Getting a Home Loan in Australia – Various Income Sources

Buying a home is exciting – but what if your income doesn’t come from a typical 9-to-5 salary? Many Australians earn money through unique income streams beyond a standard wage. You might receive shift penalties or allowances, income from a family trust or dividends, or even be on an income protection insurance claim. If you’re a first home buyer, home upgrader, or property investor with non-traditional income, you may wonder: Can I get approved for a home loan with these income sources? The good news is yes, it’s often possible – but each type of income is treated differently by lenders. In this comprehensive guide, we’ll explain how Australian lenders assess various income types, what documentation you need, and tips to improve your chances. We’ll cover everything from regular wages and overtime to trust distributions, investment earnings, government benefits, and more. By the end, you’ll know how to present your unique income so it counts as assessable income in a mortgage application, and when to seek expert help. (Spoiler: a quick chat with a Fundd mortgage broker can clarify exactly which lenders will accept your income situation.) Let’s dive in.

How Lenders Assess Income for Home Loans

When you apply for a home loan, lenders perform a serviceability assessment – essentially a budget test – to ensure you can afford the repayments. A critical part of this is determining your assessable income, which is the income amount the bank will count in their calculations. Different income sources are not all treated equally:

Stable, regular income (like a full-time salary) is usually counted at 100%.
Variable or less predictable income (overtime, bonuses, commissions, investment returns, etc.) may be counted at a discounted rate (often 50–80%) or averaged over time. Lenders do this to account for the risk that these incomes can fluctuate.
Short-term or non-recurring income (like a one-off bonus or capital gain) might be excluded entirely from assessable income.
Ongoing payments with an end date (such as an insurance benefit that stops at age 65) may be acceptable only if your loan term ends before the income expires.
Unacceptable income: Some sources (e.g. temporary government benefits, very sporadic earnings) are generally not accepted at all for serviceability.

Every lender has its own policy on what income it accepts and how it’s calculated. For example, one lender might count 100% of your share dividends or bonus, while another might only allow 50% or ignore them. These differences can make a big impact on your borrowing power. A case in point: one Australian borrower with a high annual bonus found that Bank A was willing to count most of it (boosting his assessable income to $148k), whereas Bank B only used a conservative portion (assessable income $116k), and some banks wouldn’t count it at all – leading to vastly different loan sizes offered. Because of such variations, matching your situation to the right lender is key.

Consistency and continuity of income are crucial. Lenders want to be confident your income will continue into the future at a similar level. They will ask for evidence like payslips, tax returns, bank statements, or letters from employers to verify:

Amount – how much you earn from each source.
Frequency – how regularly you receive it (weekly, monthly, annually?).
History – how long you’ve been receiving it (a longer history makes them more comfortable it will persist).
Future outlook – whether the income is likely to continue (e.g. an employment contract, or if there’s a fixed end date).

In the following sections, we break down how common and not-so-common income types are assessed. We’ll also highlight what portion of each income is typically accepted as assessable income for your home loan.

Income from Employment: Salary, Wages and More

For most borrowers, employment income (your earnings from a job or jobs) is the primary source used to qualify for a loan. But employment income isn’t just your base salary – it can include overtime, shift penalties, allowances, bonuses, commissions, etc. Here’s how lenders view each:

Base Salary (Full-Time or Part-Time Work)

Your base wage from stable employment is the simplest income for banks to assess. If you work full-time or permanent part-time, lenders will usually take 100% of your gross salary as income. They will verify this with recent computerised payslips and often your most recent PAYG Summary or tax return. It helps if you’ve completed any probationary period, but being on probation doesn’t always disqualify you – some lenders are okay if you’re in the same industry or there’s strong demand for your role. Generally, though, having at least a few months in your current job (and continuous employment history) strengthens your case.

For part-time workers, as long as your hours and pay rate are regular, banks again use your gross pay. If your hours vary each week, they might average your income over a period (using year-to-date figures on payslips or group certificates). You should show at least 6–12 months in the role to prove stability if part-time or casual (more on casual income below).

Job changes: If you’ve recently switched jobs but remain in the same field with no employment gap, many lenders will still consider your income readily. They may require a letter from your employer confirming your new salary and that your position is ongoing. However, if you have a history of very frequent job hopping or if you’re brand new to an industry, expect more scrutiny.

Multiple jobs: If you have two or more jobs, lenders will consider all your employment income, provided each is stable. Typically, if you have a second job, you should have held it for at least 6–12 months for the income to count. Some lenders accept secondary income even with a shorter history, especially if your main job is solid. Be prepared to show payslips for each job. (We’ll discuss self-employed side gigs separately in the business income section.)

Casual and Contract Employment

If you’re employed on a casual basis, it’s a bit trickier but still possible to use your income for a home loan. Lenders want to see that although you’re “casual”, you actually work regular hours and have done so consistently. A common policy is requiring 12 months of continuous casual employment with the same employer (or sometimes 6 months at the same job and 2+ years in the same industry). This proves your casual work is ongoing. They will usually take an average of your earnings over that period if hours fluctuate. If your hours are consistent and guaranteed, some banks might treat it similar to part-time.

Fixed-term contract workers (e.g. a 6-month or 12-month contract) are often treated similarly to permanent employees if you have a track record of contract renewal or working in that field. For example, IT contractors or government contractors who regularly roll from one contract to the next can be accepted. If you’re on a contract with, say, 3 months left, the lender may want evidence it’s likely to be renewed or that you have new contract lined up. Having a longer initial contract (12+ months) or being contracting for several years strengthens your case.

Some lenders even consider agency temps or seasonal workers, but typically only if you have a 2-year history showing a consistent pattern of income (e.g. you work each summer and earn similar amounts each year, which is reflected in your tax returns).

Overtime Earnings

Do you regularly work overtime and rely on that extra pay? Lenders will include your overtime income if it’s consistent – but often not at 100%. Most banks will only consider overtime if you have a proven history of earning it and it’s likely to continue. For many industries, they will annualise or average your overtime based on past earnings:

A common approach is to take the overtime amount from your last annual PAYG summary or tax return and use 80% of that figure as your yearly overtime income. For instance, if you earned $10,000 in overtime last year, they might count $8,000 toward your income.
Another method is year-to-date extrapolation: if your payslip shows you’ve consistently earned, say, $800/month in overtime this year, that annualises to ~$9,600; again the lender might take 80% of that (around $7,700) as assessable income.
They might also look at a 2-year average if your overtime pay fluctuates significantly from year to year.

However, there’s an exception: if you work in certain essential services roles or industries where overtime is a regular part of the job (not optional), some lenders will count 100% of your overtime. Roles like nurses, doctors, police, paramedics, firefighters, prison officers, and other emergency or health workers often fall in this category. In these jobs, overtime or extra shifts are considered more dependable income (sometimes even mandatory), so a few banks are comfortable taking the full amount you earn. For example, if you’re a nurse frequently doing extra shifts, it’s possible to find a lender who includes all that pay in your borrowing capacity. You may need a letter from your employer confirming that overtime is a normal and expected part of your employment and detailing how much you earned in overtime over the past year.

Pro tip: Document your overtime thoroughly. Provide payslips and the annual payment summaries showing overtime earned. If your employer can write a letter stating that your overtime is regular (and perhaps critical to the role), it can bolster your case. The more evidence of consistency, the better – especially if you need a lender to consider overtime at 100%. And as always, if one lender’s policy caps your overtime at 50% or 80%, a mortgage broker can identify alternative lenders that are more generous.

A mining engineer working a night shift – in many essential industries, overtime and shift penalties are regular, and some lenders will count 100% of this income. For other jobs, banks often use 50–80% of overtime earnings to be safe.

Shift Loadings and Penalty Rates

If you’re a shift worker (such as working nights, weekends, rotating shifts), you likely receive additional pay like shift loadings, penalty rates, or other allowances for working non-standard hours. The question is, will banks count these extras as part of your income? The answer is generally yes – if they are a regular and permanent part of your earnings. Lenders commonly treat shift allowances similarly to overtime: they want to see a track record and assurance that you’ll keep getting this income.

Here’s what lenders typically look for with shift allowances:

You must be permanently employed in the role that attracts the allowance (not a temporary fill-in on night shift).
The allowances should be a stable part of your roster and pay – e.g. you always do 2 night shifts a week with 15% loading, or you have an annual shift penalty built into your contract.
The extra pay should not be a reimbursement of expenses. Some allowances (like a meal allowance, travel allowance, etc.) are intended to cover costs you incur – those are usually not counted as income because they offset an expense. True penalty rates for working undesirable hours, or industry allowances (like a health worker’s infectious disease allowance, or an underground miner’s allowance) can be counted, because they’re essentially additional salary for job conditions.

If these conditions are met, major lenders do accept shift allowances as part of your assessable income. In fact, at least seven major banks in Australia will include shift loadings for serviceability when they see it’s regular. Most don’t impose any special loan-to-value (LVR) restrictions just because you have shift income – meaning you could still borrow up to 90–95% of the property value (with LMI) if otherwise qualified.

That said, some lenders might be more conservative, perhaps counting only a portion (e.g. 80%) of your average shift allowance, especially if it fluctuates. Consistency is key: if your pay slips show a steady pattern of these allowances over 6–12+ months, you’re in good shape. You might consider providing a letter from your employer stating what the allowance is for, and that it’s a regular, ongoing part of your remuneration. For example, “Ms. Smith is a full-time employee who regularly works overnight shifts for which she receives a 20% shift loading. This has been a consistent part of her income for the past 2 years.” Such a letter can help any hesitant lender feel more comfortable including it.

