Home loans for Centrelink recipients

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Centrelink recipients still have a wide range of choices when taking the step toward owning their own home.Home loans for centrelink recipients

Obtaining a home loan through a traditional bank is challenging for those receiving Centrelink benefits. If you do your research, however, you will find that receiving Centrelink benefits doesn’t necessarily mean you have to give up the dream of owning your own home.

You'll need to do some research or contact a mortgage broker to find out which lenders accept Centrelink benefits as your sole source of income.

It’s important to note that some payments are considered more permanent than others by lenders, and can help you build a case for your home loan application.

How does a mortgage for people on Centrelink work?

A home loan that is designed for a Centrelink recipient works in the same basic way as a home loan offered to other Australians, in that money is borrowed and paid back with interest. One of the major differences is that the application process may be more difficult, because you’re trying to find a lender who understands your situation. These lenders will allow certain Centrelink benefits to be counted as income. Other types of information will be used by the lender to decide whether the applicant will be capable of making timely monthly repayments.

A Centrelink recipient will need to be specific about which benefits they are receiving and for how much. Centrelink recipients who already own a home can also use this type of loan to refinance their current home loan.

Jane is currently receiving Centrelink benefits and applies for a home loan

Jane is a divorced mother of two children, who in addition to income from her job receives Centrelink benefits in the form of Child Support. After saving for five years she felt confident that she had the money needed for a deposit and began to investigate home loan lenders who would be willing to consider her Centrelink benefits as a reliable source of income.

Jane calculated what she could borrow based on her income alone and found that she would only be able to look at homes that cost around $396,000. Once she added the additional $200 she received weekly through her Centrelink benefit that number jumped to over $415,000. Since her children were still young, she was able to find a bank that met her in the middle and allowed her to borrow $400,000 to purchase a new home.

What are the risks?

  • Overapplying. Be sure that you do your research before you begin applying for a home loan if you are including Centrelink benefits as income. Too many rejected applications will further damage your credit history.
  • Ensure you can make your loan repayments. While the idea of owning a home may be enticing, you should first make sure you're able to take on that type of financial commitment. It may be a good idea to try smaller personal loans at first to help build your credit and possibly qualify for a loan with lower rates later on.

Pros and cons of getting a home loan while receiving Centrelink benefits

Pros
  • Accessibility. A home loan that has been structured for Centrelink recipients gives them an opportunity that many lenders are not willing to afford them.
Cons
  • Harder to qualify for. Lenders will be strict about which types of Centrelink payments are considered income. For example, if you receive rent assistance, that cannot be considered as the funds are designated for a specific payment and are not disposable income. See below to find out which types of Centrelink benefits lenders will accept.

Is your Centrelink benefit accepted by lenders?

Not all Centrelink benefits will be considered by a lender as an acceptable form of extra income. Those that are designated for a specific purpose, such as for pharmaceuticals, will not be added to your monthly earnings. Others may be considered, but only under certain conditions. The information below is a general guide only. Please remember that each lender might treat the below benefits in different ways:

Age pensionYesAge pension will only be considered as a secondary form of income. You must have another source of earnings in addition to the benefit.
Carer’s AllowanceYesThis type of benefit will require that you have an additional source of income. Earnings from a job would be your primary source, while the allowance is considered supplemental.
Child SupportYesYou will need to provide documentation including the Family Law Court Order, bank statements showing a steady deposit history, a letter from your solicitor and a letter obtained from the Child Support Agency (CSA).
Disability PensionYesIf you receive a disability pension you will need to show proof of a second source of income.
Family Tax BenefitsYesThis applies if you are receiving Family Tax Benefits part A and B. Lenders will look at the age of your children before deciding if this is an acceptable form of income.
Foster Care AllowancesYesAllowances for foster care are accepted so long as you are receiving another source of income.
Overseas PensionYesOnly in the event that your pension is coming from one of the following countries: Austria, Belgium, Canada, Chile, Croatia, Cyprus, Denmark, Finland, Germany, Greece, Ireland, Italy, Japan, Korea Republic, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Slovenia, Spain, Switzerland or the United States of America.
Veterans and Widows PensionYesWhile there are typically no conditions to be met, your application will be better received if you have another form of income as well.

If the benefit you receive from Centrelink is not listed on the chart above, then it may not be considered by lenders as a genuine form of income. In this case it might be best to speak to a lender directly about your options and eligibility.

Don’t let the pension get in the way of getting a loan
 

What you should look for in a home loan

You have many options available to you in a home loan, even if you are receiving Centrelink benefits. To ensure that you are getting the right home loan for your circumstance make sure that you are comparing the criteria and what is being offered by different lending institutions.

