If you’re searching for practical, up-to-date information on home loans for low income earners in Australia, you’ve come to the right place.
For many low-income earners in Australia, the dream of owning a home can feel just out of reach. Rising property prices, the cost of living, and strict lending criteria often create roadblocks for first homebuyers, especially those with limited financial resources. However, the good news is that owning your own home is still possible—even on a tight budget.
In this blog post, we’ll explore everything from government assistance programs and low-deposit home loans to budgeting strategies and lender options that cater to low-income earners. We’ll also cover common challenges faced by first homebuyers and how to overcome them with smart planning and the right advice from a mortgage broker.
Let’s dive in!
Understanding "Low Income" in the Australian Housing Market
In the Australian housing market, “low income” typically refers to individuals or households earning below 80% of the national median income. For example, if you’re a single person earning less than $60,000 per year or a family earning under $90,000, lenders may consider you a low-income earner. Many people in this category work in essential roles—like aged care, retail, or childcare—or rely on part-time work, casual employment, or government assistance such as Centrelink payments.
You might assume that a low income automatically disqualifies you from homeownership, but that’s not true. Low income doesn’t mean no chance.
More and more lenders recognise that hardworking Australians on modest incomes still deserve the opportunity to own a home. Today, several banks and financial institutions offer home loans for low income earners. These lenders consider more than just your salary—they may also take into account other income sources and support payments when assessing your loan application.
Government programs also exist to help first homebuyers with lower incomes. For instance, the First Home Guarantee lets eligible buyers purchase a home with a deposit as low as 5%, without paying lenders mortgage insurance. Many states and territories also offer grants, stamp duty concessions, and shared equity schemes that lower the upfront cost of buying your first home.
Your income matters, but it’s only part of the picture. Lenders also look at your overall financial habits—how you manage your money, your debts, your savings history, and your credit score. If you’ve shown that you can budget wisely and meet your financial commitments, you stand a much better chance of getting loan approval, even if your income falls into the “low” category.
Understanding where you stand financially helps you make informed choices. Instead of giving up before you start, explore the options designed specifically for people like you. Many Australians with low incomes have already taken the leap into homeownership—and you can too.
Common Myths About Home Loans For Low Income Earners
If you’re a low-income earner in Australia, you’ve likely heard a few discouraging myths that make homeownership seem out of reach. However, the truth is that many of these beliefs are outdated or simply incorrect. Let’s break down the most common myths and show you why they shouldn’t stop you from exploring your options.
Myth 1: "Banks won't lend to people like me."
Many first homebuyers assume that if they earn a modest income, lenders will automatically reject their application. While some banks do have strict criteria, others specialise in home loans for low income earners. These lenders consider your full financial picture—including your ability to budget, pay rent on time, manage debts, and maintain a steady income. You don’t need to be earning a six-figure salary to qualify for a home loan.
Myth 2: "I need a huge deposit to get started."
This is one of the most persistent myths. While a 20% deposit is ideal to avoid lenders mortgage insurance (LMI), it’s not always required. With government programs like the First Home Guarantee, you may only need a 5% deposit to secure a home loan—and avoid paying LMI altogether. In some cases, state-based grants and concessions can further reduce your upfront costs.
Myth 3: "Renting is cheaper than owning a home."
Renting might feel like the only affordable option, but depending on where you live, monthly mortgage repayments can actually be lower than rent. Plus, when you pay off a mortgage, you’re building equity and investing in your future—not just paying someone else’s loan. With the right home loan structure, homeownership could become more affordable than you think.
Myth 4: "I have to figure everything out on my own."
You don’t have to navigate this process alone. One of the smartest moves you can make is working with a mortgage broker—especially one who understands the challenges low-income earners face. A good broker will assess your situation, compare loan products from multiple lenders, and help you access government support programs you might not even know exist. They act as your advocate, guiding you step by step through the application process.
