Single Income Home Loans
With careful planning and a realistic sense of your borrowing power, it is possible to get a home loan on a single income.
We’re committed to our readers and editorial independence. We don’t compare all products in the market and may receive compensation when we refer you to our partners, but this does not influence our opinions or reviews. Learn more about Finder.
Getting approved for a home loan on a single income may need a bit of extra planning and care, but it's definitely possible. You'll need to carefully work out how much you can borrow and repay comfortably and make sure that your spending is under control before you apply.
Follow our tips below and you'll find yourself in a much better position.
Work out your borrowing power
Your chances of approval depend in large part on how much money you want to borrow. From a lender's point of view, a realistic borrowing amount takes into consideration several factors:
- Your income
- Your expenses
- Your deposit size
- The value of the property you're buying
Use a borrowing power calculator to estimate how much a lender will give you.
Save a 20% deposit
The bigger your deposit the easier the home loan approval process becomes. If you had a 60% deposit, lenders wouldn't think twice about lending to a borrower on a single income. Of course, that's not very realistic for the average borrower.
Saving a 20% deposit, however, is more realistic and a good way to strengthen your application as a single income applicant. It's not essential, as low deposit home loans are available for borrowers with deposits as low as 5%. But approval does get a lot harder, especially on a single income.
Get your debt and spending under control
In the months leading up to submitting your home loan application, get your spending under control. Review how much you're spending each month, identify areas where you can cut back (if any), set a budget and stick to it. This will make your lender happy and makes you a more reliable borrower, whether you're on a single income or not.
If you have urgent debts, such as personal loan or credit card debt, you should focus on paying them down before anything else. These debts will weigh against you in any mortgage application.
Choose your property carefully
The property you wish to buy is your lender's security in the event you can't repay your loan. It minimises the lender's risk because they can take the property (in a worst case scenario).
This means your lender cares about the property you're buying. Your lender will have the property valued to make sure you're not paying too much for the property. And if the property is in a poor condition or in an undesirable location the lender may reject your application or limit how much they can lend you.
Some lenders also have postcode restrictions for apartments, meaning they are more cautious about lending to people buying apartments in areas with a high saturation of such buildings.
Check what help is available
You might be buying a property on one income but you're not alone. There may be help available in the form of government grants and concessions.
Depending on your circumstances you may be able to get help from your family in the form of a guarantee.
- First home owner grants. If you're a first home buyer you may qualify for a first home owner grant in your state or territory. You can even use the grant to form part of your deposit.
- Stamp duty concessions. Also for first home buyers, you may qualify for a stamp duty concession. This could reduce your stamp duty costs significantly.
- Parental guarantor. If you have parents who own their own property and are willing to help, they could guarantee part of your deposit. They don't have to pay anything, but they agree to pay some of the mortgage if you can't. This makes your application stronger and means you can potentially buy a property with a smaller deposit while on one income. It's not without risks and it's not an option for everyone though.
Speak to a mortgage broker
Before applying anywhere as a single income home loan applicant, consider speaking to a mortgage broker.
Brokers are experts at helping borrowers find home loans they can qualify for and then guiding them through the application process. If you don't feel confident and want some help with the process a broker is a good starting point.
They might even be able to help you boost your borrowing capacity and get a slightly larger home loan.
Need a competitive home loan? Compare your options
More guides on Finder
With interest rates so low, are savings accounts still worth it?
Interest rates on Australian savings accounts are at record lows, but there are a few key benefits to keeping cash in a savings account.
Brighte Personal Loan
Looking to renovate your home? Find out more about Brighte's personal loan for home improvements and ways in which it may be able to benefit you.
Endeavour Mutual Bank Special Fixed Home Loan
The Special Fixed Home Loan from Endeavour Mutual Bank is a fixed rate mortgage for owner-occupiers and investors.
Planning your retirement? Here are 4 things you need to know about reverse mortgages
SPONSORED: A reverse mortgage could let you use some of your home equity to fund your retirement costs. Here's what you need to know.
Sydney Mutual Bank Special Fixed Home Loan
The Special Fixed Home Loan from Sydney Mutual Bank is a fixed rate mortgage for owner-occupiers and investors. Available with a 5% deposit.
How Budget 2020 will affect you
The complete guide to how tax changes and new regulations will hit your wallet.
Australian Property Half Time Report
Various data sources reveal just how resilient the Australian property market is.
Hunter United Fixed Home Loan
The Fixed Home Loan from Hunter United is a fixed rate loan with options for home buyers and investors.
Home run: Mortgage approvals soar to pre-COVID-19 levels
Finder research shows not even coronavirus can dampen Australia’s love affair with property.
Free Loan Agreement Templates (Australia)
Learn how to write a loan agreement and find out where you can get free legal templates.
Home Loan OffersImportant Information*
Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get $4,000 cashback (Other terms, conditions and exclusions apply).
A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.
Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.
Ask an Expert