Can I get a home loan while receiving Centrelink benefits?

As there are many different types of Centrelink benefits, loan approval is likely to differ depending on the lender and the borrower’s situation.

| | 8 minute read

Can I get a home loan while on Centrelink?

If you’re looking to buy a house and receive income from Centrelink, you can apply for a home loan. As there are many different types of Centrelink benefits, loan approval is likely to differ depending on the lender and the borrower’s situation. For one, a lender is unlikely to approve you for a loan if Centrelink is your only source of income. Your chances of being approved will improve if someone in your household is in paid employment. Some lenders will accept borrowers with sole incomes (such as single parents and those on war veteran pensions) but their interest rate is likely to be higher. It does vary from lender to lender so it’s a good idea to chat to a uno expert to find out more.

There are some Centrelink benefits that may count towards your income for a home loan:

Family tax benefit

If you are receiving parenting payments from Centrelink, you may be able to apply for a home loan in some circumstances. It largely depends on the lender, and your situation. Some lenders accept Family Tax Benefits (FTB) Part A and B as income, as long as you can provide supporting documentation.

Several FTB benefits won’t be considered income, including medical allowances and parenting payments because these benefits have specific purposes. Rental assistance is also not taken into consideration.

Carer’s allowance

If you give extra care to someone who has a disability or severe illness or is frail aged, you may be able to include this income in your application for a home loan. Your lender is likely to ask a lot of questions about your support payments and want to see documentation to support your claims.

War veteran’s and widow’s pensions

A lender may accept a veteran’s or widow’s pension as this is an ongoing payment and usually considered normal income. Again, speak to a uno expert to find out if you meet the requirements.

Disability pension

Can a disability pensioner get a home loan? Yes, a disability pension is usually considered a valid form of income by lenders, although it all comes down to whether or not you can comfortably repay the loan using the income amount you receive.

You’ll also need to provide supporting documentation such as bank statements and a letter from Centrelink confirming your disability pension. It’s best to speak to a uno expert about your options as your borrowing power with vary from lender to lender.

How can I get a house with low income?

If you have low income, you can still apply for a home loan, but your options might be limited. How much you can borrow depends on two factors. The lender’s policies play a part, but the most important factor is your income amount. If you want to get an idea of how much you can borrow, calculate your fortnightly income, then multiply that amount by 26 to find your annual tax-free income figure.

You can also check payslips or statements to calculate how much tax you pay. If you are applying for a joint loan, calculate the income of all parties.

The best way to get a rough estimate of how much you can borrow is to use uno’s borrowing calculator.

Keep in mind that different lenders have different ways of calculating how much you can borrow. Chat to a uno expert to learn more about your options.

Also check out our tips for saving money, which include getting rid of personal loans, car loans and credit card debt. We’ve also compiled a definitive list of answers to your most pressing home loan questions, which looks at concerns such as how working part time or casually affects your borrowing power.

Can you get a home loan while on workers’ comp?

If you’ve been injured while at work or become sick due to work and are receiving workers’ compensation, it’s unlikely you will be able to put the money towards a home loan application. Liberty finance may consider you, so it’s a good idea to speak to a uno home loan adviser about whether you qualify.

In order to apply for a home loan, the workers’ comp must be permanent and ongoing (to show you can continue to pay off your mortgage) and you’ll need to provide medical certificates and supporting documentation from Centrelink.

What are genuine savings?

Genuine savings refers to money that you have saved yourself. These monies are not dependent on your brother selling his car, or a loan from a friend, which make lenders nervous.

You need genuine savings to make up your deposit as this will affect how much you are able to borrow from your lender. The lender wants to see that you are responsible with money and capable of saving money, so they can rely on you to pay off your home loan.

Can I buy a house with no down payment?

Pre-GFC days, you might have found a lender who would grant you a deposit for 100% of the value of the property. But, unless you have a guarantor, these days getting approval for a no-deposit loan is unlikely. Most people who get no deposit loans are first home buyers who will live in the homes they purchase. To get the loan approved, they need a guarantor: a person legally responsible for paying back the entire loan if the borrower cannot or will not make the loan repayments. The guarantor will also have to pay any fees, charges and interest. A parent may act as a guarantor to first-time buyers seeking help getting a home loan.

Is child support considered income when applying for a mortgage?

Yes it is, although not with all lenders. If you’re receiving Centrelink payments and applying for a home loan, whether you are approved will largely depend on the lender and your situation. Some lenders accept Family Tax Benefits (FTB) Part A and B as income, as long as you can provide supporting documentation.

Several FTB benefits won’t be considered income, including medical allowances and parenting payments because these benefits have specific purposes. Rental assistance is also not taken into consideration.

What is the first time home buyer program

The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant is payable to first home owners that satisfy all the eligibility criteria.

You can find links to each state’s grant page with more information about this opportunity for extra income, via this link here.

Can I use superannuation to pay for a home loan?

As part of new housing affordability measures announced by the Australian government in the 2017 budget, first-home buyers are now allowed to put up to $30,000 of voluntary superannuation contributions toward a deposit on a house or apartment.

Individuals with existing home loans can also apply for the early release of superannuation benefits for mortgage assistance, if they meet certain requirements and can provide the relevant supporting documents.

According to the Department of Human Services, you may be eligible for an early release of superannuation for mortgage assistance if:

  • your mortgagee or council is threatening to repossess or sell your home due to arrears on your mortgage or council rates;
  • the property under threat is your usual place of residence;
  • you are responsible for the mortgage repayments and rates; and
  • you can’t afford to pay the arrears without accessing your superannuation.

You will not be eligible for an early release of superannuation for mortgage assistance if:

  • you are not currently in arrears on your mortgage or council rates but expect to have difficulty making future repayments;
  • you are in arrears on your mortgage or council rates but your mortgagee or council is not threatening to repossess or sell your home; or
  • you are in rental arrears.

For more information see https://www.humanservices.gov.au/individuals/enablers/mortgage-assistance

With Alexi Neocleous

This information is general in nature and you should always seek professional advice when making financial decisions.

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Hannah Tattersall worked as a journalist in Sydney, New York and Edinburgh before joining uno as its Content Editor. She has written for The Australian Financial Review, The Sydney Morning Herald, Qantas The Australian Way and In The Black, among other titles, and worked for 21st Century Fox and News Corp. She writes content aimed at buyers, investors, refinancers and anyone interested in the home loan process and welcomes feedback on how we can make uno's content better for you.

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