Home Loan With Low Income: What Are Your Options in Australia?
Many Australians believe that a home loan with low income is out of reach. However, even if your income comes from Centrelink, part-time work, or alternative sources, securing a mortgage is still possible with the right strategy and support.
In this guide, we’ll explore how you can improve your chances of home loan approval, even if you’re on a limited income. For further assistance, see our guide to buying your first home in Australia, or check out government support through Moneysmart
The Challenge of Getting a Home Loan With Low Income
Lenders often see low-income borrowers as higher risk due to limited borrowing capacity. The concern lies in whether you can meet the monthly repayments.
However, income alone isn’t everything. Lenders also look at your debt-to-income ratio—how much of your income goes toward debt repayments. If your income is low but your debts are minimal, your chances of approval improve significantly.
General rule: Lenders prefer that your mortgage repayments do not exceed 30–40% of your gross income.
Tips for Getting a Home Loan With Low Income
🔹 1. Expand Your Definition of Income
You may qualify for a home loan with low income by including other forms of income:
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Rental income
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Government benefits (e.g., Family Tax Benefit, Parenting Payment)
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Child support
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Bonuses or commissions
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Dividend or investment income
Make sure to document all your income sources clearly when applying.
Need help compiling this? Speak to a mortgage broker familiar with alternative incomes.
🔹 2. Buy Within Your Means
Opt for properties within a lower price range. A smaller loan improves your chance of approval and helps keep repayments affordable.
Consider:
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Regional or outer-suburban areas
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Older homes that need cosmetic updates
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Smaller units or apartments
🔹 3. Explore Rentvesting
Rentvesting allows you to buy an investment property in a cheaper area while you rent where you live. It lets you build equity and potentially earn rental income, while still living in a location that suits your lifestyle.
Learn more in our Rentvesting 101 guide.
🔹 4. Apply With a Guarantor
A guarantor home loan allows a family member to offer equity from their property as security for your loan. This reduces risk for the lender and increases your approval odds.
⚠️ A guarantor is legally responsible if you default, so both parties should seek financial and legal advice first.
🔹 5. Boost Your Borrowing Power
To improve your eligibility for a home loan with low income, work on:
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Paying off existing debts
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Reducing expenses (subscriptions, credit cards)
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Consolidating personal loans
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Building a positive savings record
Use our borrowing power calculator to get an estimate.
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6. Save a Larger Deposit
A bigger deposit means a smaller loan, reducing risk for the bank. Aim for at least 10–20% if possible. If you can reach 20%, you’ll also avoid Lenders Mortgage Insurance (LMI).
🔹 7. Extend Your Loan Term
Choosing a 30-year mortgage term over 20 years can reduce monthly repayments. This may help meet the lender’s affordability requirements.
🔹 8. Wait Until Income Increases
Sometimes, the best option is to wait. Focus on increasing your income or securing more stable employment. Use the time to:
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Improve your credit history
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Build up savings
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Research the market
🔹 9. Apply With a Co-Borrower
A joint application with a partner, family member, or close friend may strengthen your overall financial position. Ensure all parties understand the shared responsibility and legal implications.
🔹 10. Work With a Mortgage Broker
An experienced mortgage broker for low-income borrowers can match you with lenders who:
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Accept Centrelink benefits
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Have flexible policies
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Specialise in non-traditional income
They’ll also help you package your application to show your strengths.
