The short version
- Many lenders accept casual income after six to twelve months in the same job, or less if you've been in the industry longer.
- Lenders usually work from your average income over the past year, from payslips and tax returns.
- Expect to pay lenders mortgage insurance if your deposit is under 20%.
You may be wondering whether you can apply for a home loan as a casual worker. Yes, you can.
While your choice of lenders may be limited, some non-bank lenders are willing to tolerate the uncertainty of fluctuating incomes and may let you borrow up to 90% or more of the property's value after at least six to twelve months in the same job.
Here's what you need to know as a casual worker seeking a home loan.
Can I get a home loan as a casual worker?
Yes, you can. Not all lenders may work with you though, due to possible income fluctuations and doubts about stable employment.
Only some lenders recognise that casual work is normal in certain industries, such as hospitality, agricultural sector, entertainment, design and the arts, education and even technology related sectors. There are a lot of freelancing professionals out there as well. However, whether you are a casual worker, your partner is, or both of you are in casual positions, you may still qualify for a home loan provided you are able to fulfil certain conditions.
Will I get LMI waivers?
Unlikely. It all depends on your individual financial circumstances.
Usually, people buying property are required to pay Lenders Mortgage Insurance (LMI) when your deposit is less than 20% LVR. In other words, if you're borrowing more than 80% of the property value you will be asked to get LMI, adding thousands of dollars to the cost of your loan.
In general, your chances of qualifying for a home loan with less than 20% deposit is slim because lenders consider casual workers as a high risk group. The goal of LMI is to protect the lender (not you) against the risk of default (when you are unable to repay the loan).
Lenders typically offer LMI waivers to certain preferred categories of professionals like doctors, accountants and lawyers, because they are known to default at a lower rate. But casual workers like you may have a hard time getting into that group. However, there is no harm in asking as there may be exceptions such as overseas trained doctors and other professionals awaiting clearance for permission to work in Australia. Speak to a mortgage broker to find out what you can do.
Eligibility criteria
Some select lenders may offer LMI waivers to casual workers in the following instances:
- If you are applying with a guarantor, which can let you borrow up to 100% or more without paying LMI.
- If you're a first home buyer, the government's 5% Deposit Scheme lets you buy with a 5% deposit and no LMI. It's open to casual workers, as long as a participating lender approves your loan.
Considerations
Overseas qualifications
In Australia it is common to find people with overseas professional qualifications working in casual jobs. Some may eventually find their way to permanent employment, while others may not. If you belong in this category, ask your broker whether there are any lenders who may offer you better deals, even as you apply as a casual worker today.
Ask whether you can change the terms of your casual worker home loan to better terms if and when your transition to permanent employment occurs. Some lenders are open to this option. For example, recently self-employed people who begin with relatively expensive low doc home loans are allowed to convert their loans to more affordable standard home loans when their businesses grow or after two years.
Changes in Fair Work Act workplace entitlements
Changes to the rules for casual employees under the Fair Work Act 2009 (FW Act) came into effect on 27 March 2021, when employers had to start giving casuals a Casual Employment Information Statement (the CEIS).
Since 26 August 2024, casual employees can also tell their employer they want to become permanent (full time or part time) once they have worked for six months, or 12 months at a small business. A letter confirming permanent employment, even with a probation period, will widen your choice of lenders.
Lenders now often accept casual income after six to twelve months in the same job or industry, so check how long each lender asks for.
Apply using a broker
Your range of options for home loans is narrow already as a casual worker. You can improve your chances of getting approved for a home loan by working with an experienced mortgage broker.