The bottom line? Don’t let myths hold you back. Thousands of Australians with modest incomes have already purchased their first home—and you can too. With the right advice, smart planning, and expert help from a mortgage broker, your dream of homeownership is absolutely within reach.
Government Schemes For Low-Income First Homebuyers
For low income earners, securing a home loan can feel overwhelming, but the government offers several support schemes that make buying a first home more affordable. These initiatives reduce upfront costs and lower barriers, helping more Australians enter the property market with smaller incomes.
First Home Owner Grant (FHOG)
The First Home Owner Grant (FHOG) is a one-time payment available in all states and territories to eligible first homebuyers. The grant helps cover initial expenses by providing financial assistance when buying or building a new home.
Eligibility usually requires applicants to be Australian citizens or permanent residents aged 18 or over, and the home must be their primary place of residence.
Grant amounts and criteria vary by state—for example, NSW offers up to $10,000 for new homes, while Victoria’s grant also sits around $10,000 but includes different property value caps. This grant reduces the amount buyers need to save upfront, easing the strain on low income earners who might otherwise struggle to meet deposit requirements.
Read more: First Home Owner Grant
First Home Guarantee (FHG) / New Home Guarantee (NHG)
The First Home Guarantee allows eligible buyers to purchase a home with as little as a 5% deposit without paying lenders mortgage insurance (LMI). The government guarantees up to 15% of the property price, lowering upfront costs and monthly repayments.
The New Home Guarantee functions similarly but focuses on new builds, encouraging home construction and ownership. These guarantees directly assist low income earners by cutting the high deposit barrier and making home loans more accessible.
Read more: First home guarantee scheme
Stamp Duty Concessions
Stamp duty, a significant upfront cost on property purchases, often challenges low income buyers. Many states provide stamp duty concessions or exemptions for first homebuyers, reducing or even eliminating this tax on eligible properties, especially for lower-priced or new homes.
For example, in Queensland and Victoria, first homebuyers may receive partial or full exemptions on stamp duty, easing upfront financial pressure. These concessions can save thousands of dollars, making home loans more affordable and achievable for those on tight budgets.
Help to Buy Scheme
Several states also offer Help to Buy schemes, which assist low- and moderate-income buyers by offering government-backed loans or co-purchasing options. These programs often cover part of the deposit or purchase price, enabling buyers to qualify for home loans sooner. By sharing the financial load, Help to Buy schemes provide practical pathways into home ownership for those who might otherwise be locked out of the market.
Regional First Home Buyer Guarantee (RFHBG)
For those buying outside major cities, the Regional First Home Buyer Guarantee provides similar low deposit benefits targeted at regional areas. This scheme encourages home ownership in less populated regions while still supporting low income earners with smaller deposits and reduced entry costs.
Together, these government schemes, including grants, deposit guarantees, stamp duty concessions, and Help to Buy programs, create a supportive framework that makes home loans possible for low income Australians. They lower financial barriers, reduce upfront costs, and provide confidence for first homebuyers to step into their new homes.
Low Deposit Home Loan Options
Saving a large deposit can be one of the biggest obstacles to buying a home. Thankfully, many lenders offer low-deposit home loan options that allow buyers to enter the property market with as little as a 5% deposit. These loan products are designed to help borrowers with limited savings but still require careful planning and understanding.
Loans with Lenders Mortgage Insurance (LMI)
When you borrow more than 80% of a property’s value, lenders generally require lenders mortgage insurance (LMI). This insurance protects the lender in case you default on the loan but adds extra cost to your home purchase. LMI premiums can be significant, sometimes thousands of dollars, which might seem daunting for low income buyers.
However, government support schemes such as the First Home Guarantee and the New Home Guarantee can help reduce or eliminate the need to pay LMI by guaranteeing a portion of the loan. This government backing lowers your upfront costs and monthly repayments, making home loans more manageable for those with smaller deposits.
