How to get a home loan if you’re a casual worker

Low doc home loans are the most common choice of home loans for casual workers.

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It's harder to get a home loan as a casual worker because lenders consider these borrowers to be higher risk. But this is not always the case. The most common home loan option for casual workers is a low doc home loan.

A low doc home loan is a mortgage that is designed for the self employed or someone who receives an irregular income and can’t prove it through normal means. However, these types of loans are considered to be of a higher risk than the regular home loan, and so higher rates and in some cases lower maximum LVRs (the amount you can borrow in relation to the property's purchase price or value) can apply.

How does a home loan for a casual employee work?

If you're a casual worker applying for a home loan you'll most likely need to show that you've been working steadily by providing the last two years group certificates. From there, the lender will likely take the lesser of the two and deem that to be your income. If you have not been with the same job for several years you may have a more difficult time providing proof of income.

In this case, some lenders may use your year to date (YTD) income and calculate what your yearly income would be. This method will only be used by lenders who are willing to extend a mortgage to a casual worker who has not been under the same employment for a significant amount of time.

John applies for a low doc home loan

John has worked as a casual worker in the same industry for 3 years and thought he was ready to apply for a home loan. He had $10,000 in savings and was able to cover the cost of his rent and monthly expenses with his income. The lender he chose looked at his gross income and felt confident that he could afford monthly repayments of $810 a month.

This allowed John to borrow $150,000 at an interest rate of 4.94% for 30 years. Since this was a variable rate loan that also included fees, he chose to buy a smaller home and borrow only $135,000. This allowed him to make his repayments promptly without having to worry when his income fluctuated down.

Comparing mortgages for casual workers

Even though your income criteria may be different than that of other borrowers, you generally still have the same opportunity to apply for many of the same loan products as someone with a more steady form of employment. Consider these options when choosing your loan:

  • Documentation required. As mentioned before, you don’t need as much documentation with a low doc loan as you would with a full documentation loan. The lender will ask for the minimum, but you’re still required to meet that standard.
  • Interest rate. The special circumstances of your home loan application may encourage banks to offer you the home loan at a higher interest rate than other borrowers. Check to see the rates they display online compared to what is being offered to you at a branch, and always ask for a discount.
  • Fees. Look carefully at the fees for home loans and try to find one that charges fees which justify the features and interest rates.
  • Interest type. You should consider whether the flexibility of a variable rate or the certainty of a fixed rate is better suited to your circumstances. Some loans will allow you to split your loan into variable and fixed rate portions.
  • Features. Check the list of features being offered and try to find the ones that will be most beneficial to you. Things to look for might be a 100% offset account, redraw facilities and flexible repayment options.

Pros and cons of a home loan for a casual worker

Pros

  • Availability. Home loans are available for all types of casual workers, including those with fluctuating hours, permanent positions, freelancers, casual nurses and teachers. As long as your income is taxed and you can show proof, then a low doc loan could be suitable.
  • Options. You will be able to choose from a number of different lenders who specialise in home loans for casual workers.
  • Flexibility. Having access to a typical home loan will help you set up your terms and repayments to work best with your fluctuating income.

Cons

  • Higher fees and rates. Some lenders may charge you extra fees or higher interest rates for the higher risk they perceive you to have.
  • You may need an accountant. Lenders could request the contact details of an accountant to verify your income. If you don’t have an accountant, you may want to consider one just to sort out your documentation.

What are the risks?

  • Applying for too many home loans. Do your research before you begin to apply for home loans when you are a casual worker. Applying for many and being rejected will have a negative impact on your credit history. Before filling out an application make sure that they accept applicants with your employment type.
  • Affordability. Ensure that you are able to afford the terms of your home loan before making a commitment to it.

Try comparing your mortgage options from across the market

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

HSBC Fixed Rate Home Loan Package P&IHome 2Y Fixed≥ 20% Deposit

HSBC Fixed Rate Home Loan Package
1.88%
2.86%
  • App: $0
  • Ongoing: $390 p.a.
$547
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

Westpac Fixed Option Home Loan Premier Advantage Package P&IHome 2Y Fixed≥ 5% Deposit

Westpac Fixed Option Home Loan Premier Advantage Package
1.99%
3.48%
  • App: $0
  • Ongoing: $395 p.a.
$555
$3,000 refinance cashback
Lock in a low fixed rate for 2 years that allows you to make up to $30,000 in extra repayments and buy your home with a 5% deposit. $3,000 cashback for eligible refinancers. Apply by 30 September 2021. Terms and conditions apply.

UBank UHomeLoan Fixed P&IHome 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
1.79%
2.32%
  • App: $0
  • Ongoing: $0 p.a.
$540
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.

Nano Variable Home Loans P&IHome≥ 25% Deposit Refi Only

Nano Variable Home Loans
1.99%
1.99%
  • App: $0
  • Ongoing: $0 p.a.
$555
Switch to this competitive variable rate with zero fees. Requires a 25% deposit.

Suncorp Home Package Plus Fixed P&IHome 2Y Fixed≥ 20% Deposit

Suncorp Home Package Plus Fixed
1.89%
2.85%
  • App: $0
  • Ongoing: $0 p.a.
$548
$3,000 refinance cash bonus
Lock in a low fixed rate for 2 years. Available with a 20% deposit. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan. $3,000 refinance cash bonus for eligible borrowers. Other terms, conditions and eligibility criteria apply.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.85%
2.21%
  • App: $0
  • Ongoing: $0 p.a.
$545
Get a low discounted variable rate loan. Requires a 30% deposit. Get your loan processed fast and settle within 30 days.

Well Home Loans Equity Plus P&IHome≥ 40% Deposit

Well Home Loans Equity Plus
1.87%
1.90%
  • App: $250
  • Ongoing: $0 p.a.
$546
Borrowers with 40% deposits or equity can get this low variable rate loan. 100% offset account included.

St.George Fixed Rate Advantage Package P&IHome 2Y Fixed≥ 20% Deposit

St.George Fixed Rate Advantage Package
1.84%
3.38%
  • App: $0
  • Ongoing: $395 p.a.
$544
$3,000 refinance cashback
Borrowers with 20% deposits or equity can get this competitive fixed rate loan. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 September 2021. Terms and conditions apply). Refinancers Only.

Athena Variable Home Loan P&IHome≥ 40% Deposit

Athena Variable Home  Loan
1.99%
1.99%
  • App: $0
  • Ongoing: $0 p.a.
$555
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.

Homestar Star Gold P&IHome≥ 40% Deposit

Homestar Star Gold
1.79%
1.84%
  • App: $395
  • Ongoing: $0 p.a.
$540
Refinancers and buyers with 40% deposits can get this very competitive variable rate. It even comes with a 100% offset account.