Common types of shift and work allowances that lenders will consider: night shift penalties, weekend/public holiday rates, laundry or uniform allowances, meal allowances, overtime meal allowances, hazard allowances, travel allowances, and living away from home allowances – provided these are regular and part of your normal pay. Again, they won’t count portions that are merely expense reimbursements (e.g. if you get an allowance because you spent that amount on a work expense).

Example: A Melbourne nurse earns a base salary of $70,000 plus about $10,000 a year in shift penalties for evenings and weekends. She provides her last 6 months of payslips showing these penalties in almost every pay. The lender verifies that such penalties are standard for nurses. They agree to include the $10k (in full) as part of her income, meaning an extra ~$800/month is counted in serviceability. This boosts her borrowing capacity notably. Another lender might have been more cautious and counted, say, $8k of it – which is why finding a lender experienced with healthcare workers was beneficial.

If you’re unsure which bank will be most generous with your shift income, speak to a broker. There are specialist lenders and non-bank lenders that explicitly market to non-standard income earners (Pepper Money is one example) who often take a more accommodating approach – sometimes assessing 100% of shift allowances and penalties just like base pay.

Nurses and other shift workers often earn penalty rates for night or weekend work. Lenders will count this income if it’s regular. Many banks simply require proof that shift allowances are a permanent part of your job. Providing consistent payslips and an employer letter can help ensure your shift worker income is fully assessable for your home loan.

Bonuses and Commissions

Many people earn performance-based income in the form of bonuses, commissions, or incentive payments. For instance, you might get an annual bonus from your employer, sales commissions monthly, or profit-share payments. Lenders will usually include these earnings if they are regular and likely to continue – but they apply some of the strictest rules here, because bonuses/commissions can vary widely year to year.

Here’s how banks typically handle bonus or commission income:

Documented 2-year history: The common requirement is at least two years of bonus or commission income, as evidenced in your PAYG summaries or tax returns. They want to see you consistently earned these payments over time.
80% of the lower year’s amount: A very typical policy is to take the smaller of your last two years’ bonus amounts and use 80% of that as your annual bonus income for servicing. For example, if you received a $15k bonus last year and $10k the year before, the lender might use 80% of $10k = $8k/year as allowable income. This conservative approach accounts for the possibility that you might have a down year.
Averaging: Some lenders simply average the last 2 years. In the above example that would be $12.5k; they might then take 80% of that or sometimes 100% of the average if stable.
Consistent or rising trend: If your bonuses are steady or growing, it helps. If they are declining, many lenders will only use the most recent (lower) figure or may even question sustainability.
Less than 2 years with current employer: If you’ve been getting bonuses for many years but switched jobs last year, some banks might be flexible (as in the case study earlier, where the borrower had industry history and one lender accepted 80% of his latest bonus even with 1-year history at the new job). But others will insist on 2 full years at the current job before considering it.

Some conservative lenders ignore bonuses/commissions entirely, especially if they’re a large portion of your income and you haven’t been in the role for long. On the other hand, a few lenders are more lenient: for example, a couple of banks will use an 80% of latest year’s bonus if you can show at least 12 months in similar roles earning such bonuses. And certain specialist or second-tier lenders might count 100% of a regular commission if the structure is clearly documented (for instance, if your employment contract guarantees a commission on each sale and you have a multi-year track record).

Bottom line: Yes, banks do take bonuses into account for mortgages. Just be prepared to show paperwork – usually two years of PAYG Payment Summaries (Group Certificates) or tax returns that break out the bonus/commission amounts, plus possibly a letter from your employer confirming how your bonuses work and what you earned. The bank will then apply its formula. If you rely on a large bonus to afford the loan, you might need a lender with an aggressive policy (some will even do 80% of a one-year bonus with the right circumstances). This is where a broker’s knowledge is invaluable – they can point you to Lender A vs Lender B, as illustrated by how one client’s borrowing capacity jumped from about $620k with a strict lender to $908k with a flexible one, purely because of how bonus income was counted.

Allowances (Car Allowance, Phone, etc.)

Many employees receive allowances on top of their salary – for example a car allowance (vehicle allowance), travel allowance, uniform allowance, or phone allowance. These are often part of your remuneration package. Generally:

If an allowance is a fixed amount paid as part of your taxable income, it can be counted. For instance, a $10,000 car allowance paid monthly and shown on your payslip is essentially additional salary. Most lenders will include it fully, especially if you are not actually spending the full amount on a car. (They might, however, also account for the fact you likely have a car expense or lease – so keep that in mind on the expense side.)
Fringe benefits: Some employees (especially in healthcare or charity sectors) have part of their income as tax-free fringe benefits (like salary packaging for a car or meals). Lenders will often “gross up” non-taxable income (because it’s worth more pre-tax). For example, if you get a $15k tax-free benefit, a lender might treat it as equivalent to maybe ~$20k gross salary for serviceability since you pay no tax on it. Policies vary, but know that non-taxable income can be boosted by 25% or more in calculations due to the tax advantage – this is sometimes called “grossing up”.
If an allowance is explicitly a reimbursement (e.g. you submit receipts and they pay you back), it’s not counted. For example, a per-km fuel reimbursement or a travel per diem – those are not treated as income.

A common example is a car allowance: Let’s say your employer gives you $500 per month car allowance. Lenders typically count this $6,000 per year in addition to your base salary. In fact, some lenders see car allowances as very stable (since many people get them continuously year to year) and will take 100% of it. Just be aware if you also have a car loan, that loan payment will count as an expense, partially offsetting the benefit of the allowance.

Pro tip: If you have a significant allowance, clarify with your lender or broker what it’s for. If it’s not tied to an expense, great – it boosts your income. If it is tied to an expense (like a living-away-from-home allowance meant to cover rent in a remote location), the lender might count it but also factor in the higher living cost you have. In some cases, such allowances aren’t counted at all if they deem it fully offset by expense.

Second Jobs and Side Gigs

Working a second job or doing side gigs (like freelance work in addition to a main job) is increasingly common. Lenders will include secondary employment income in many cases:

You should ideally have held the second job for at least 6–12 months, proving you can manage both and that the income is ongoing. If it’s very new, they may ignore it for now.
They will verify it with payslips (if it’s a PAYG job) or bank statements/invoices (if it’s adhoc contracting – though if contracting, you might be classified as self-employed for that portion).
Total working hours: If your combined working hours are extremely high (e.g. 60–70 hours week), a lender might question sustainability. But generally, if you can show it’s regular (say 10 extra hours a week at a second job), they will include it. Some lenders explicitly state no issue with multiple jobs – for instance, Pepper Money says they assess 100% of your second job income alongside your primary income.

Ensure you disclose all jobs and provide documentation for each. A letter from your second employer confirming your employment and income can help, especially if that income has any variability.

Maternity/Parental Leave Income

If you’re currently on maternity or paternity leave from your job, lenders can still approve a home loan – but they’ll consider what your income will be when you return to work. Typically:

If you’re on paid parental leave (either employer-funded or government Paid Parental Leave), that income is short-term (usually 18 weeks for gov PPL, or varying employer policies). Many lenders will not count the short-term leave payments, but instead focus on your normal salary post-leave. However, a few will count employer-paid maternity leave if it’s certain (Pepper Money even lists “parental leave payments from your employer” as acceptable income).
The key is often obtaining a letter from your employer stating your position is secured and your expected return-to-work date and salary. For example, “Jane is on maternity leave and is confirmed to return to her role as Marketing Manager on 1st March at her full salary of $80,000.” With that, many lenders will effectively use that $80k as income (sometimes they may ask how you’ll manage in the interim period – e.g. you might need some savings to cover mortgage in the months you’re on leave if the leave pay is lower).
Any government parental leave pay or family benefits you receive during leave can be mentioned, but again those are temporary – lenders focus on your ongoing income after leave (plus any permanent family benefits as discussed later).

In short, being on maternity leave doesn’t bar you from getting a loan. Just be prepared to show your pre-leave income and that you have a job to go back to. Some couples actually apply for loans while one partner is on leave – it’s doable with the right prep and often a broker’s guidance on which lender will be most understanding.

Probationary Employment

If you are on probation in a new job, some lenders have a policy not to approve loans until probation is finished (commonly 3 or 6 months). However, there are lenders who will overlook probation if:

You moved within the same industry or to a higher role.
You have a stable employment history prior.
The probation is a mere formality (e.g. government jobs often have 6-month probation but it’s rare to fail it).
Or if you’ve already completed most of it (e.g. 2 months into a 3-month probation at application time).

This is a case-by-case thing. Don’t assume you must wait if everything else is in order – talk to a broker who can identify a lender with flexible probation policy (some absolutely do lend during probation, especially for professionals).

That covers the main categories of employment income. The big takeaway: lenders will count more than just your base wage, but usually with some haircut or conditions for anything extra. Now, let’s move on to self-employed income, which follows a whole different assessment process.

Self-Employed Income and Business Owners

If you’re self-employed, a freelancer, or a business owner (including trading via a company or trust), lenders can certainly lend to you – but proving your income is a bit more involved. Instead of payslips, you’ll need to supply financial documents (and possibly use specialized loan products) to demonstrate your earning capacity.