  • Eligibility criteria. Certain lenders will only accept applications if you are only receiving Family Tax Benefits, while others may count a large family supplement. You will need to look at the restrictions very carefully before applying for a home loan if you are receiving Centrelink benefits. Many lenders will even look at the age of the children in your household and base part of their assessment on that information.
  • Lender. Make sure you choose a lender that you think will be understanding of your situation. You’d want a lender to look after you from the start of your mortgage to the end. In the event that you can’t make your repayments, you’d want your lender to understand why, and to know if they offer a repayment holiday.
  • Employment. In most cases, Centrelink benefits will only be considered as a secondary form of income. Check to see if you have to be employed as well. If you're filling out a joint application, make sure you determine if your partner needs to hold a steady job.
  • Interest rates. Due to your unique circumstances, lenders may attempt to take advantage by offering home loans at a higher rate. Compare rates from lender to lender to make sure you are getting the best deal.
  • Extra fees. A lender may impose extra fees for the paperwork involved in considering Centrelink benefits as a second form of income. Read the fee charts carefully and calculate what yours will be for each lender that you are interested in.

Need help? A mortgage broker can find specialised loans for borrowers in difficult circumstances

Frequently asked questions about taking out a home loan with Centrelink benefits

First you should get in touch with a few lenders or a mortgage broker to discuss your options and eligibility. After you’ve found a lender who is willing to assist, you can proceed with the regular application process. Note that you will need to provider extra information about your income.

This will depend on your income, combined with the income from your Centrelink benefit. Your other expenses will also be considered. You can use our borrowing power calculator to give you an indication.

Shirley Liu

Shirley Liu is a program manager at finder, formerly the publisher for Banking and Investments. She is passionate about helping people make an informed decision, save money and find the best deal for their needs.

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110 Responses

  1. Default Gravatar
    DwaneNovember 1, 2017

    I have a friend on disability payments from centrelink that is struggling to keep up with her mortgage repayments. she has had the house valued at $250,000 and owes $133,000, is there a way that she can refinance the loan to reduce that fortnightly repayments.

    Thanks

    • Staff
      JudithNovember 1, 2017Staff

      Hi Dwane,

      Thanks for contacting finder, a comparison website and general information service. I hope all is well with you today.

      You may find a list of options on this page. You may also read this guide to learn more on how to calculate the costs of refinancing a home loan. On the other hand, this guide discusses about its risks and benefits.

      This page has the best refinancing deals too.

      It would also be good if you would reach out to lenders about this for you to compare them.

      I hope this helps.

      Best regards,
      Judith

  2. Default Gravatar
    JessicaOctober 23, 2017

    My husband works full time and I stay at home with our three sons (aged 3 yrs, 2yrs and 2 months), I receive a parenting payment from Centrelink but not the full family tax A and B because of our choice to not vaccinate our children… Would this potentially count as a source of income?

    • Staff
      MariaOctober 23, 2017Staff

      Hi Jessica,

      Thank you for your inquiry.

      Family Tax Benefits Part A and B is generally accepted by lenders but having supplementary income would help with your application.

      You may want to review this guide on Loans For People on Centrelink Payments.

      Before applying, please ensure that you meet the eligibility criteria and requirements and to read the details, as well as the relevant Product Disclosure Statements/ Terms and Conditions of the option before making a decision and consider whether the product is right for you.

      Best,
      Maria

  3. Default Gravatar
    StevenOctober 23, 2017

    I’ve inherited some money from the passing of my parents,I’m 55 years old and I’m on a Disability Pension and a Army Pension which is $246 per fortnight,I have $40,000 and I went to the Anz Bank and approved $150,000 which isn’t enough to buy a place needing $350,000 paying $500 per week in rental ,can you give me some helpful information,thanks

    • Default Gravatar
      JonathanOctober 23, 2017

      Hi Steven,

      Thank you for your inquiry.

      Usual deposits tend to be around 20% of the property value, but in some circumstances, your deposit can be as small as 5%. There are some loan providers who can consider your current income source upon application. We have listed some loan options such as low-doc loans, which pensioners could usually take advantage of. Moreover, we have a step guide on how to get a home loan if you’re a pensioner.

      Alternative income sources such as Centrelink payments may also be considered, but it is important that you tap the right lenders who count on them as a valid income. Sometimes, if you reach the traditional lending application, it will be more challenging to get a loan due to lack of paycheck.

      Should you need a more comprehensive of your options and your finances, you may send an inquiry to a broker of your choice.

      Hope this helps.

      Cheers,
      Jonathan

  4. Default Gravatar
    MohanOctober 2, 2017

    Just let me know about home loan, I’m interested about it.

