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.

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By

Richard Whitten

Updated

Fact checked

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.

Key takeaways

  • Not all home loan lenders accept Centrelink payments as income and those who do might have a stricter application process.
  • Different types of Centrelink payments will be accepted in different ways.
  • You might need to put up with higher rates and fees if you are accepted for a home loan.

How do mortgages for people on Centrelink work?

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. Some Centrelink payments are also only accepted as additional income, rather than your main source of income (more on that below).

If you receive the age pension, there are specific home loan options for you. Check out our guide on getting a home loan as a pensioner.

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Our expert says: A mortgage broker can help

"Getting in touch with a mortgage broker is a good idea if you're ever unsure about how your income will be assessed: whether you're self-employed or you receive Centrelink payments. 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."

Senior Money Writer

Is my Centrelink benefit accepted by lenders?

You may find it harder to get a loan if your entire income is from Centrelink payments. While some payments can be accepted as your main (primary) source of income, others will only be considered if they are additional (secondary) sources. That means you'll need another steady income, usually from employment.

Here's a general guide, but remember that each lender treats Centrelink income differently and while some accept these payments as a primary source of income, others will not. You should always speak to individual lenders to be clear on their criteria.

Type of benefitAccepted?Notes
Age pensionAs secondary incomeAge 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 AllowanceAs secondary incomeThis 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 SupportAs primary incomeYou 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 PensionAs secondary incomeIf you receive a disability pension you will need to show proof of a second source of income.
Family Tax BenefitsAs primary incomeThis 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 AllowancesAs secondary incomeAllowances for foster care are accepted so long as you are receiving another source of income.
Overseas PensionAs secondary incomeThis will depend not only on your residency status in Australia, but also on which country you're receiving the pension from. Lenders will assess this on a case-by-case basis.
Veterans and Widows PensionAs primary incomeNot accepted by all lenders. Your application is more likely to be approved if you have another form of income as well and there may be age restrictions.

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. For example, you will likely not be approved for a home loan if you receive Jobseeker payments.

In these cases it might be best to speak to a lender directly about your options and eligibility, or book an appointment with a mortgage broker.

How to boost your chances of mortgage approval while receiving Centrelink payments

Number 1

Make a strong application

  • Get your documents together. Make sure you collect all the necessary documents for your mortgage application, including bank statements, payslips and identity documents.
  • 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.
Number 2

Find the right lender

  • 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.
Number 3

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.

Ready to find a home loan that suits you? Compare home loan options now.

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Money Editor

Richard Whitten is Finder’s Money Editor, with over seven years of experience in home loans, property and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise
Richard has written 609 Finder guides across topics including:
  • Home loans
  • Property
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