Low Deposit Home Loan Products
Many banks and non-bank lenders offer specific low-deposit loans tailored for first homebuyers and low-income earners. These loans allow deposits starting at 5%, with flexible repayment options and competitive interest rates.
Some lenders also offer special features, such as offset accounts or redraw facilities, which can help manage finances more efficiently during the loan term. It’s important to shop around and compare different loan products to find the best fit for your income and lifestyle.
The Importance of Saving, Even a Small Amount
While low-deposit loans make buying a home more accessible, saving remains a crucial step in the process. Even a modest savings buffer can help cover upfront costs such as inspection fees, moving expenses, and other home buying costs.
More importantly, having savings shows lenders that you can manage your finances responsibly, increasing your chances of loan approval. Set realistic savings goals, consider automatic transfers to a dedicated account, and look for ways to reduce unnecessary spending. Every dollar saved brings you closer to securing a home loan that suits your income.
Exploring Non-Bank Lenders and Specialist Lenders
When searching for a home loan, many people naturally turn to major banks. While these institutions dominate the market, they are not the only option—and sometimes, they may not be the best fit for low income earners or borrowers with unique financial situations. Non-bank lenders and specialist lenders offer valuable alternatives that can help make home loans for low income earners more accessible.
Non-Bank Lenders: Flexible and Accessible
Non-bank lenders operate outside the traditional banking system, and they often approve loans that major banks might decline. They actively assess your application based on more flexible criteria. For example, they consider alternative income sources, irregular employment, or lower credit scores. By doing so, non-bank lenders open doors for low income earners who face challenges meeting the strict rules of big banks.
These lenders provide competitive interest rates and various loan products, including low deposit options tailored to first homebuyers. Many non-bank lenders streamline the approval process and deliver more personalised service, which benefits first-time buyers who need clear guidance.
Specialist Lenders: Tailoring Loans to Your Situation
Specialist lenders focus on borrowers with non-standard financial profiles. They understand that many people earn income differently or have credit challenges. These lenders actively evaluate your financial situation beyond credit scores, looking at cash flow, assets, or self-employed income.
For low income earners, specialist lenders create loan solutions that fit your financial reality. They offer flexible repayment plans and accept lower deposits, increasing your chances of approval. Many specialist lenders work specifically with first homebuyers, people with poor credit, or those who need tailored loan terms.
By actively considering non-bank and specialist lenders, low income earners find home loans that suit their needs better. These lenders provide flexible criteria, faster decisions, and personalised support—helping you step confidently onto the property ladder.
The Importance Of Your Credit Score For Home Loans For Low Income Earners
Your credit score plays a crucial role when applying for home loans, especially for low income earners. Lenders use this number to assess how likely you are to repay your loan on time. A good credit score increases your chances of approval and can secure you lower interest rates, which saves you money over the life of the loan. Understanding what a credit score is and how to improve it can strengthen your home loan application.
What Is a Credit Score?
A credit score is a three-digit number that summarises your creditworthiness based on your financial history. It reflects how responsibly you have managed debts like credit cards, personal loans, and previous mortgages. Scores generally range from 300 to 850, with higher scores indicating better credit health. Lenders check this score to decide if lending you money carries a low or high risk.
For low income earners, maintaining a good credit score can feel challenging but remains essential. A strong credit score reassures lenders you can manage repayments, which may lead to more favourable loan conditions.
Actionable Tips to Improve Your Credit Score
- Pay Bills on Time: Your payment history heavily influences your credit score. Always pay bills—including utilities, credit cards, and loans—by their due date. Setting up automatic payments or calendar reminders helps avoid missed payments that can harm your score.
- Reduce Existing Debt: Lowering the amount you owe on credit cards and loans improves your credit utilisation ratio. Aim to keep credit card balances below 30% of your available limit. This shows lenders you aren’t over-reliant on borrowed money.
- Avoid New Debt: Refrain from applying for multiple new credit accounts at once, as each application can lower your score temporarily. Only seek new credit when necessary, especially before applying for a home loan.