  5. Default Gravatar
    MichelleSeptember 23, 2017

    Hello, I’m currently going through a particular messy divorce and wishing to buy out the existing family home. I have recently lost a casual position i had held for just over 12mths, so i only have an incoming finance of child support, single parenting payment and ftb. I have been told previously by a bank that having 4 dependants is taken into consideration and that lessens the chances of being accepted for a loan.

    • Staff
      JoanneSeptember 24, 2017Staff

      Hi Michelle,

      Thanks for reaching out.
      The types of home loans available to centrelink beneficiaries are further discussed on this page.
      Each lender will have different eligibility criteria, so it’s best to speak directly with your mortgage broker or lender to determine whether a home loan is suitable for you.

      Cheers,
      Joanne

  6. Default Gravatar
    shimoneSeptember 11, 2017

    my husband has a terminal illness and i am his carer we have three young kids he is on dsp and im on carers pension as well as ftb is there any chance of getting a home-loan with only those incomes

    • Staff
      AnndySeptember 11, 2017Staff

      Hi Shimone,

      Thanks for your question.

      Kindly note that if you are receiving DSP or carer’s pension, most lenders will require you to show proof of another source of income.

      You may contact a mortgage broker for advice on the best option for your situation.

      Cheers,
      Anndy

    • Default Gravatar
      BOctober 17, 2017

      Except that if you’re on the DSP, it’s because you conclusively cannot create another source of income. Maybe check your facts there?

    • Staff
      DanielleOctober 18, 2017Staff

      Hi there!

      Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

      Generally, a disability pension is considered a valid form of income by most lenders. Therefore a home loan application for someone on a disability pension is not treated any differently from an application where someone services their loan with other forms of income. You may refer to this page for more information.

      I hope this helps.

      Cheers,
      Danielle

  7. Default Gravatar
    RuvanAugust 9, 2017

    Me and my husband are paying rent for nearly 18 years. Our son is also living with us. We know how to manage our income. We did not have a problem in paying rent or manage bills. Now, 2 of us is getting $3000 per month. We would like to apply for a home loan with insurance.

    • Staff
      RenchAugust 9, 2017Staff

      Hi Ruvan,

      Thanks for reaching out to us. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.

      If you’re on a pension/Centrelink benefits, you can also have a look on this page and compare your options.

      Please click the name of your preferred lender to find out the details and the minimum eligibility. You may then click the green “Go to Site” button to submit your loan application online.

      Kind regards,
      Rench

  8. Default Gravatar
    LisaJuly 24, 2017

    We need a home loan relatively quickly and have been told that it’s ok. We need a personal loan for $60000 for a deposit and don’t know where to get it. I have had a part 9 but that has been paid out approx 18 months ago. We can’t go to Homestart as they only loan up to 5 acres and we need more because we have disabled foster children and one has horses. We would love any help you could give us.

    • Staff
      RenchJuly 27, 2017Staff

      Hi Lisa,

      Thanks for reaching out to us. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.

      You may compare your options on this page and get helpful information. You may click on your preferred lender to see more details then you can click on the ‘Go to Site’ button to submit an online application.

      Hope this helps.

      Best regards,
      Rench

  9. Default Gravatar
    ZacsMumJuly 19, 2017

    Hi! I am on Single Parent Pension FTB A + B from Centrelink which is around $1200 per fortnight and my newborn son is 8 weeks old. I have no debts at all, I do not pay for rent or living expenses and have a deposit of $100,000. Would that qualify for a home loan? Would they accept my Centrelink as my only source of income? Thanks so much. :-)

    • Staff
      RenchJuly 20, 2017Staff

      Hi Kimberly,

      Thanks for reaching out to us. Congratulations to you and your newborn baby. Wishing you and your newborn many years of good health, love, and happiness.

      You’re actually already on the correct page for helpful information on home loans for Centrelink recipients. You can also find this page helpful and you may compare your options from there.

      Please click on the name of your preferred lender to see more details and their eligibility criteria. Then you may click on the green ‘Enquire Now’ button to get in contact with them.

      Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.

      Hope this helps.

      Cheers,
      Rench

  10. Default Gravatar
    ninaJuly 16, 2017

    Is it possible for an age pensioner with no other assets to apply for a loan for home ?

    • Staff
      JhezelynJuly 16, 2017Staff

      Hi Nina

      Thanks for your comment.

      There are still lenders willing to offer home loans to individuals receiving pension benefits even if some lenders view pensioners as being high-risk borrowers. You may refer to this page to get information on how to get a home loan if you’re a pensioner.

      Regards,
      Jhezelyn

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