is more complicated than simply totalling last year’s grocery bills.
Here’s how it works:
🔎 1. What lenders really look at: “living expenses,” not just income
When a bank assesses whether you qualify for a loan, they evaluate your overall financial position: your income, existing debts, and your regular household expenses (not just your current rent or mortgage).
As part of this, some lenders require applicants to declare their usual outgoings across categories including food and groceries, transport, utilities, personal care, communications and other “essential” or “everyday” expenses.
In short — how much you normally spend on food (or at least a reasonable estimate) does matter in the overall calculation of whether you can afford the loan repayments.
📊 2. The benchmark they often use: the Household Expenditure Measure (HEM)
Given that individual spending habits vary widely, banks (and other lenders) often rely on a benchmark rather than your exact spend. That benchmark is HEM — a standardised estimate of living costs for households based on income, household size, location and basic goods/services. HEM covers essential expenses such as food, groceries, utilities, transport and modest discretionary spending.
During a loan application, you may be asked to fill out a living-expenses estimate (or the bank will rely on HEM if your declared expenses are unusually low).
If your actual expenses are higher than HEM — for example, you have a large family, particular dietary needs or higher grocery/food bills — some lenders may accept the higher figure. But if your declared expenses are unusually low, many lenders will still apply HEM, rather than taking your number at face value.
🧮 3. Loan “serviceability” depends on expenses — food included
The core test banks perform when approving a loan is whether you can comfortably service (repay) that loan, now and in future, under a range of scenarios (e.g. interest-rate rises).
As part of that, they subtract your estimated “living expenses” — food/groceries, utilities, transport, insurance, other regular outgoings — from your income to work out how much is left over. That leftover capacity determines how much you can safely borrow.
So if you have big food and grocery bills (because of family size, lifestyle, dietary needs, or frequent take-out), that will reduce the amount you can realistically borrow — all else being equal.
⚠️ 4. It’s not a perfect “food audit” — banks don’t ask “food per year 2024–25”
Even though food spending is part of the living-expenses picture, lenders do not typically ask you for a detailed “how much did you spend on food last year” statement. Instead:
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You usually fill in an estimate of your usual “weekly/monthly living expenses” including groceries/food.
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Banks may ask for bank statements and transaction records for the past 1–3 months (or more); they then use that to gauge whether your declared budget is realistic.
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If your declared living expenses are lower than the benchmark HEM, the lender will often default to using HEM — so “living cheap” on paper doesn’t necessarily boost your borrowing power.
In other words: food spending counts — but estimates and standard benchmarks matter more than a full-year audit.
🏠 5. What this means for applicants
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When preparing for a loan application, treat groceries/food as part of your living expenses. Even if you try to minimise spending, the lender may apply HEM — so be realistic.
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Have recent bank/credit-card statements handy (3–6 months is typical). These help show actual spending patterns.
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Understand that higher essential expenses (food, transport, bills) reduce borrowing capacity. So, a large household or high-cost lifestyle may lower the maximum loan amount a lender will deem “safe.”
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Don’t rely on “frugal living” to get a bigger loan — most lenders default to HEM or use actual spending data.
✅ The verdict
Yes — banks and lenders in Australia do look at how much you spend on food/groceries indirectly when assessing home-loan eligibility. They do this as part of estimating your overall living expenses. But it’s not strictly “food per year” that matters. Rather, what counts is your typical ongoing living costs (food among them), assessed via your declaration, recent statements, and/or a standard benchmark such as HEM.