Standard Income Verification for Self-Employed

Most banks follow a straightforward rule: you should have at least two years of trading history and provide your last two years of tax returns and financial statements. They use the net profit from your business (or your share of it) plus any salary you pay yourself, to work out your annual income:

Sole trader: Lenders look at your personal tax returns, specifically the taxable income after business expenses (as shown on your Notice of Assessment). This is essentially your net profit from the business.
Partnership: They’ll look at the partnership tax returns and see your share of partnership profit (plus any wages you drew).
Company: They examine the company’s profit and loss. Typically, your salary + dividends from the company + any net profit remaining attributable to you as an owner are considered. If profit was retained in the company instead of paid out, some lenders might count your portion of that profit if it’s a pattern and the company has capacity to pay it out.
Trust: If a trust is the business vehicle, similar to company – they look at the trust’s net income and which beneficiaries it’s distributed to. (We’ll cover trusts in detail soon.)

Lenders often average the last 2 years of income. If year 2 is higher than year 1, some might take the average, while others may take the lower figure to be conservative. If year 2 is significantly higher, a few lenders will use year 2 only (especially if you can explain growth and the current year’s figures support it). If year 2 is lower than year 1, many will use the lower number (or an average that still ends up closer to the lower). Stability or upward trends are your friend.

They will also often require you to have a valid ABN (Australian Business Number) registered for at least 2 years (to show you’ve been in business). Some lenders accept 1 year of ABN if the rest of the profile is strong, but many prefer 2. If you’re registered for GST, that indicates your turnover is at least $75k, which can be a positive (some lenders ask for GST registration if self-employed less than 2 years, to prove you’re serious and have decent income).

Example: You’re a self-employed consultant. Last year your taxable income was $90k; the year before it was $80k. A lender might average them and say your income for servicing is $85k. If instead your income jumped from $60k to $100k, some lenders might call it $80k average, others might say “we’ll take $100k if year-to-date figures and the nature of business support that it wasn’t a one-off”. On the flip side, if your income went $100k down to $70k, most will use $70k and want to know why it dropped.

Importantly, lenders will allow certain “add-backs” to your income. Add-backs are expenses that reduced your taxable profit but are actually optional or non-cash:

Depreciation is the classic add-back – it’s a paper expense, so lenders often add it back to your income.
Extraordinary one-off costs (e.g. you had a one-time large equipment purchase or an unusually high expense in one year that isn’t recurring) – with accountant verification, some lenders will add that back.
Interest expenses – if you’re refinancing business debt or the interest was related to a loan that will be closed, they might add that interest cost back (since post-refinance it won’t be an ongoing expense).
Company car, travel, or other discretionary expenses – if you run personal perks through the business, some lenders can add portions of those back (with evidence and typically if they’re identified in notes by your accountant).
Trust distributions to others – we’ll discuss soon, but if your business is in a family trust and you distributed income to family members for tax reasons, some lenders can effectively add that back to your income (since it was at your discretion as a business owner).

All these add-backs can increase your assessable income in the eyes of the lender, often significantly, so it’s worth having a mortgage broker or savvy accountant go through your financials to spot them. Not all banks allow all add-backs, but some are quite flexible, especially specialist lenders who understand small business owners’ tax minimization strategies.

Low-Doc and Alt-Doc Loans for Self-Employed Borrowers

What if you don’t have up-to-date tax returns or your financials are not showing your true income (perhaps due to aggressive deductions)? This is where low-doc (low documentation) or alt-doc loans come in. These loans let self-employed people verify income through alternative means instead of traditional tax returns.

Common alternative documentation accepted:

Business Activity Statements (BAS) – e.g. last 4 quarters of BAS to show turnover.
Business bank account statements – showing cash flow/income deposits over 6–12 months.
An Accountant’s declaration – a letter from your accountant stating your business’s annual income (or your personal income from the business).
Sometimes an income declaration form – you sign a form declaring your income (this was more common in true “no doc” days; nowadays lenders still like some third-party verification like BAS or accountant letter to prevent unrealistic self-declared incomes).

Low-doc loans typically require a larger deposit or equity (often max 60% to 80% LVR depending on lender and risk) and carry higher interest rates than full-doc loans. They also might charge lenders mortgage insurance even with lower LVRs, and have stricter policy on credit score or asset position since income proof is lighter. Low-doc is not as prevalent as it once was (post-GFC many lenders pulled back), but non-bank lenders and specialist lenders do still offer alt-doc loans.

If you truly have no proof of income (say you haven’t done your taxes for several years and no BAS – basically no-doc), your options are very limited in the mainstream market. That would push you to either get your docs in order or seek private funding which is an entirely different realm (short-term loans from private lenders or asset-based lenders who might lend at 50% LVR against property without income proof, but those are expensive and not a long-term solution).

In summary, if you’re self-employed:

Get your financials done (at least the latest year) if possible before applying. It opens up more options.
If your tax returns show low income due to deductions, work with a broker to find lenders that consider add-backs (some lenders might, for example, add back large super contributions or one-off director fees, etc., in addition to depreciation).
If you only have one year of good income, there are a couple of lenders who will accept one year’s financials (especially if you’ve been in business several years but only last year was high, or you moved from PAYG to contracting in same field – some will take 1 year if the story makes sense).
Consider alt-doc loans if needed – just be prepared for higher rates and LVR caps.

Many self-employed borrowers initially get a low-doc loan to purchase a property when their docs aren’t ready, then refinance into a cheaper full-doc loan a year or two later once they can show tax returns with sufficient income. This can be a strategy to get in the market sooner (though you pay a premium for a while).

Income from Company Dividends and Trust Distributions

Now, a special scenario: you might be drawing income in the form of dividends from your own company or distributions from a family trust. This often applies to business owners who optimally split income or retain profits in an entity, then pay out to themselves or family members. Lenders will certainly consider this income, but with some extra considerations:

If the dividends/distributions come from a business you control, the lender will want the company/trust financials to see how sustainable that income is. They essentially treat you as self-employed – looking at the overall business profit, not just the amount paid out to you. For example, if your private company paid you $50k in dividends last year, the bank will check that the company had the profits to support that and maybe could continue paying at that rate.
Many lenders will require not just your personal tax return but also the company tax returns and/or trust tax returns for the last 2 years. This is to verify the source of the income and its “longevity”. If the business had a stellar year and paid big dividends but is now struggling, the bank won’t just blindly take your last dividend as ongoing.
Trust distributions (Family Trusts): If you receive income from a discretionary family trust, lenders first look at your relationship to the trust. Are you the business owner directing that trust? If you (or your spouse) are the trust’s controller/primary beneficiary, most lenders will treat the trust income fully as your income (with the caveat that they’ll analyze the trust’s finances). In fact, if you’re the spouse of the main earner and you receive trust distributions (a common tax minimisation strategy), most lenders will use 100% of those distributions in your income assessment. They recognize it’s basically family/business income being split for tax, not a separate unpredictable source.
If you’re a child over 18 receiving distributions from a family trust, lenders get more conservative. They often view it as a secondary, somewhat less reliable income, unless the trust income is very firmly established.
If you’re getting distributions from a trust to which you’re not related (third-party) – say you invested in someone else’s unit trust or you’re a beneficiary of a trust set up by someone not in your immediate family – many banks will ignore or heavily discount this. They consider that if something goes wrong with that company or trust, they can just stop paying you and you have no control. There are exceptions, like if it’s a joint venture trust where you actually own part of the underlying asset/business – then a lender might consider it akin to an investment share and accept it, especially if you can show legal agreements and consistent income. But generally, random trust income where you’re a passive minority beneficiary is not seen as stable (unless perhaps it’s a fixed trust with guaranteed payments for X years – which is rare).

The longevity question is crucial with trust/company income. Lenders will ask: Will these distributions continue? They may require a letter from the accountant or trustee stating that similar distributions are expected to continue in future years. And if the trust income came from an asset that’s being sold, then it’s off the table (no asset, no future income).

Another nuance: Mortgage insurers (LMI providers) often do not like loan applications that heavily rely on trust distributions. If you need LMI (i.e. high LVR loan), and a big chunk of your income is trust distribution, it could complicate approval. Some banks may decline if LMI won’t approve. In such cases, either a larger deposit to avoid LMI, or using a lender that can do a non-LMI insured loan (some non-banks self-insure high LVR loans at a price) might be necessary.

Adding back distributed income: This is an interesting scenario for business owners. If you chose to distribute income to, say, your adult children or your retired parent from your family trust (for tax efficiency), those people might not be borrowers on your loan. From a servicing perspective, that income went out on paper – but arguably it’s under your control. Some lenders acknowledge this and can “add back” those distributed amounts into your assessable income (because if needed, you could decide to distribute to yourself instead in future). However, not all lenders are comfortable with this, and it often doesn’t fly for distributions to non-immediate family or truly third parties. Select lenders, often through broker channels, will do it if you provide:

A letter from your accountant confirming those distributions were made for tax purposes and the beneficiaries are financially independent (i.e. they don’t actually rely on that money).
Possibly a statutory declaration from the beneficiary that they won’t need those funds (thus could be redirected to you to service debt).

This is a complex area – definitely one for an expert broker to navigate. But it’s good to know that if your taxable income looks low because you spread it around family, there are ways to present a truer picture of your household income to certain lenders.

Documentation tip: If you have a trust or company, be prepared to supply a copy of the trust deed or company constitution. Lenders need to confirm that the entity is allowed to borrow or distribute income as being done. And for trusts, they check you (the borrower) are an authorized beneficiary. This is usually a formality but can catch you off guard if you don’t have those documents handy.

