Low Income Home Loans

For low income earners the idea of purchasing and owning a home may seem impossible, but a low income home loan could be the answer.

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, updated on August 7th, 2023       

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Not earning much money doesn’t mean that you have to miss out on owning your own home. With the help of a low income home loan, you could find yourself getting into the property market in no time at all.

What is a low income home loan?

A low income home loan is more or less the same as any other standard home loan in terms of its function, except more tailored towards borrowers who don’t earn a big income.

The only major difference with this kind of loan is that your borrowing capacity is likely to be limited by your ability to repay your loan.

Lenders will determine an amount they believe you can afford to repay on terms that ensure regular repayments are manageable before proceeding with your application. From there, your interest rates will be determined by your financial and credit histories and how they stand up to scrutiny.

A good credit score with a proven history of repaying debts can give you access to some of the better interest rates on the market even if you’re not earning much. 

How can I secure a low income home loan?

There is no black and white solution when it comes to securing a home loan. However, there are some things you can do to put yourself in a good position with potential lenders. First of all, you need to assess your income. Income does not only need to come from wages, it can also be found in:


Secondly you will need to assess your living costs and understand exactly how much goes out of your account during a week, fortnight and month. You must then work out how you can reduce these costs to maximise what you can do with your income.

Lastly you should look to clean up your credit history. This is because lenders will be looking at this to assess whether or not you will be able to meet your repayments.

How much do you need for a deposit?

The acceptable level of Loan to Value Ratio (LVR) will vary between lenders and home loan products. Most will fall between the 80% and 90% LVR marks with some even going as high as 95%.

An option when looking for a smaller house deposit is something that you maybe haven’t thought of just yet, the regional property market.

While many people prefer to live in Australia’s capital cities, it is important to understand that there are many cheaper housing options in Australia’s regional centres.

According to CoreLogic Australia has seen a 1.8% increase in its combined capital city housing values and while there has been a larger growth of 4% in the combined regional values. Despite this, the median prices in regional areas should still be far more attractive to those looking for low income home loans.

Here are the median house and unit values in Australia’s capital cities and regional centres:

City Median House Value Median Unit Value

Source: CoreLogic

Regional Areas Median House Value Median Unit Value

Source: CoreLogic

Low income earners will often be looking to purchase a unit due to the substantially lower prices. The difference between the average capital city unit price and average regional unit price sits at $159,728. This is a large difference and while for many Australians, lifestyle in the capital cities is more ideal, there is clear evidence that regional areas are growing.

Of course most people cannot simply uproot their life in search of lower property prices, however it should definitely be something to look at for those considering a low income home loan.

Am I eligible for any sort of schemes or grants with a low income home loan?

Whether you are eligible for any sort of grant is completely dependent on your situation and location, here are some examples of schemes or grants you could be eligible for:

Low Income Home Loan Schemes

Each state and territory has a separate scheme to help low income earners enter the property market:

State Scheme name Details
HomeStart Home Loan
  • Offers applicants the ability to start with as small as a 5% deposit on their chosen property and avoid paying LMI.
  • You also have the option to combine the HomeStart Home Loan with a loan from another lender and borrow up to 30% more.
Queensland Housing Finance Loan
  • Offers low income earners the ability to get into the Queensland property market with as little as a 2% deposit.
  • The loan also means that applicants will avoid paying LMI and any other application fees.
HomesVic Shared Equity Initiative
  • Allows low income earners to qualify for a home loan with a deposit as little as 5%.
  • You will enter a shared agreement with HomesVic and they will cover a certain percentage of your deposit, meaning you can borrow less and have lower monthly repayments.
  • Eventually you will need to cover HomesVic’s investment.
Home Buyer Initiative
  • Allows low income earners to enter the property market in the state.
  • Allows low income earners to purchase a home with the assistance of the Director of Housing.
  • The Director will pay as much as $100,000 or up to 30% of a home loan which you will eventually pay back over time.
  • Allows low income earners to enter the property market without needing to pay LMI.
  • Applicants can deposit as low as 2% of the property’s value and will not need to pay any further account keeping fees.
Home Buyer Concessions
  • All home buyers will not have to pay duty when purchasing their first home.
First Home Loan Deposit Scheme (FHLDS)
  • Allows first home buyers to place a deposit of 5% with the National Housing Finance and Investment Corporation covering the further 15% to avoid LMI.

Low income earners and the First Home Owners Grant?

The First Home Owners Grant (FHOG) is only available to first home buyers. This will likely be the case for many low income home loan applicants, so it is important to understand if you fit all the requirements. Nationwide rules state:

  • You must be over 18 years of age
  • You must be an Australian citizen/permanent resident
  • You must not have previously owned or co-owned any properties in Australia.

Different states have different requirements when it comes to the FHOG as can be seen in the table below:

State or Territory How much you’re eligible for What makes you eligible Additional notes
Urban homes - $10,000 Regional homes - $20,000
New properties valued up to $750,000
Exempt from paying stamp duty on properties worth up to $600,000 Concessions are available for properties valued between $600,001 and $750,000 The extra $10,000 received when purchasing regional homes is valid for contracts signed before 30 June 2021
new properties valued up to $600,000 New properties valued up to $750,000 if you enter a contract with a builder
Exempt from paying transfer duty on new homes valued up to $800,000 Exempt from paying transfer duty when purchasing vacant land valued up to $400,000
A new property valued up to $575,000 if you live there for at least 6 months within the first year of settlement
Purchasing or building a new property valued up to $750,000
Stamp duty concessions are available (but vary) for homes valued up to $550,000
Properties valued up to $750,000 when south of 26th parallel Properties valued up to $1,000,000 when north of 26th parallel
Stamp duty concessions are available (but vary) for homes valued up to $530,000
New Properties or off the plan properties
50% discount on property transfer duty
New properties

Got questions about low income home loans?

What would be the maximum amount I can borrow on a low income home loan?

How much you will be able to borrow on your home loan depends on your income and living costs. Some people with low income but minimal expenses might surprise themselves with how much they can get approved for.

If I’m self employed could I still get a home loan?

If you are self employed you are certainly still eligible for a home loan. It might be a little more complicated as a self employed person on a low income, but it will still be possible in most cases.

Can I combine my home loan application with someone else?

Yes, you will be able to combine your home loan application with another person. This could be for example a partner or sibling.

Combining your loan application will increase your borrowing power, especially if you are both earning a lower income.

What defines as low income?

Low income usually is defined by what falls around the minimum wage available to full time employees. Currently according to Fairwork, the minimum wage in Australia is $19.84 per hour or $753.80 per week. This works out to $39,197 annually. If you are anywhere around this mark in annual income, you will be classified as a low income earner.

Are there any differences between borrowing for a house or unit?

There are many differences between borrowing for houses and units. Generally, banks will usually associate borrowing for a unit as riskier than a house as they are usually in less demand.

Who can I speak with to help me get a low income home loan?

A mortgage broker may be a great help for you to get into the property market. They know the lender market well and will be able to help you find the best possible deal for your situations. Many brokers will also not charge very much.

What if I have bad credit?

Having bad credit will not prevent you from getting a home loan. It might complicate your process, but there are many products available to those with bad credit histories.

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