Home Loans For Pensioners

Rates and Fees verified correct on October 21st, 2016

Don’t let your age get in the way of purchasing your own home; here are some tips to help get you started.Home loans for pensioners

Home loans are a great way to help you get the additional funds you need to purchase a house or make improvements to your house. However, as pensioner incomes tend to be lower than the income of regular borrowers, lenders may view you as being a high-risk borrower as it may be more difficult for you to service your loan.

In turn, this can make it difficult for pensioners to receive home loans. However, there are many banks that are willing to offer home loans to individuals receiving pension benefits. Read on to learn more about home loans for pensioners.

What types of home loan are available to pensioners?

  • Reverse mortgages A reverse mortgage allows you to borrow funds using equity from your home as security for the loan. A reverse mortgage can either be paid as a lump sum, a regular stream of income, a line of credit or a combination of these. No income is needed to qualify and for this reason, the interest rate tends to be higher. You must repay the sum of borrowed money when you sell your home, pass away or move into aged care.
  • Variable rate loans Variable rate loans are a common loan choice in Australia. With a variable rate loan, your interest rate is subject-to-change based on interest rate fluctuations. For example, when interest rates are low, the interest rate on your loan should also be low, allowing you flexibility and possible cost savings.
  • Fixed rate loans A fixed rate loan is more secure than a variable rate loan. With a fixed loan, the interest rate for your loan will be set upfront and you commit to this rate for the entirety of your loan. This means you avoid any possible fluctuations in interest rates and you also know your repayments upfront. This kind of loan takes the stress away from worrying about interest rate changes.
  • Line of credit loans A line of credit is a funding line which uses the equity in your home. It’s an approved amount that you can use a bit at a time or all at once. You loan is approved against a security and you can draw on this loan amount at any time. You only pay the interest on the amount that you use. For example, if you get a line of credit of $200,000 and only use $50,000, you only pay interest on the $50,000. These are good for those who are unsure if they need the full value of a loan.

How to compare home loans

  • Interest rates. Interest rates are one of the most important elements to compare as interest is the biggest expense for home loans. For pensioners, it’s important to look for the lowest interest rate because this is what will help you save money.
  • Home loan flexibility. It’s important for your home loan to provide you with flexibility. This may be flexibility in repayment schedules, flexibility in making additional repayments and redraw facilities. Compare each loan and see what flexibility it can offer you.
  • Eligibility requirements. Some home loans will require you to meet certain eligibilities in order to take out that home loan. This may include regular source of income, a good credit history and more. Pensioners in particular should compare the eligibility requirements of home loans because some may be more appropriate to apply for than others.
  • Fees and charges. Most home loans have mandatory fees and charges that you may have to pay. Compare any potential fees and charges each loan has - these may be either upfront fees or ongoing fees - and select an option with lower fees to help save money.
  • Loan term. Each home loan provided by financial lenders will have different loan lengths. Compare and select the home loan that provides you with the loan length to meet your needs.

Am I eligible for a home loan if I'm on a disability pension?

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.

Like any applicant for a home loan, the lender will review whether the amount of income support you receive is sufficient for you to comfortably repay the loan.

Most lenders will review your application on a case-by-case basis. Your eligibility for a home loan will depend on the amount of income you receive and how much of this can be used to service a loan.

Other factors including your age, assets and debts will be assessed by a lender on an individual basis.

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.

Extra documentation for disability pensioners

Among other eligibility criteria required by the lender, you’ll generally need to provide the following:

  • Evidence of funds to complete the deposit.
  • Bank statements showing Centrelink benefits being paid into your bank account (i.e. some lenders require 6 months of recent bank statements).
  • Letter from Centrelink confirming the status and nature of your disability pension.

Pros and cons of home loans available to pensioners


  • Gives you funds when you need it. These home loans allow pensioners to enter the property market and give you the funds you need, when you need them.
  • Extra benefits. Some home loans available to pensioners come with extra benefits such as low or no interest rates, flexible payment plans and advance payments.
  • No proof of income required for reverse mortgages. With reverse mortgages, no proof of income is required. It’s important to note that other home loans will require proof of income unless it’s a low doc loan.


  • Higher interest rate. Reverse mortgages tend to have higher interest rates compared to other home loans.
  • Eligibilities. Some home loans have specific eligibility requirements you must meet that may be quite stringent.

Considerations when applying for a home loan on a pension

Pensioners applying for home loans must keep in mind that their income and financial position might limit their success in getting a home loan. This is mainly because the pension is lower than the normal income of other applicants who are applying and the income level required. If you have assets and believe you can meet lending requirements, it might be a good idea to discuss your position in person with your financial provider or mortgage broker, as applying online may be difficult if you can’t demonstrate your capacity to repay the loan. Also keep in mind that a small number of home loan lenders will set an age limit for different products, so be sure to check the terms and conditions before applying.

Frequently asked questions about home loans available to pensioners

What is a home loan?

A home loan is when an advance of money is provided to a borrower from a lender when they want to purchase their own home or land to build their home. The lender will give you the money you need to purchase your house or make improvements. Home loans are primarily for those who want to enter the property market but do not have the full property value saved up. Home loans are best suited to anyone who has a good credit history and wants to purchase a house but does not have all the funds required.