In summary for self-employed and entity income:

Two years of financials are gold. Keep them up to date.
Use add-backs and adjustments to your advantage with lenders that understand them.
Distributions from family entities are usually fine (100% counted if going to you or spouse), but discretionary distributions to third parties are often not counted (unless restructured).
If one lender gives you a hard time or offers a low loan amount due to the way they calculate your self-employed income, don’t despair – a different lender might see it much more favorably. It’s not one-size-fits-all, as we saw with investors and unusual incomes too.

Now, beyond working income and business income, many Australians have investment income – like rent from properties or dividends from shares. Let’s look at how those are treated, which is especially relevant for property investors.

Investment and Passive Income Sources

Income from investments – whether it’s rental properties, dividends, interest on savings, or other returns – can boost your borrowing capacity. Lenders generally do count investment income, but often at a reduced rate to account for costs and volatility. Here’s a breakdown:

Rental Income from Investment Properties

If you own an investment property (or plan to buy one and will receive rent), lenders will include the rental income in your affordability assessment. However, they don’t give you full credit for the gross rent. Why? Because owning a property comes with expenses (council rates, insurance, maintenance, potential vacancy periods, agent fees, etc.). So most lenders only count a portion of the rent, typically 75% to 80% of the gross rental income. This is to conservatively allow for those expenses.

For example, if your investment property generates $400 per week ($20,800 per year), a lender using an 80% assessment rate would count about $16,640 per year as income for your loan application, and implicitly assume ~$4,160 covers expenses and vacancy. Some lenders might use 75%, which would be $15,600 in this example.

Pepper Money (the non-bank lender we mentioned earlier) is known to use 80% of rental income in their calculations. Many banks use 75%. A handful might differentiate depending on the property type or if you have multiple properties (for instance, some may use a lower percentage if you have a lot of properties, as a buffer).

If the property is not yet rented: When you’re buying a property that you will rent out, the lender will often estimate the rental income. They might use:

The rental appraisal from the valuer (during the bank’s valuation of the property, the valuer usually provides a fair market rent estimate).
Or a generic figure like 4-5% of property value per annum if no other info (though most will rely on a rental appraisal these days).

Existing rental property: If you already own the property and have it tenanted, you’ll show a lease agreement or rental statement. Many lenders also like to see your recent tax return which shows the rental income and expenses. They won’t use the net income from the tax return (because that factors your interest deductions etc., which they handle separately in the loan assessment), but they want to ensure no huge issues like the property being vacant or extremely costly to maintain. They’ll primarily take the gross rent figure and apply their haircut.

It’s worth noting that lenders do account for your rental property expenses separately in serviceability: typically, they include an estimate for ongoing costs or take your actual costs from your tax return (except mortgage interest – the new loan’s interest will be fully factored into the repayment side of the calculation anyway). Some lenders simply rely on the 20-25% income haircut to cover expenses rather than explicitly adding expenses; others may explicitly add known expenses (like if you pay $1,000 strata per quarter, they might include that if they see it). Generally, the simpler method is: they count 80% of rent and don’t separately list costs, aside from adding any shortfall or deducting any surplus in your existing rental scenario.

Negative gearing effect: In Australia, if your investment property is running at a loss (i.e., interest and expenses > rent), you get a tax benefit (your taxable income is reduced, so you pay less tax). Some lenders will actually add back a portion of that tax saving in your serviceability, effectively giving you credit for the fact you’ll pay less tax due to the rental loss. This used to be more common; nowadays many lenders have simplified by just taking a percentage of rent and ignoring tax effects, but a few still account for negative gearing benefits (especially if you’re a high-income earner, since the tax savings are larger). This can improve borrowing capacity a bit for investors with big negative-gearing. It’s complicated, so not all do it – those that do might ask for your taxable income with and without negative gearing to calculate the benefit.

Vacancy and multiple properties: If you have several investment properties, lenders may be a bit stricter because multiple properties increase the chance one might be vacant or need major repairs at any time. They might use a slightly higher expense assumption or ensure you have adequate rental yield overall. But as long as you’ve managed them well and have stable tenancies, each property’s rent is usually treated with the same 20-25% haircut.

Boarder income / Room rent: If you rent out part of your own home (say to a roommate or boarder), most major banks either do not count that income or count only a token amount (because it’s not usually a formal lease and the arrangement could be transient). Some lenders may accept boarder rent if it’s evidenced (like consistent payments in your account) and typically only up to a certain amount (often a cap of maybe $150-$250 per week). And usually only from one boarder (if you have a big house and rent to 3 friends, banks get wary of treating your home like a business). There are a couple of lenders who will consider a portion of “rent from owner-occupied property” if documented. It’s a niche case to discuss with a broker if you’re relying on that income.

Short-term rental (Airbnb) income: If you Airbnb a property or a room, it can be a bit more complex to use that income for a loan. Many lenders view short-term rental income as less reliable due to occupancy fluctuations and platform risks. If you have a track record (say 12 months+) of Airbnb income, some lenders will treat it similar to normal rent but might use a heavier haircut (maybe 50% or so) unless the figures show very high occupancy. Alternatively, if you could switch the property to a long-term lease, lenders might prefer to assume a conventional rent amount (some will take the lower of the actual Airbnb income vs. market long-term rent). There are specialist lenders more comfortable with holiday rental income if it’s in a known location and you have the financials to back it up.

Wrap up: Rental income can significantly boost your loan eligibility, especially for investors building a portfolio – but banks won’t count every dollar of it. Using 75-80% of rental income is standard across most lenders. If you see a calculation and wonder why they “cut” your rent, it’s not a mistake – it’s deliberate prudence. For maximizing borrowing, a broker can direct you to lenders that use 80% (a bit better than 75%), but the difference is usually marginal in borrowing power unless dealing with large rent figures.

Dividends from Shares and Investments

If you earn dividend income from shares, managed funds, or other investments, this can be included in your assessable income. Lenders vary a lot in how they treat investment income (excluding rent, which we covered):

A few lenders are very investor-friendly: for example, one or two lenders will accept 100% of your investment income (dividends, interest, etc.) when assessing your loan. These lenders recognize that some investment income (especially from diversified portfolios or fixed-interest investments) can be quite stable.
Most lenders are more conservative: 50% is a common figure for general investment income (non-salary) if they don’t have a specific policy. They figure only counting half covers volatility.
Some take a middle road at 80% for investment income.

In practice, what many do is look at your tax returns to see interest and dividend income reported. If it’s substantial, they might include a portion. They also often want to know that the underlying assets generating that income will remain in your possession (because you could, for example, sell stocks to fund your house deposit – in which case the dividend income from those stocks will vanish, so they shouldn’t count it).

It’s important to clarify to your lender if you are or aren’t selling those assets. If you have investments that you will liquidate for the deposit or costs, the income from those investments cannot be counted going forward. For example, you have a portfolio yielding $10k a year in dividends, but you plan to sell it to get $100k for your house deposit. The bank will exclude that $10k from your income (and may ask for proof of sale when you do sell). On the other hand, if your deposit is coming from elsewhere and you’ll keep your portfolio, then the dividends can be used to help you qualify.

Documentation for investment income: Provide the last 2 years of your Notice of Assessment or tax returns showing the interest/dividend income received. Also provide current investment statements (like a portfolio report or dividend statements) to show the assets still exist and what they’re generating. Some lenders might accept just one year’s tax return for investment income, especially if the income is modest or the assets are obviously still there (one lender only requires one year’s evidence for dividend income).

Reliability of dividends: Lenders generally consider blue-chip share dividends and managed fund distributions as relatively reliable – many companies have long histories of consistent dividends. However, if your investment income comes from a highly volatile source (say, a single speculative stock or something like cryptocurrency staking), they will be far less inclined to count it. In fact, many explicitly exclude capital gains or ad-hoc investment profits – only regular interest or dividends count. If you’re an active stock trader who made capital gains, that’s not counted as ongoing income.

They may also look at the concentration of your investments. If you have dividends from one or two stocks only, a lender could consider that less reliable than if you have an index fund or a broad portfolio (since one company could cut its dividend unexpectedly). This usually isn’t a make-or-break issue, but it’s something underwriters informally consider.

Interest income: If you have significant interest income (from term deposits, bonds, high-interest savings), that too is counted similarly. It’s often very stable (especially if it’s from a fixed-rate term deposit). But lenders might ask about the term – e.g., if you have a 5-year bond paying $5k interest per year, that’s pretty secure for those 5 years. If it’s just money in a savings account, they might consider current interest rates and could assume a slightly lower amount in case rates drop. Given rates fluctuate, some lenders may put a conservative spin (for example, if you have $200k in the bank at 3% interest, giving $6k a year, a lender might only count say $4k to be safe, or require evidence of the interest earned over time). Again, they will also verify that the capital isn’t being used for the property purchase.

Private company dividends (non-listed companies): If you receive dividends from a private business (one you don’t control), and it’s a substantial part of your income, lenders might treat you as self-employed or at least want more info. For instance, say you own 10% of a private company and it pays you dividends of $30k a year. Some banks will say “if >25% of your total income is from this source, we treat you as self-employed in that company”. They’d then want the company’s financials. Others might accept an accountant’s letter from that company confirming the likelihood of future dividends, and otherwise just count it with a haircut. Because a private business’s dividends are less assured than, say, BHP or Commonwealth Bank paying a dividend, some lenders are cautious. They know you don’t control it (if you’re a minority shareholder) and it’s not easily tradeable if something goes wrong. So the risk profile is different.

