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Can I get a mortgage with a low income?

Yes, you can get a mortgage with a low income. Some high street lenders have no minimum income requirements, meaning you can qualify for a mortgage no matter how much money you have coming in each month. 

But having a lower income can reduce your borrowing power, so you need to align your expectations regarding loan size. However, the good news is that plenty of lenders will consider your application.

Income isn’t restricted to salary or earnings, and some lenders will gladly count pensions, child maintenance, benefits, and overtime when deciding how much to offer. 

The amount you can borrow is broadly based upon exactly how much income you have. Most lenders will offer a loan somewhere between four or five times your income for those with less coming in. 

For example, if you earn £20,000 a year and the lender has an income multiplier limit of 4.49, you can expect a loan in the region of £89,800. 

Lenders will also consider your outgoings, including bills, credit agreements and childcare costs, which will affect the overall amount you can borrow. 

The size of the deposit or equity in a home affects the loan-to-value ratio and the interest rates offered. A larger deposit will usually mean lower interest rates, enabling you to borrow more. \nHow to compare low-income mortgages?

How to compare low-income mortgage deals

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Who is Mojo?

Mojo is a free online mortgage broker. We partner with them so you can get all the mortgage support you need in one place.

Mojo will find out about your circumstances, check your eligibility, and search across the whole of market to help you secure the best mortgage for you.

An expert will be on hand to offer help and advice and you will be supported through each step of your mortgage application.

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What counts towards income on a mortgage application?

Your income can include the following: 

  • salary, wages and self-employed income

  • income from second jobs or freelance work

  • overtime and bonuses

  • benefits and child maintenance payments

  • state and private pensions

  • investments

In short, whatever you have coming into your bank account each month.

Many big lenders will count benefits as income if the payments are regular and are expected to continue throughout the mortgage term. 

Certain lenders will also consider other forms of income, including attendance, carers and maternity allowance; mortgage subsidy income payment protection; and stipends.  

Aside from income, lenders tend to provide better mortgage terms to those with a good credit history, a large deposit and little in the way of existing debts. 

What documents do I need to prove my income?

To get a mortgage on a low income you will need to provide clear evidence of earnings, benefits and any other income you have coming in each month. Lenders usually want to see bank statements for all applications and further documentation to back up individual income sources.

They typically need the latest three payslips to confirm salary and earnings from employment. In addition, they may ask for:

  • Benefit award letters from the Department for Work and Pensions to prove benefits 

  • A copy of a court-ordered maintenance agreement or a CSA assessment for child maintenance payments

  • Your latest pension annual statement or a P60 for pension income

How can I improve my chances of getting a mortgage on a low income?

Borrowers can use a few trusty methods to get a bigger mortgage on low income in the UK. 

Income is only part of the story for lenders. They also look for signs that you are a trustworthy borrower who will keep up with repayments and pay back the debt.

Improve your credit record

Having a clean credit history with no late or missed payments signals to lenders that you are a reasonable risk for a mortgage.

Cut your outgoings

The money you pay out each month affects your overall affordability in the eyes of lenders, so make sure you are on the best tariffs for energy, phone bills and internet. You could also consider dropping pricey gym memberships or TV subscriptions to cut outgoings further.

Save up a larger deposit

Sometimes taking the additional time to save a larger deposit pays off as you access a lower loan-to-value ratio and lower interest rates and can put more money towards a future home.

Buy with someone else

Combining forces with a spouse, partner, family member or even friend shares the risk of mortgage debt and bolsters income for repayments so that lenders feel more comfortable offering a bigger mortgage. 

Do mortgage lenders accept people on benefits?

Yes, those on benefits can use this income to get a mortgage. The type of benefit is a deciding factor in whether the lender will count it as income. 

One of the most widely accepted benefits is child benefit, which parents earning up to £50,000 receive. 

Child tax and working tax credits are also often accepted. Disability benefits are also usually allowed if they are a long-term income. 

In fact, mortgage lenders are comfortable lending to people on various benefits. The only notable exception is housing benefit, which is excluded.  

Large high street lenders such as Halifax, Nationwide and TSB consider benefits as income as long as the payments are ongoing and can be proved.  

Benefits that lenders might take into account

  • Attendance allowance

  • Carers allowance

  • Child benefit

  • Child tax credit

  • Disability living allowance

  • Disability income support

  • Employment and support allowance

  • Industrial Injuries Disablement Benefit

  • Pension credit 

  • Personal Independence Payment

  • State widows pension

  • Working tax credit

  • Universal credit

What other support is available if you have a low income?

High house prices and stringent borrowing rules mean that buying a home in the UK is no easy feat. But there are several schemes designed to help people with a low income onto the housing ladder.

Help to buy

First-time buyers can get a new-build home with a deposit of just 5% through this scheme, which is open until March 2023.

Shared ownership

If you can’t afford a home in the current climate, you can buy a stake in a property through this scheme. You can start by buying as little as 10% and build up ownership gradually, with the eventual aim of owning 100%. 

Right to buy

This scheme offers council and housing association tenants in England a discount to help them buy their homes.

Mortgage Guarantee Scheme

This scheme provides a government guarantee to help lenders offer 95% mortgages until the end of 2022 for buyers who have a small deposit or low amounts of equity in their property.

Low income mortgage FAQs

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