Navigating home loans responsibly
Applying for a home loan can be more complex if you earn income outside of traditional full-time employment. Many Australians work casually, part-time, or receive government support payments. While these income types are common, they can present challenges when applying for a mortgage.
Lending rules
Responsible lending rules apply across the industry, which means every application is assessed to ensure the loan is suitable for the borrower. This includes assessing income stability, expenses, and the ability to repay over time. If you have non-traditional income, the process may involve additional documentation or checks. This guide explains what lenders typically look for and how you can prepare, so you can make informed decisions about home ownership.
Understanding casual and irregular income
Casual work and non-traditional income (freelance, short-term contracts) are common in Australia, and while this type of income can make budgeting more difficult, it doesn’t automatically disqualify someone from getting a home loan. For example, someone who has worked in a casual role for over a year with regular hours may be viewed more favourably than someone who has just started. Speaking with a NAB home loan specialist can help clarify what’s realistic for your situation.
What the lender checks
Lenders typically look at:
What the applicant provides
Applicants may need to provide documentation, such as:
Tips to improve your application
Save for a larger deposit
A bigger deposit reduces the amount you need to borrow and shows lenders you can manage money well. It also lowers risk for the lender, which can improve your chances of approval.
Reduce existing debt
Credit cards, personal loans, and buy-now-pay-later services can affect borrowing power. Paying these down before applying for a home loan can make a noticeable difference.
Keep income consistent
Lenders look for stability. Providing relevant documentation helps demonstrate reliability. If you’re self-employed with fluctuating income, you’ll need to provide evidence of stability through contracts or long-term client agreements.
Non-traditional income and home loans: what else matters?
Getting a home loan while on maternity leave
It depends on your overall financial situation. Lenders will look at income before and after leave, as well as your ability to make repayments.
Changes in income after loan approval
If your income drops and you’re worried about making repayments, contact your lender straight away. There are hardship support options to help you manage during tough times and seeking support early gives you the best chance at keeping on top of your finances.
A joint home loan on irregular income
Lenders will typically assess both you and your co-borrower’s incomes and financial positions to make sure the loan is affordable. If you’re planning to buy with someone else, take a moment to learn about how co-borrowing works.
Centrelink income and home loan eligibility
Some payments, such as Family Tax Benefit or Age Pension, may be considered by lenders. Others may not count. However, a loan approval depends on your full financial picture. Responsible lending regulations mean a loan cannot be approved unless it’s affordable for you.
Low, irregular income and financial wellbeing
Earning a lower income doesn’t necessarily mean home ownership is out of reach, but it does require careful planning. Lenders will look closely at whether repayments could cause financial strain. Building a savings buffer, reducing unnecessary debt, and maintaining a good credit history are key steps to improve your position.
Government initiatives like the Australian Government 5% Deposit Scheme may also assist eligible buyers by reducing the deposit required and avoiding lenders mortgage insurance (LMI). Not every low or irregular income will qualify for a home loan, so it’s important to understand what’s realistic. For those experiencing financial stress, it’s important to seek help early. If you’re unsure, one of our home loan experts can help.
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.
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