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Home loans for Centrelink recipients
If you're receiving Centrelink payments that doesn't mean a home loan is off limits. You may be able to get a mortgage, but the process is a little tougher.
If you currently receive Centrelink benefits, you may be able to borrow money from a bank for a small home loan. There are some lenders who accept some Centrelink payments as part of your income, but it's likely you'll need to purchase with another buyer in order to have enough income to satisfy a loan assessment.
If you're receiving a Centrelink benefit, your home loan application will be processed the same as any other: you save a deposit and then borrow money from the lender, which you pay back with interest. However, not all lenders accept Centrelink payments as income and those that do, have a stricter application process.
Getting in touch with a mortgage broker is a good idea. Brokers specialise in finding loans for borrowers in unique circumstances such as this, and their services are 100% free. They get paid in commission from the bank for successfully settling the loan, so you can get access to a service that helps you find the right lender without it costing you any money.
The following Centrelink benefits may be considered as an acceptable form of extra income. The information below is a general guide only; please remember that each lender treats Centrelink income differently:
Type of benefit
Accepted?
Notes
Age pension
Yes - secondary income
Age 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 Allowance
Yes - secondary income
This 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 Support
Yes - primary income
You 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 Pension
Yes - secondary income
If you receive a disability pension you will need to show proof of a second source of income.
Family Tax Benefits
Yes - primary income
This 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 Allowances
Yes - secondary income
Allowances for foster care are accepted so long as you are receiving another source of income.
Overseas Pension
Yes - primary income
Only 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 Pension
Yes - primary income
While there are typically no conditions to be met, but your application is more likely to be approved 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.
How to boost your chances of mortgage approval while receiving Centrelink payments
Avoid over-applying. 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.
Find the right lender
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. Look at the restrictions very carefully before applying for a home loan if you are receiving Centrelink benefits.
Lender. Make sure you choose a lender that you think will be understanding of your situation.
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, check if your partner needs to hold a steady job.
Watch out for...
Higher interest rates. Due to your unique circumstances, lenders may only offer you a home loan at a higher rate. Compare rates 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.
Higher LVR. Your lender may restrict how much you can borrow (known as a loan-to-value ratio) to 80% of a property's value or lower.
Why you can trust Finder's home loan experts
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Since 2014, we've helped 150,000+ people find a home loan by explaining the nitty gritty details simply and clearly. We'll never ask for your number or email. We're here to help you make a decision.
Frequently asked questions about Centrelink recipients
If you're on Centrelink your home loan will be the same as any other: you save a deposit and then borrow money, which you pay back with interest. But if you're looking for a lender which accepts Centrelink payments as a form of income then you have fewer options. Not all lenders accept Centrelink payments as income. And those that do have a stricter application process.
That's why getting in touch with a mortgage broker is a good idea. Brokers specialise in finding loans for borrowers in unique circumstances.
Not all Centrelink benefits will be considered by a lender as an acceptable form of extra income.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification.
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