In any case, investment income can help your loan application, but often not as much as you’d hope on a dollar-for-dollar basis. If you feel a lender is not recognizing the true value of your strong investment income, seek out those niche lenders or non-bank options that specialize in investors – they exist, and as noted, a couple will use all your investment income which could significantly increase your borrowing capacity if you’re living off investments.

Other Passive Income: Royalties, Annuities, etc.

Less common sources include:

Royalties (from books, music, patents): Lenders treat these similar to bonus or self-employed income. They’ll want a history (2 years usually) of royalty payments and evidence of ongoing contracts. They might average the royalties and likely use a conservative portion if it fluctuates. If you have a stable contract (e.g. licensing royalties fixed for next 5 years), provide that contract – it could help show longevity.
Annuities or Trust Income Streams: If you’re receiving a fixed annuity (say you invested in a lifetime annuity paying you $X per year), that can be seen as stable income provided it will continue for a good long while (at least 5+ years into the loan). Annuities and retirement income streams are often considered very reliable since they are contractually set. The lender will want to see the annuity policy or statements. They might treat it like pension income (see next section) or just as investment income. If it’s non-taxable, they might gross it up similarly to other non-taxed income.
Crypto or FX trading: Generally not counted unless you declare it as business income on tax returns (and even then, many lenders will be wary if your primary income is from day trading or crypto trading – too volatile). Best to have other income or at least a longer-term track record if you want that considered.
Peer-to-peer lending income, etc.: Treated like interest income – again, consistency and documentation (e.g. show the interest you earn each month from your lending portfolio).
Farm income from hobby farms: If truly hobby (losses claimed, etc.), lenders likely ignore it or treat it separately. If it’s a business, then back to self-employed criteria.
Miscellaneous: Any other recurring income (e.g. long-term insurance payouts, structured legal settlements that pay monthly, etc.) can sometimes be considered. The rule of thumb is: if it quacks like an income (regular, ongoing, stable amount) and you can prove it with paperwork, you have a case to include it. But expect a lot of questions and possibly a case-by-case review by credit.

Alright, we’ve covered jobs, businesses, and investments. Now let’s discuss government benefits and assistance, since many households have some income from those sources and wonder how they fit into a home loan application.

Government Payments and Benefits as Income

Australian lenders can accept certain Centrelink and government payments as part of your assessable income – but not all types, and usually not as the only source of income. Here’s a rundown of common government benefits and how they’re treated:

Family Tax Benefit (FTB A & B)

Family Tax Benefit A and B are payments to help families with the cost of raising children. Many lenders will include FTB (Part A and possibly Part B) in your income if you have young children, but typically only while the children are below a certain age. The reasoning is that FTB ceases once kids grow older/finish school, so it’s only counted if you’ll receive it for some years into the loan term.

Typical policy: Accept FTB for children up to about 11-12 years old. Some lenders extend that to 15 or 16 years if the benefit will continue through that age, but others cut off earlier. For example, a bank might say “we take FTB A & B if the children are 11 or under, otherwise not.” If you have, say, a 2-year-old and a 5-year-old, you’ve got a long runway of FTB, so that would be considered. If your kids are 14 and 16, many lenders would exclude it (since the 16-year-old’s payments may stop soon). Always declare it though, because even if the primary lender you apply with doesn’t count it, a broker might know another that will if needed.

Lenders also typically want to ensure you’re actually receiving the benefit regularly (so provide your latest Centrelink income statement showing the FTB entitlement) and that it’s not including any one-off supplements. They usually only count the base FTB payment, not things like any temporary COVID supplements or newborn one-off bonuses, etc.

Child Support / Child Maintenance Payments

If you receive child support from a former partner for your children, some lenders will recognize this as income – with several conditions. Key points:

It cannot usually be your sole income. Banks won’t approve a home loan where child support is the only source of funds for repayments. They generally want to see you also have a job or some other income. The rationale is that child support can be contentious or stop if circumstances change, and it ends when the child turns 18, so alone it’s not stable enough for a 25-30 year mortgage. But as a supplementary income, it certainly helps.
Legal agreement or court order: Lenders require formal documentation of the child support arrangement. Ideally, a Child Support Agency (Services Australia) assessment or a Family Court order specifying the amount and frequency of payments. If you have a private agreement, it’s a bit trickier – you’d need to show strong evidence of consistent payments (bank records) and possibly get the agreement in writing and witnessed.
Consistency and history: Expect to show at least 6 months of bank statements showing the child support being paid on time, every time. Some lenders ask for 12 months history to be extra sure. Any missed or irregular payments could cause them to discount or ignore it.
Age of children: As with FTB, banks will only count child support if the children are significantly younger than 18 – often they use 12 or younger as a guideline. Some will go up to 15 or 16. If your child is 17, they know that support will cease in a year, so it won’t help you on a long-term loan. One lender might say “child support accepted for kids up to 16,” another might cap at 11 or 13; it varies.
Percentage counted: Lenders differ on how much of the child support they count. It could be anywhere from 50% up to 100% of the documented amount. Some major banks may only take half of it into income, whereas a few lenders (especially non-bank or smaller ones) might take the full amount, assuming it meets all criteria. For example, if you receive $1,000 a month in child support, one bank might add $500 to your monthly income in the servicing calc, while another might add the whole $1,000.
Multiple children / large amounts: If the amount is very large relative to your other income, even a willing lender might raise an eyebrow. E.g., if you earn $40k from a part-time job and $30k in child support, that’s substantial. They’ll be extra careful verifying it, and might still impose a heavier shading like 50%. But if it’s $5k support on top of $70k salary, it’s easier to include fully.

To use child support income in your application, be ready with:

Child Support Agency letter or court order showing the payment schedule and amounts.
Bank account statements (3–6+ months) highlighting those payments coming in.
Possibly birth certificates of the kids to confirm ages (some lenders ask for proof of age of dependents when relying on these benefits).

When done right, child support can indeed boost borrowing power. A Perth mortgage broker gave an example: some banks may only use 30-50% of the child support you receive, but others can consider up to 100% if it’s regular and the kids are young. It really underlines the importance of choosing the right lender. If one says no, another might say yes if you tick their boxes.

Pensions (Age Pension, Disability Pension, Veterans Affairs)

Many retirees or those on long-term government pensions wonder if that counts as income. The answer is partially:

Age Pension: Most banks do not count the Age Pension by itself as sufficient income for a new mortgage. The Age Pension is relatively low and if that’s all you have, realistically it’s hard to service a new loan unless it’s very small or you have substantial assets (in which case, perhaps a reverse mortgage is more suitable – more on that soon). Some lenders will include Age Pension as supplementary income if, say, one spouse is still working and the other gets a part Age Pension. But if both applicants are fully on pensions, standard loans are tough. Typically lenders also worry about loan term – a 30-year loan when you’re 70 on pension doesn’t make sense without an exit strategy.
Disability Support Pension (DSP): This is also often not accepted, unless perhaps the person is only a secondary applicant. Many lenders exclude DSP from serviceability, or they might consider it case-by-case if the disability is permanent but the person has other income or the loan is short term. If you can show the DSP will continue for at least 5+ years (and typically it does until pension age if one remains eligible), a few non-bank lenders might count it but likely with a cap (e.g. only if joint with another working borrower).
Carer’s Payment: Generally not accepted. It’s considered similar to a welfare payment that is contingent on a situation (caring for someone) and not stable long-term if that situation changes.
Veteran Affairs Pension / War Widow Pension: These government pensions are often accepted by lenders as income. Why? They tend to be stable lifetime entitlements and often are received at a younger age than Age Pension. Many ex-ADF members on DVA pensions are in their 40s/50s or have a partner working, etc. Lenders like CBA, ANZ, etc., have policies allowing Veteran Affairs pensions to be included. If you’re a war widow receiving a pension, similarly it’s considered stable. They’ll count it much like a salary (maybe even grossed up if it’s tax-free).
Other pensions: Some people might have private pensions or foreign pensions. Private (superannuation) pension streams can be used if they’re regular withdrawals – essentially you’d treat it like annuity income. A foreign pension (from another country) is usually considered if it’s a permanent ongoing payment (and you convert it to AUD for the calcs), but some banks only take a portion or want to ensure it continues (e.g. some foreign pensions stop if you’re out of that country too long). It’s very case-by-case.
Home Equity Access Scheme (formerly Centrelink Pension Loans Scheme): This is not actually income – it’s effectively a government-run reverse mortgage that gives pensioners extra cash by borrowing against their home. Money from such a scheme wouldn’t count as “income” since it’s a loan. It’s more of a tool for retirees to get cash without income.

For pensioners who want a loan, often the solution is a reverse mortgage rather than a standard forward mortgage. A reverse mortgage doesn’t require income (repayments aren’t made; the interest compounds until you sell or die). We won’t dive deeply into reverse mortgages here, but know that if you’re of age-pension age with minimal income, a reverse mortgage is likely the product a bank would recommend for borrowing against your home. In fact, mainstream banks will hardly give a new standard mortgage to someone relying solely on age pension – because they know a reverse mortgage is more suitable and responsible in that scenario. (If you want to learn more about that, check out Fundd’s guide on Reverse Mortgages in Australia for retirees.)

Newstart/JobSeeker and Other Benefits

Unemployment benefits (JobSeeker) are not counted as income for a mortgage. If you’re unemployed and receiving Centrelink, you’ll need to gain employment before any lender will consider you, unfortunately. No lender (other than maybe a payday lender, which isn’t for home loans) will lend based on JobSeeker.