- Check Your Credit Report Regularly: Obtain free copies of your credit report from credit reporting agencies and review them for errors. Dispute any inaccuracies immediately, as incorrect negative entries can unfairly damage your score.
By actively managing your credit score and following these steps, you improve your chances of securing a home loan—even on a low income. A healthy credit score not only boosts lender confidence but also helps you access better loan terms, reducing the overall cost of your home purchase.
Budgeting and Saving Strategies Low-Income Earners
Saving enough money for a home deposit can feel overwhelming. However, creating a clear budget and adopting smart saving strategies can help you build your deposit faster and prepare you for the costs of home ownership. With discipline and planning, you can take control of your finances and move closer to securing a home loan. Here are some tips to supercharge your savings:
Create a Realistic Budget – Start by tracking all your income and expenses. List your regular income sources and document every expense, from rent and utilities to groceries and entertainment. Use a budgeting app or a simple spreadsheet to categorise spending and identify where your money goes each month. Once you see the full picture, set a realistic budget that covers essentials and allocates a fixed amount to savings.
Identify Areas to Save Money – Look closely at your daily habits and expenses to spot savings opportunities. For example, consider using public transport or carpooling to cut fuel costs. Shop with a list to avoid buying unnecessary items and take advantage of discounts or loyalty programs. Small savings add up over time and can significantly boost your deposit balance.
Accelerate Your Deposit Savings – To speed up your deposit savings, automate transfers to a dedicated savings account right after payday. Treat your savings like a regular bill you must pay each month. This “pay yourself first” approach helps you stay consistent and reduces the temptation to spend.
You can also increase your savings by picking up extra work, freelancing, or selling unused items. Even small additional income streams can make a difference. Additionally, explore government schemes like the First Home Owner Grant or stamp duty concessions, which can lower your upfront costs and reduce the total amount you need to save.
Consistent saving, smart spending, and leveraging available support programs build a strong financial foundation for your first home purchase.
Working with a Mortgage Broker: Your Best Ally
Mortgage brokers act as expert guides who help you find the best loan that fits your unique financial situation and goals.
What a Mortgage Broker Does
A mortgage broker works directly with multiple lenders on your behalf. Instead of applying to just one bank, they actively search through a wide range of loan products from major banks, non-bank lenders, and specialist lenders. This means they find home loans designed specifically for low income earners, first homebuyers, and those with smaller deposits.
They help you understand how much you can borrow and suggest loan options that match your needs. Brokers also know about government schemes like the First Home Guarantee and stamp duty concessions. They manage paperwork, communicate with lenders, and negotiate terms to secure the best deal for you.
How Mortgage Brokers Help Low Income Buyers
Mortgage brokers understand the challenges low income buyers face, such as tighter borrowing limits and stricter loan requirements. They actively present your financial situation in the best possible way and advise you on how to improve your application. They know which lenders offer more flexible options or specialise in loans for people with lower incomes or small deposits.
Using their knowledge, brokers help you avoid common mistakes and delays. They also identify loan products and government-backed guarantees that you might not find on your own.
No Direct Cost to You
Most mortgage brokers receive commissions from lenders once your loan settles, so you usually pay nothing for their service. This means you can access expert advice and a wide range of loan options without any upfront cost.
By choosing to work with a mortgage broker, low income earners gain expert support, access more loan options, and enjoy a smoother path to homeownership. Brokers help you unlock the best deals and government incentives, turning your dream of owning a home into a reality.
Ready to talk to a mortgage broker? Please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
Next Steps And Getting Your Low-Income Home Loan
Homeownership doesn’t have to remain a distant dream. With the right information, practical steps, and support from professionals, you can navigate the process confidently. Start by checking your eligibility, speaking to a broker, and taking control of your finances. The sooner you begin, the closer you get to the pride and security that comes with owning your own home.
Our team at Hunter Galloway is here to help you buy a home in Australia. Unlike other mortgage brokers who are one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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