How do home loans work?

When you want to purchase a home but don’t have the full amount of the funds that you need to purchase, then you should apply for a home loan. Typically, you apply for a home loan if you meet the eligibilities of each financial lender. With most home loans, you are required to pay a deposit. Typical deposits tend to be around 20%, but in some circumstances, your deposit can be as small as 5%. The lender will give you the money you need to purchase your home and you are liable to pay the loan back within a certain amount of time, as well as interest on the loan and any additional fees.

Can I still apply for regular home loans?

Yes, pensioners can still apply for regular home loans that aren’t specific home loans for pensioners but you should keep in mind you may not be successful if you don’t meet eligibility or income requirements.

Other than my pension, what else will be considered in my application for home loans?

Any other forms of income you may receive, your previous credit history, and any other assets that may be in your name can be used to boost your home loan application. Usually your pension is taken in account if it is taxable.

Will I need to come up with a deposit if I’m on a disability pension?

Generally, a person on a disability pension will need to come up with a 20% deposit. This is because there is no other salary or other source of income that can be used to service the loan- there is little security should you default on your loan.

Again, this criteria varies from lender to lender.

If I’m on a disability pension, what happens if I have a co-borrower?

If take out a mortgage with a co-borrower, generally your ability to meet your repayments is increased so the lender will view you as being a less risky borrower. In this case, your application may have a greater chance of being approved.

Some lenders may only accept your application if your co-borrower is working. For instance, some lenders will assist you if you’re buying a new home together with your son or daughter. However, some banks may not be able to help you if you're borrowing on your own.

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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68 Responses to Home Loans For Pensioners

  1. Default Gravatar
    Mike | June 9, 2016

    Hi Finder

    I would be very pleased if you could clarify the below query for me?

    Your site states that on the day you apply for the age pension you must be in Australia and “a resident”

    What exactly does be a resident mean?



    • Staff
      Elizabeth | June 10, 2016

      Hi Mike,

      To be a resident you need to be living in Australia and either:
      an Australian citizen
      a permanent visa holder, or
      a protected Special Category visa (SCV) holder

      You need to have been an Australian resident for a continuous period of ten years to be eligible for the pension. You can find out more on the Department of Human Services website.

      Hope this helps,


    • Default Gravatar
      Mike | June 10, 2016

      Hi Finder / Elizabeth

      Thank you very much for responding to my above query so quickly!

      I have one more question if that’s possible

      Q – If you are receiving the pension in Australia, how long are you allowed to spend out of country (eg on holiday), per trip, and how long in total per year?

      Regards Mike

    • Staff
      Elizabeth | June 10, 2016

      Hi Mike,

      No worries. Your pension rate will not change unless you take a holiday for more than six weeks or decide to move out of Australia permanently. You’ll need to notify the Department of your travel plans if this is the case. If you travel for longer than six weeks you will be paid an “outside Australia” rate, your pension supplement will reduce to the basic rate and your energy supplement will stop.

      If you travel outside of Australia for 26 weeks the rules are different. After 26 weeks your rate will be based on how long you have lived in Australia as an Australian resident between the age of 16 and age pension age.

      I hope this information has helped,


  2. Default Gravatar
    David | April 29, 2016

    my mother is looking to get a loan she is on aged pension she owns another property outright. so does she need a deposit for a home loan or can she use other property ???

    • Staff
      Jodie | May 2, 2016

      HI David,

      Thank you for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage or finance experts so can only offer generalised advice.

      Your mother could use the already owned home as security for the deposit in order to get a loan for another property purchase however it would be recommended that she seek professional financial advice before doing this so that she is aware of all the risks involved. She may also want to speak to a mortgage broker about what lending options may be right for her.


  3. Default Gravatar
    stephen | April 18, 2016

    line of credit loans,what are the % rates

    • Staff
      Belinda | April 19, 2016

      Hi Stephen,

      Thanks for reaching out.

      On this page, you can compare a range of line of credit loans with competitive interest rates. If you think one of these loans sounds right for you, click on the ‘go to site’ button to be redirected to the lender’s website or to a mortgage broker page where you can discuss your borrowing needs.


  4. Default Gravatar
    stephen | April 18, 2016

    my wife is a disability pensioner & and i am her carer,we have been on the pension for over four years.

    • Staff
      Belinda | April 19, 2016

      Hi Stephen,

      Thanks for getting in touch.

      I’ve sent you an email to follow up with this enquiry.


  5. Default Gravatar
    Steven | March 10, 2016

    Hi, my brother was recently made redundant and is currently looking for work.
    He has $170,000 in cash and is wanting to borrow $140,000 for a townhouse.
    Can he use this large deposit to borrow the amount he needs even though he’s not working? he has a partner who is also on the disabled pension, who can contribute to the loan.

    • Staff
      Belinda | March 11, 2016

      Hi Steven,

      Thanks for getting in touch.

      Your brother might be interested to read our page about applying for a home loan (or refinancing) while unemployed. Evidently, it can be difficult to qualify for a home loan while you’re not employed as the lender views you as a high-risk borrower as they will be uncertain about your propensity to repay the loan.