Parenting Payment / Single Parent Pension: Similar to above, if it’s the sole source, it’s not acceptable. But if combined with some part-time work and FTB, etc., it could be considered as part of the package. However, many lenders just lump this under “welfare” and won’t count it. The introduction of the government’s Family Home Guarantee scheme (which allows single parents with as little as 2% deposit to get a home loan, guaranteed by NHFIC) has prompted some lenders to consider single-parent applicants more holistically. Under that scheme, while deposit hurdle is lowered, the income still needs to service the loan. Lenders participating in the Family Home Guarantee will consider some Centrelink incomes like FTB and child support to help single parents qualify (we’ve seen earlier they can use those if documentation is solid). But they typically require the parent to have at least some employment income too. So a single parent working part-time, getting FTB and child support might successfully borrow under that scheme. (If you fit that category, definitely talk to a broker – they’ll know which banks are participating and their exact criteria.)

Rent Assistance, Energy Supplements, etc.: Many benefits come with small supplemental payments (rent assistance for those on Centrelink, utility allowances, etc.). These supplements are generally not counted by lenders because they are tied to specific expenses or are minor. Lenders stick to the core benefit amounts.

Disaster relief or one-off payments: Not counted. Only regular ongoing income matters.

Youth Allowance/Austudy: If you’re a student dependent on these, a lender won’t count them for a mortgage (and realistically if that’s your only income you shouldn’t be taking a mortgage yet).

Carer Allowance (different from Carer Payment): Carer Allowance is a smaller payment for those providing care, often on top of working. It’s not usually counted on its own. If an applicant works and also gets a carer allowance of a few dozen dollars a week, it might be overlooked or possibly counted by a lender who’s okay with it, but it’s minimal anyway.

NDIS participant income: If someone gets NDIS funding, note that’s not “income” to them – it’s funds for services, so not relevant for loans except maybe if it covers expenses, the lender might consider your cost-of-living differently.

In essence, mainstream lenders want to see that at least one borrower has employment or business income, and then they will augment that with certain government payments that are ongoing and significant (like FTB, child support) to boost the serviceability. A common policy is, “We’ll accept benefits as secondary income as long as the primary applicant has a job.” One mortgage provider states: “as long as one applicant is working, most banks will accept the other applicant relying solely on Centrelink benefits” – meaning a non-working spouse’s Centrelink (like parenting payment) can count if the other spouse works. But if neither works (and you’re not retired on super), it’s nearly impossible to get a standard home loan.

For those on very low incomes, there are some specialist lenders and community schemes:

For example, some non-bank lenders might approve loans with more lenient criteria if you have a large deposit or additional security (but interest rates will be higher).
There are also state programs like Keystart in WA or HomeStart in SA that cater to lower-income borrowers with subsidized loans, but they still require sufficient income to pay the loan, just lower deposits and sometimes a bit more lenience on criteria.
The federal schemes (First Home Guarantee, Family Home Guarantee) can help by removing the cost of LMI, but again, they are not waiving the need for serviceability – you still have to show you can afford the loan.

Always check with a mortgage broker if you receive any government benefits – they will know exactly how each can be used. For instance, a broker might say: “Lender X will count your Family Tax Benefits and child support fully, which will help your borrowing capacity, whereas Lender Y won’t – so we’ll go with X.” This tailoring can make the difference between approval and decline for some families.

Insurance and Compensation Payments as Income

What if your “income” isn’t from working or investing at all, but from an insurance payout or compensation due to an injury or other claim? Examples include:

Workers’ compensation payments due to a workplace injury.
Income protection insurance payouts (from a private insurer) because you’re unable to work.
A disability pension from an insurer or annuity purchased with a TPD payout.
Other court-awarded regular payments (for example, a structured settlement where you receive monthly income after an accident lawsuit).

Lenders can consider these incomes, but they tread carefully, since by nature these situations often involve unique circumstances and potentially finite payment periods.

Income Protection Insurance / Workers’ Comp (Ongoing Payments)

If you have an income protection insurance policy and you’re currently on claim (meaning the insurance is paying you a monthly benefit replacing your salary), some lenders will accept that as income – particularly if it’s a long-term or permanent disablement situation. But there are several important factors:

Policy term / expiration: Most income protection policies have a benefit period (commonly up to age 65). Lenders will ask: how long will the payments continue? For example, if you’re 45 now and the policy pays until 65, it could continue for 20 years – that’s fairly long term. But if you’re 60 and it stops at 65, you only have 5 years of payments left. Generally, the loan term may be restricted to match the income protection period. A broker noted, “lenders want to line up the loan term with the expiry of the income protection”. So if you’re older, they might only offer a shorter loan (which raises payments and can hurt serviceability).
Age and exit strategy: As mentioned, older borrowers on these payments face challenges because the income will stop at retirement age. If you’re nearing that, banks worry how you’ll pay the loan thereafter. You’d need a strong exit strategy (e.g. substantial superannuation or assets to sell by that time) to get approval in such cases.
Permanence of disablement: Is your condition permanent or are you expected to recover/return to work? If there’s a chance you’ll return to work, some lenders might actually prefer to consider a return-to-work letter from your employer rather than count the temporary insurance (especially if the insurance is short-term). If it’s clearly permanent disability and you’ll be on claim long-term, that makes the insurance income more like a stable pension.
Reviews of claim: Many income protection or workers’ comp claims require periodic medical reviews or reassessments. Banks know that at any given review, benefits could potentially adjust or cease if you improve. Some major banks don’t accept income protection payments that are subject to ongoing review, because of that uncertainty. They might require evidence the insurer has declared you unable to ever work (classed as permanent).
Percentage counted: Even when accepted, some lenders only count a portion of the insurance income. For instance, “some banks only consider 50% of these payments” while others will consider more. We have on record that certain lenders, including some big banks and non-banks, might accept 80% or even 100% of the payment with the right circumstances. One senior broker noted that some banks (like CBA and Westpac) and non-banks will do loans for people on income protection, sometimes at 80% LVR or higher, and Pepper Money might deem up to 80% of the income acceptable*.* So again, policy varies – a specialist lender is more likely to work with it than a strict one.
Example scenario: A lender might say, “We’ll use 80% of your insurance benefit as income, and we’ll only give a 20-year loan because you have 20 years until the payments stop at 65.” If that scenario still fits (payments cover the loan, etc.), they may approve.

Workers’ compensation payments (from say WorkCover) are similar – if you’re getting weekly or monthly comp payments due to injury, those usually either are temporary (until you recover or get a lump sum) or turn into a disability pension. Many people on long-term workers’ comp eventually convert it to a lump sum settlement or transition to disability support. If it’s truly ongoing, lenders treat it like income protection. If it’s short-term, they likely won’t count it at all (or might ask for the return-to-work plan).

Case insight: An Australian mortgage news piece highlighted that just because a client is on workers’ income protection doesn’t automatically bar them from loans, but “it’s not straightforward”. In that case, the broker had only seen a few such scenarios. They indicated that if someone is, say, 55 and on a policy to 65, they might only get a 10-year loan, which makes repayments high and thus serviceability tough. In practice, many of those cases didn’t proceed due to limited borrowing power on a short term. However, where someone was younger or had other income/exit plans, they did get loans. Major banks CBA and Westpac have been known to lend to borrowers on income protection, and even consider higher LVR (80% or more) with LMI on a case by case. Non-bank Pepper Money openly states a flexible approach and mentions they’ve helped clients on workers comp by evaluating capacity, character, collateral, and considering up to 80% of the income.

So, it’s possible, especially if you have:

a letter from the insurer or doctor confirming long-term/permanent disability and ongoing payments,
a decent LVR (if you need >80% LVR it gets trickier but not impossible),
ideally some other income or assets as backup (maybe a partner’s income, or substantial equity).

One more thing: If you receive insurance payouts as a lump sum (for example, a Total & Permanent Disability insurance paid you a lump sum, or a personal injury lawsuit gave a large settlement), that lump is not “income” per se for servicing. But you could use it as a cash deposit or to buy an annuity or investment that generates income. Lenders won’t say “oh you have $500k cash from a payout, thus you can afford a loan” unless you either invest it or plan to use it to make repayments (which would be depletion of asset, not usually acceptable). They’d rather you just borrow less since you have that cash. However, some might be okay if you have a massive lump sum to allow a larger loan-to-income ratio since they know you have reserves. Mostly though, lump sums will reduce how much you need to borrow or can act as an “exit strategy” (e.g. “I’ll use part of the lump sum to pay off the loan in 10 years”).

Other Compensation or Court-Ordered Income

If you have a court-ordered structured settlement that pays you monthly or annually (common in big personal injury cases or even lottery winnings that are structured), lenders will evaluate it similarly to an annuity:

They’ll want to see the legal agreement of the structured settlement.
How long will it pay you (5 years? 10 years? lifetime?). Needs to cover a good duration of the loan.
Is it a fixed amount? If yes and it’s basically guaranteed by a strong entity (insurance company or government), that’s good – they’ll likely count most or all of it with appropriate evidence.
If it’s subject to any conditions, those will be scrutinized.

Alimony/Spousal Maintenance: In Australia, ongoing spousal maintenance is less common than in some countries, but it does exist especially for a set period after divorce. Banks approach it similarly to child support, but usually with even more skepticism, because there’s no clear endpoint like a child turning 18 (though court orders often specify a term). If you have a court-ordered spousal maintenance for X years, a lender might consider it for those X years. It would need documentation and history of payment. It likely can’t be the main income either. Honestly, many lenders would just exclude it unless it’s a significant payment with a long remaining term, and even then might only count it if the payer has very stable capacity to pay (they might indirectly consider the ex-spouse’s financial situation to see if it’s reliable).

