How can I get a mortgage with low income in Australia?

Low-income earners in Australia can obtain a mortgage by taking advantage of government-supported programs like the First Home Owner Grant and the First Home Loan Deposit Scheme, which reduce the required deposit and eliminate the need for Lenders Mortgage Insurance. Additionally, improving credit scores, reducing debt-to-income ratios, and exploring alternative mortgage options like low deposit loans or shared equity schemes can significantly increase the chances of securing a home loan.

Getting into the Australian housing market is becoming increasingly difficult, especially for those with limited financial resources. For low-income earners, the dream of homeownership might seem distant, but with the right information and strategies, it can become a feasible goal. This article provides an essential guide to understanding the mortgage process in Australia for low-income earners, including government support, tailored mortgage options, and practical tips to enhance your mortgage approval chances.

Assess Your Financial Health

Before looking to buy your first home, it's crucial to thoroughly assess your financial situation. Start by detailing your monthly income, expenditures, and any existing debts. This information will be foundational in determining your borrowing capacity.

Your credit score plays a pivotal role in mortgage applications. In Australia, lenders use this score to assess your creditworthiness and reliability as a borrower. A higher credit score can significantly improve your chances of getting a mortgage, and one with favourable terms.

The debt-to-income (DTI) ratio is another critical factor. It measures the portion of your income that goes towards paying debts each month. Keeping your DTI ratio low and paying off credit cards demonstrates to lenders that you can manage your debts effectively and sustain additional mortgage repayments.

Government and Non-Government Support Programs

Several government initiatives in Australia aim to assist low-income earners in entering the housing market. The First Home Owner Grant (FHOG) is a national scheme, with variations depending on the state or territory, designed to help first-time home buyers by providing a one-off grant. Eligibility criteria and the amount offered can vary, so it's essential to check the specifics for your region.

Other state-specific grants and affordable housing programs also exist, such as the Victorian Homebuyer Fund, which offers a shared equity arrangement to reduce the amount borrowers need to finance through a mortgage.

The National Housing Finance and Investment Corporation (NHFIC) offers the First Home Loan Deposit Scheme (FHLDS), which allows eligible first-time homebuyers to purchase a home with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI).

Low-Income Friendly Mortgage Options

For low-income earners, securing a traditional mortgage can be challenging. However, specific products cater to this demographic. Low Deposit Loans are ideal for those who have not saved a significant deposit. Certain lenders offer loans that require a deposit of only 5%. Some financial institutions allow family members to use their own home's equity to guarantee a portion of the loan, reducing the borrower's need for a large deposit. Keystart Home Loans in Western Australia offer low-deposit home loans and do not charge LMI, with looser criteria regarding income limits.

Strategies to Increase Mortgage Approval Odds

Improving your financial standing is crucial. Regularly check your credit report for inaccuracies and work towards paying off existing debts. Reduce your DTI by paying down debts and avoiding new debt commitments. Consider applying with a co-borrower or having a guarantor to strengthen your application. Saving for a deposit is often the biggest hurdle for low-income earners. Set up a high-interest savings account specifically for your home deposit. Look into government schemes like the First Home Super Saver Scheme, which allows you to make voluntary contributions to your superannuation that can be withdrawn for your first home's deposit. Using the services of a mortgage broker is free, and they can help by contacting their network of lenders to find one that can give you a home loan.

Preparing to Apply for a Mortgage

Being well-prepared can significantly streamline the mortgage application process. Gather recent payslips, tax returns, and personal identification documents. Obtaining pre-approval from lenders can give you a clear idea of your borrowing capacity and strengthens your position when making an offer on a property. Use mortgage comparison tools to find the best rates and terms suited to your financial situation. 

Alternative Paths to Home Ownership

If traditional pathways prove challenging, consider alternatives. Shared Equity Schemes allow you to buy a portion of a property and pay rent on the remainder, reducing the initial financial outlay. Rent-to-Buy Schemes let you rent a property with the option to buy it later, often building a deposit through higher rental payments. Joining a housing co-op can offer more affordable entry points into the housing market.


While the path to homeownership for low-income earners in Australia can be fraught with challenges, a range of programs, support mechanisms, and tailored lending products are available to help bridge the gap. By understanding your financial health, leveraging support programs, and exploring suitable mortgage options, you can take significant steps towards securing a home loan. Speak to a top mortgage broker who can help you find a lender for your situation.

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