      The large deposit will help, but your brother will also need to demonstrate that he has adequate savings, equity, assets, government benefits (assuming a joint application with his partner), and/or other income sources that will be used to service the loan. He may also need to take steps to show the lender that he is actively seeking work.

      He should get in touch with a mortgage broker as a broker will be able to help him understand his borrowing power and they will be able to draw upon a panel of lenders that are more likely to review his application. He may want to consider approaching specialist or non-bank lenders.


  6. Default Gravatar
    Natasha | March 9, 2016

    Hi there, I rent through a realestate and I’m on a single parent pension but soon to be on the disability pension. I pay nearly $300 in rent every week, I find it hard saving money to get a loan to buy my own home. Every time I go to the shops I hear on the radio “are you sick of paying rent and want to own your own home? Well instead of paying rent you could be using that rent to pay off your own home etc etc ” I want to use my rent money to instead pay off a house. Is that possible without a deposit ???

    • Staff
      Belinda | March 10, 2016

      Hi Natasha,

      Thanks for getting in touch.

      Unfortunately it can be difficult to qualify for a home loan if you don’t have a secondary income to supplement your pension benefit.

      You can read our guide about home loans for Centrelink recipients and you can enquire with a mortgage broker to explore your options. Before applying for a home loan, you may want to consider clearing any existing debt that you have and approaching specialist or non-bank lenders that may have more lenient eligibility criteria for pensioners.

      We have a page about low or no deposit home loans but keep in mind that most lenders will require at least a 5% deposit. However, if you can’t come up with a deposit then you may want to consider a guarantor loan to boost your borrowing capacity and to avoid paying lender’s mortgage insurance (LMI).

      All the best,

  7. Default Gravatar
    disability | March 1, 2016

    wanting to buy a home for my disabled daughter who is on a pension she would have a good deposit to put down and i could go guarantor for her could this house go solely in her name with me and older siblings staying with her as a tag team or would the house need to go into my name as well

    • Staff
      Belinda | March 2, 2016

      Hi there,

      Thanks for reaching out.

      I’ve sent you an email to follow up with this enquiry.


  8. Default Gravatar
    Gloria | November 21, 2015

    I am on a sole parent pension an ftb i have 20000 in savings an i able to get a home loan an being 46 can i get 1st home buyers grand . I have a 23yo son living at home with a traineeship at the mines an works casual. Do i qualify for a loan or reverse mortgage as i live in dept housing for last 8yrs an have gr8 rental history.

    • Staff
      Jodie | November 23, 2015

      Hi Gloria,

      Thank you for contacting finder.com.au a financial comparison website.

      To see if you qualify for a home loan please use the table above to reach out to a mortgage broker who can advise you on which lender can assist you with a home loan. Each first home owners grant has different eligibility requirements, in general, the main eligibility requirement is that you have not held property in your name previously, please review our page on the grants in each state to see what you may be eligible for.

      In terms of a reverse mortgage, these can only be obtained if you own your own home and have equity, have paid off part or all of it, as this will be used to offer you funds for use so if you have never purchased property before you will not be eligible for a reverse mortgage.


  9. Default Gravatar
    Tony | October 7, 2015

    My wife and I are both on pensions, my wife is on a disability pension and I am on a Blind Pension. We would like to move to the country and buy a home for approx $70,000 to $100,000 we have approx $20,000 for a deposit do you think we would be able to find a lender who would lend us the rest of the amount even though we are on a pension.

    • Staff
      Jodie | October 7, 2015

      Hi Tony,

      Thank you for contacting finder.com.au.

      We are a financial comparison website and general information service so are not able to offer you specialised advice on your specific needs.

      Generally speaking there are lenders who will offer borrowers on a pension a loan it would be best to use one of the enquire buttons above to contact a mortgage broker who will be able to assist you with your search for a home loan.


  10. Default Gravatar
    Bev | August 26, 2015

    I am 69 and on a aged pension. I have $130000.00 cash and I am at present paying $440 weekly rent. I also have a boarder who is paying $180 per week. Can I get a loan of $70,000 to purchase a unit on the Gold Coast Queensland? Many Thanks

    • Staff
      Belinda | August 27, 2015

      Hi Bev,

      Thanks for your enquiry.

      You’ve come through to finder.com.au which is an online comparison website so although we can provide you with general information regarding home loans, we can’t comment on whether or not you will qualify.

      If you’d like to speak with a mortgage broker you can click on the ‘enquire now’ button in the table above on this page to discuss your options for a loan.

      Generally, lenders will review these types of applications on a case-by-case basis but they will take into account your age, assets and any existing debts that you have to determine your ability to meet the repayments.

      Please note that you’ll need to provide evidence of genuine savings to complete the deposit, provide 6 months of bank statements showing the benefit being deposited into your account and a letter from Centrelink confirming the status of your pension.

      The aged pension is typically only considered as a secondary source of income, so you may need to have another source of earnings to qualify with certain lenders.

      You can read more about home loans for Centrelink recipients on this page.

      All the best,

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