Summary tip: Whenever your income is from a non-employment source like insurance or legal settlements, be prepared to educate the lender (through documentation) on exactly what it is and how reliable it is. Bank credit officers don’t see these every day, so your application might need a cover letter from the broker explaining, for example, “Client receives a monthly insurance payment of $X due to permanent injury, with payments contractually continuing to age 65. See attached insurer letter confirming the same.” This will help them get it through credit approval. A bit of humanization – e.g., noting that the client has managed finances well on this income and perhaps has savings – can also reassure the lender.

Finally, let’s address what to do if your income is low or unconventional and you’re still aiming for a home loan.

What If Your Income Isn’t Enough? Tips for Low or No Conventional Income

You might be reading all the above and thinking, “That’s great, but I still don’t have a lot of income on paper. Can I get a home loan somehow?” While lenders must follow responsible lending (meaning you do need to show ability to repay), there are a few strategies and products for those with low income or unusual financial situations:

Consider a Guarantor or Co-Signer: If your issue is that your income alone isn’t enough to service the size of loan you need, bringing in a co-borrower with income (like a family member) can help. However, that person then becomes equally responsible for the debt. A guarantor arrangement (where, say, a parent’s property guarantees your loan) typically doesn’t directly help with serviceability – guarantors mostly solve deposit/LMI issues, not income shortfall. Banks still need to see you can afford the loan on your own, in most cases. Only if the guarantor is also going to be a co-borrower contributing income would it boost serviceability. Some niche situations exist where a guarantor might cover repayments (like if you’re a student and parent agrees to pay the loan – but banks would rather just have the parent borrow instead). So, guarantors are great for deposit but not a solution for lack of income.
Joint Ventures or Shared Ownership: Buying with a partner (whether a spouse, relative, or friend) obviously combines incomes and can get you over the line. You each then are liable for the whole debt, keep that in mind legally. But it’s a way to afford a home you couldn’t on your own.
Lower the loan amount or LVR: If you have substantial savings or deposit, borrowing less means the required income is less. Also, certain lenders have min income thresholds for certain loans (e.g. for a very high LVR loan or interest-only loan, they might implicitly expect a higher income). If you can manage a higher deposit, not only do you avoid LMI costs, but your loan payments are smaller, making it easier to qualify. That said, many low-income folks struggle precisely because deposit is hard – which is why schemes like First Home Guarantee (5% deposit) exist, but remember, they don’t bypass income checks.
Government Schemes and Grants: Leverage any first home buyer grants or schemes you qualify for – while these mainly help with deposit or reducing purchase cost (stamp duty exemptions, etc.), indirectly they help your overall financial position. For example, if you use the First Home Loan Deposit Scheme (New Home Guarantee) with a 5% deposit and no LMI, you still need to service the 95% loan, but at least you didn’t have to spend extra on LMI or wait to save 20%. The new proposed First Home Buyer Interest Tax Deduction scheme (if implemented) could also improve serviceability by effectively boosting your post-tax income (letting you deduct interest on new home loans up to $650k) – meaning more after-tax income available for repayments. This kind of policy could “improve loan serviceability” by reducing your tax, which lenders might factor into their net income calculations if it becomes law. Always stay updated on such incentives.
Specialist Lenders / Non-Conforming Loans: If mainstream banks say no, there are “specialist” lenders who cater to those who don’t fit normal molds – self-employed with short history, credit issues, unusual incomes, etc. They charge higher interest rates (because of higher risk) but can be a stepping stone. Pepper Money we’ve cited as one example: they explicitly consider alternative income sources including government benefits and are willing to assess 100% of things like casual income, overtime, bonuses, and even Centrelink or child support. They also mention considering “character” and individual story beyond just numbers, which is a more flexible approach. Liberty Financial, Bluestone, La Trobe, etc., are other non-bank lenders known for flexibility. They might approve a loan that a major bank declined, albeit at maybe 1-2% higher interest. If your dream is to get into a home now and your situation will improve later, it could be worth it. You can always refinance to a cheaper loan after a couple years of stable history.
Shorter loan term or higher initial repayments: This sounds counter-intuitive because shorter term means higher payments, which normally reduces borrowing power. But if you’re older, a shorter term is necessary since they won’t extend beyond, say, age 70-75 typically. Alternatively, if you have an asset you plan to sell in a few years (e.g. you’ll get inheritance or you plan to downsize), you could take a loan now and have an exit strategy to pay it off early. Some lenders might accept a scenario where income is low now but you demonstrate a clear plan to clear or reduce the loan in future (this is more common in retiree lending assessments).
Temporary situations: If your income is temporarily lower (e.g. you’re between jobs, or just started a business not showing profit yet), one approach is to wait and improve your income profile. It’s not what people want to hear, but spending another 6-12 months to build up consistent income can make a world of difference in getting approved and at a good rate. In the meantime, keep saving and managing credit well.
No-Doc/Asset-Based Loans: These are loans where essentially the lender looks primarily at the asset (property) and not at income – they were more common pre-GFC. Nowadays they exist mostly in the private lending sphere: for example, a private lender might give a 1-year loan for 50% of a property’s value, with the idea that you’ll refinance or sell by the end. Interest rates on those can be very high (6-12% or more, plus fees). They’re not a solution for long-term home ownership – more for short-term needs or investors who are asset-rich, cash-flow poor and need quick finance. As a home buyer, it’s generally not advisable to use such loans to purchase a home, unless you’re absolutely certain of an exit (like a near-future windfall).
Reverse Mortgage (for seniors): If you’re an older person (generally 60+), looking to access equity from a home you already own (or mostly own) but you don’t have income, a reverse mortgage is the product designed for that. You usually can’t buy a new home with reverse mortgage (it’s more for drawing cash from an existing property), but some seniors do use reverse mortgages to downsize or move (sell one, buy another smaller one with partial reverse mortgage). Reverse mortgages require no income and no repayments (until the end), but they come with their own risks and complexities.

Crucial tip: Whatever your situation, talk honestly with a mortgage broker. They’ve seen it all – low income, non-standard income, past credit issues, etc. They can quickly tell you if you have a chance with a lender and if not, what steps to take to become mortgage-ready. Brokers also know about niche programs and policy exceptions that can help. Best of all, broker appointments are usually free (the lender pays them, not you). Our guide on Mortgage Broker Appointments explains how to prepare and what to expect – but essentially, come with your income info and goals, and they’ll do the numbers and legwork.

FAQs – Frequently Asked Questions

Q: Can I get a home loan if I have no income or very low income?
A: Every lender needs to see that you can afford the loan repayments, so having no income makes it nearly impossible to get a traditional home loan. There isn’t really a “no income home loan” in Australia’s regulated lending environment (unlike pre-2008 “no doc” loans which still required some income declaration). If you have substantial assets, you might explore a reverse mortgage (if you’re a senior) or a private loan, but those aren’t standard home loans. If your income is just very low, you might only qualify for a small loan. Consider getting a co-borrower, improving your income, or reducing the loan amount. Government schemes like shared equity or the Family Home Guarantee can help some low-income buyers by reducing deposit needs or guaranteeing part of the loan, but you still need sufficient income to meet the repayments. There’s no way around demonstrating ability to repay – for your own protection and the bank’s. A specialist lender might accept more unconventional income sources (like benefits) to count toward that, which can help those with low documented income get a bit more borrowing capacity, but there is always a limit.

Q: Do lenders count my overtime and bonuses as part of my income?
A: Yes, most lenders will count regular overtime, bonuses, and commissions – but typically not at 100%. As discussed earlier, they might take 50%, 80%, or an average of these earnings over time. They usually want a history (ideally 2 years) of receiving these payments. If your overtime/bonuses are consistent, some lenders (and non-banks) will use a generous approach (e.g. full amount or 80% of latest), whereas conservative ones might only use a fraction or even ignore it if they deem it unreliable. The key is documentation: be ready to show payslips and tax summaries that detail your overtime or bonus amounts. If your job contract stipulates a guaranteed bonus or required overtime, that helps a lot. In short, yes they count, but not as straightforwardly as base salary – expect some discounting for safety.

Q: I’m a shift worker – how do banks assess my penalty rates and shift allowances?
A: Lenders will include your shift penalties/allowances in your income if it’s a permanent fixture of your job. They usually annualize what you’ve been earning from shift work and may count it fully or at 80%, depending on consistency. Many banks accept 100% of regular shift loadings, essentially treating it as part of your base pay, especially if you’re in an industry like healthcare, emergency services, etc., where shift work is standard. They want to confirm through payslips (and sometimes an employer letter) that you always get these allowances. So if you always have, say, 2 afternoon shifts with a 15% loading each week, that extra pay can be assessable income for your loan. Just keep in mind, if for some reason you stopped doing shifts or lost the loading, your capacity would drop – lenders are aware of that risk. But assuming it’s ongoing, a shift worker’s assessable income includes base salary plus regular penalties.

