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Does child support counts as income for a home loan?
If you refinance a home loan after divorce, some lenders will accept child support payments as income on a home loan application.
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Following a divorce, you will likely need to refinance your home loan into your own name. If child support benefits are your main source of income, the good news is that some lenders will accept your application without requiring you to have regular job income as well.
Find out which benefits are generally accepted and what documentation about your child support payments you'll need to provide to make the application process as smooth as possible.
Which income benefits do lenders accept?
Specialist lenders, as opposed to bigger, traditional Big Four banks, are more likely to be flexible in accepting different types of income for your home loan application. Generally, in addition to PAYG income, the following are some of the income sources a specialist lender may accept:
- Bonuses or commission
- Car allowance
- Casual income
- Centrelink income
- Child support payments
- Family payments – Part A and B
- Income protection payments
- Overtime
- Pension
- Rental property income (up to 80% of actual income)
- Self-employed income
- Worker's compensation
How are child support payments assessed as income?
Some Australian lenders will accept child support payments when assessing your income for a home loan application.
When speaking to your mortgage broker or lender, they'll want to know whether the child support payments are via the Child Support Agency (CSA) and whether the payments are court ordered.
Sometimes, parents may enter into an agreement that is not court ordered, such as an agreement around school fees. Even if these are CSA certified, generally, lenders will only accept court-stamped child support.
If your child support payments are court ordered and accepted by the lender, you may be required to supply the following paperwork as proof of income:
- Family Court Law Order
- Bank statements showing the amount being regularly deposited into your account (for a minimum of 6 months)
- A letter from your solicitor
- A letter from the Child Support Agency (CSA)
Are Family Tax Benefits assessable as income too?
Family Tax Benefits (FTB) Part A and Part B may also be accepted by a number of lenders.
The lender will consider the following:
- Age of dependants. Most lenders will take into account the age and number of dependants that you have before deciding whether this is an acceptable form of income for the loan. The older your children, the less likely the lender will accept your Family Tax Benefit (FTB) income, particularly children aged 11 years and over.
- Centrelink statements. The lender will request at least 6 months of Centrelink statements. You can download a statement from the Department of Human Services website.
If you are aiming to get a home loan with child support as your main source of income, you may benefit from working with a mortgage broker. They know which lender is going to have policies that suit your needs and can help match you to a lender that is most likely to approve your loan.
How much can I borrow?
A lender will typically review your bank statements to verify your child support payments and work out your annual gross income.
If you receive $5,000 per month, the lender may multiply this by 12 to get an annual sum, in this case, $60,000.
They will treat your application on a case-by-case basis and review your financial situation to decide whether the support benefit is sufficient to repay the loan.
If you have an idea of your annual income, you can use our calculator to estimate how much you can afford to borrow.
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