Q: Are trust distributions or trust fund dividends considered assessable income by lenders?
A: Yes, they can be – but it depends on the circumstances. If you receive income from a family trust, lenders will generally count it if it’s consistent and likely to continue. For example, if you and your spouse operate a trust and you distribute $50k to yourself each year, that $50k is normally treated as your income (100% for most lenders). You will need to provide the trust’s financials and possibly the trust deed so the bank can see where this income comes from and that you have rights to it. If the trust dividends come from an investment or business you partially own (like you’re a beneficiary but not the main family member), some banks might discount it or be wary, especially if you only have a minority interest. The longevity of the trust income is key – lenders might ask if the trust will keep distributing at that level and may require evidence (like two years of distributions on your tax returns). They may also want to ensure the trust isn’t going to stop distributing (for instance, if it sold an asset – then the jig is up). So, in summary: trust distributions are assessable income as long as they’re regular and you’re either the controller or a primary beneficiary. Each lender has slightly different policy on trust income, so this is one to discuss with your broker who can direct you to a lender that views your trust favorably.

Q: I’m self-employed – what do I need as proof of income for a mortgage?
A: Typically, you’ll need your two most recent years of tax returns (both personal and business) and Notices of Assessment. Lenders will look at your taxable income (with adjustments for add-backs as applicable) over those two years. If your business is a company or trust, bring the financial statements for those as well. Some lenders may accept one year of returns if you’ve been in business a while and the latest year is strong, but many want two years. If you haven’t done your latest tax return yet, they might accept the previous two years but could ask for an interim financial statement or BAS to see current trading. For those who can’t produce full tax returns, alternative documentation like 12 months of BAS or an accountant’s letter can be used with certain lenders (these “low-doc” options usually require a bigger deposit and incur higher rates). Additionally, be prepared to provide your ABN and GST registration details. In short, to prove self-employed income, get your financials in order: tax returns are the gold standard. And don’t try to under-report income to the ATO and then overstate it to the bank – lenders will generally only take what’s on the official tax docs (with small adjustments) as true. If you plan to get a loan, it might even be worth talking to your accountant about showing a bit more income on your returns (even if it means paying a bit more tax for that year) to strengthen your borrowing case – a strategy some self-employed do consider.

Q: Will the bank consider my investment income (like dividends and interest)?
A: Yes, lenders do consider investment income, but often at a reduced rate. They know investments can fluctuate or might be sold. As mentioned, many will count only 50% of dividends/interest income, some will go up to 80%, and a few will count 100% if it’s from stable sources. They will require evidence, usually through your tax return or investment statements. And importantly, they’ll only count it if you’re keeping the asset. If you’re selling the shares or closing the term deposit to fund the home purchase, then those dividends or interest will cease – so they won’t include them. If you have a large, diversified investment portfolio throwing off income and you plan to keep it, that can significantly help your borrowing capacity with the right lender. For example, a retiree with $1M in blue-chip shares yielding $50k/year in dividends might find a lender who’ll treat maybe $40k of that as income, which could support a modest loan. Always disclose your investments and provide documentation, even if you think the bank might not count it – some might, and every bit can help.

Q: I receive government benefits (Centrelink) – can those count toward my loan?
A: Some can, yes, usually as supplementary income. The acceptable ones include Family Tax Benefit A & B, child support, and certain pensions (Veterans’ Affairs, maybe Disability if long-term). These have conditions: e.g., FTB only if kids under a certain age, child support only if legally documented and consistently received, and typically if you also have some earned income. Lenders often will not accept benefits like Newstart/JobSeeker, Youth Allowance, or short-term payments at all. They also generally won’t accept solely Centrelink income for a loan – they like to see at least one borrower with a job (exceptions are pensioner mortgage alternatives, but for a standard loan, that holds true). If you are a single parent, for instance, working part-time and getting FTB and child support, those benefits can be added to your pay to boost your total assessable income. If you’re unsure, have a broker do a serviceability calc with your exact benefit amounts – they’ll know which lender would allow what. As a side note, under the government’s single parent Family Home Guarantee, lenders are indeed lending to single parents with as little as 2% deposit, and in doing so they are counting things like child support and FTB (because many single parents rely on them). So it is possible, it just has to be structured to meet a particular lender’s criteria.

Q: I’m currently on WorkCover/income protection due to an injury. Can I still get a home loan?
A: Possibly, but it will be a bit complicated. Banks will look at how long you’ll be on those payments and if/when you’ll return to work. If your injury is temporary and you expect to go back to your job, the bank might prefer to see you back at work (or at least have a firm return-to-work plan) before approving a new loan – because a short-term income isn’t enough for a 30-year loan. If your condition is such that you’ll be on insurance payments for many years (or until retirement), then the loan could be assessed on that income, with the term possibly capped so it ends when the payments end. You’ll need to provide a lot of info: insurer letters, medical evidence, etc. Some lenders will only take 50% of the benefit, but others could take up to 80-100% if it’s confirmed long-term. Also, expect that they might require a lower LVR (maybe max 80%) unless there’s a very strong case. As mentioned earlier, several banks and non-banks have done loans for customers on income protection – so it’s not unheard of. It’s absolutely a scenario where you want a mortgage broker to present your case properly to the right lender. And you should have an exit strategy – for example, if you’re older, maybe the plan is to downsize and pay off the loan by age 65 when payments stop, which you’d communicate to the bank.

Q: I’ve heard of “debt-to-income ratio” limits. Will my income be high enough for the loan I want?
A: Debt-to-income (DTI) ratio is your total loan debt divided by your gross income. Many banks have internal policies where they flag or cap loans with a DTI above a certain level (often around 6 or 7 times income, but it varies). This is separate from the normal serviceability calculation, but it’s an additional risk metric. If you are seeking to borrow a very large multiple of your income, even if the serviceability (with expense assumptions and interest buffers) barely passes, the bank might still say no based on DTI policy. For example, if your household income is $100k and you want a $700k loan, that’s DTI of 7. Some lenders might be cautious or require stronger compensating factors above 7×, whereas others might go to 9× for certain low-risk clients. For most owner-occupiers, the serviceability usually fails before DTI becomes the sole issue, but with today’s low-ish rates it’s possible to have high DTIs. It’s hard for a borrower to calculate this exactly because it depends on the lender’s formula. A quick personal check: Many suggest your mortgage shouldn’t exceed ~30% of your gross income in payments, which equates to roughly a DTI of about 4-5 at typical interest rates (this is more of a traditional affordability rule of thumb, not a strict rule). If you’re shooting much above that, be cautious. In any case, a broker or lender will let you know if you’re stretching too far on income. They won’t approve a loan that you truly can’t afford on paper, and you probably wouldn’t want them to – being house-poor is no fun. It’s better to either increase income (maybe consider taking a renter or improving other income sources) or lower the loan amount. We often work out the maximum borrowing capacity for clients based on their income and expense profile – it’s wise to know that number and work within it, rather than targeting a property beyond your means.

Final thoughts: Getting a home loan with unique or multiple income streams is absolutely doable. The key is presenting your income in the best light with the right evidence and choosing a lender whose policy suits your situation. Lenders ultimately want to approve loans – they just need to be convinced the income is there to support it. Whether you’re a shift-working nurse with irregular hours, a self-employed entrepreneur writing off half your expenses, an investor living off dividends, or a single parent on Centrelink supplements, there are pathways to loan approval. Use the tips and information in this guide to prepare yourself, and don’t hesitate to engage a professional. Speaking to a Fundd broker can help you cut through the complexity – they’ll identify which banks will count which incomes (perhaps 100% of your trust dividends here, 80% of your overtime there, etc.) to maximize your borrowing power, and guide you through the paperwork. With the right approach, you can secure the home loan you need – even if your income is far from “vanilla.” Good luck!

Sources:

The Better Broker – How lenders assess trust distribution income
Mortgage Providers – Shift Allowance Home Loan (criteria for counting shift allowances)
Mortgage Providers – Overtime Income Home Loan (how overtime is assessed)
MortgageExpertsonline – Case study on lenders’ treatment of bonuses
Perth Mortgage Broker Group – using child support as income (requirements and lender percentages)
Mortgage Providers – Home Loans & Centrelink Benefits (accepted benefits and conditions)
Mortgage Professional Australia – Workers income protection no barrier to loans (income protection loan considerations)
Pepper Money – Home loans for non-standard income earners (accepting 100% of various non-salary incomes)

Getting a Home Loan in Australia – Various Income Sources

How Lenders Assess Income for Home Loans

Income from Employment: Salary, Wages and More

Base Salary (Full-Time or Part-Time Work)

Casual and Contract Employment

Overtime Earnings

Shift Loadings and Penalty Rates

Bonuses and Commissions

Allowances (Car Allowance, Phone, etc.)

Second Jobs and Side Gigs

Maternity/Parental Leave Income

Probationary Employment

Self-Employed Income and Business Owners

Standard Income Verification for Self-Employed

Low-Doc and Alt-Doc Loans for Self-Employed Borrowers

Income from Company Dividends and Trust Distributions

Investment and Passive Income Sources

Rental Income from Investment Properties

Dividends from Shares and Investments

Other Passive Income: Royalties, Annuities, etc.

Government Payments and Benefits as Income

Family Tax Benefit (FTB A & B)

Child Support / Child Maintenance Payments

Pensions (Age Pension, Disability Pension, Veterans Affairs)

Newstart/JobSeeker and Other Benefits

Insurance and Compensation Payments as Income

Income Protection Insurance / Workers’ Comp (Ongoing Payments)

Other Compensation or Court-Ordered Income

What If Your Income Isn’t Enough? Tips for Low or No Conventional Income

FAQs – Frequently Asked Questions

How Do Banks Calculate Borrowing Power?

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