Getting a Mortgage on Benefits

Understand the impact of getting a mortgage if you or your partner claim benefits.

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Home Income Types Getting A Mortgage On Benefits
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 15, 2024

In this article we’ll look at how being on benefits affects buying a house with a mortgage, what you can do to improve your chances of approval and why you should speak to a broker who specialises in this area before applying.

Can you get a mortgage on benefits?

It’s not entirely impossible but it will be difficult. A lender’s major concerns when assessing an application are what level of risk is attached to your loan and whether you can afford the repayments. Meeting the lending criteria and affordability requirements will be the main obstacles in these circumstances.

Your benefits income, and your personal and financial situation – particularly whether you’re receiving any income from earned employment – will help determine the pool of lenders who will consider your application. Having a large deposit and excellent credit files, will also help your chances.

Employed and claiming benefits

If you’re working and receiving benefits you stand a far better chance of attracting more mortgage lenders to consider your application especially if you’ve worked with the same employer for a number of years and/or are in a respected profession (doctor, solicitor etc.).
In certain circumstances, it may be possible to qualify for a mortgage by purely taking your employed earnings into account if the amount you wish to borrow is low enough.

Unemployed and claiming benefits

If you’re both unemployed and claiming benefits the chances of securing a mortgage are extremely slim. Lenders would have very little to base their affordability risk assessment on in this scenario.

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How does it work?

Most mortgage providers cap the amount of benefits that can be included in your affordability assessment but a handful may consider applications from borrowers whose income is made primarily of benefits if other criteria is met (for example, a large deposit).

If your income fluctuates, this will affect how much you receive in some benefits (for example, Universal Credit). In this case, lenders would be much less likely to accept an application and, in the case of universal credit, the housing benefit element would not be taken into consideration.

One of the things lenders are looking for when assessing affordability is longevity. So, for example, if you are in receipt of DLA (Disability Living Allowance) for a permanent disability, from a lender’s perspective, this is stable income. Those with a short-term illness who are expected to return to work may be seen as having a higher lending risk.

Likewise, if you receive child benefits but this is due to end soon, providers may not include it as income when assessing affordability.

What types of benefits are acceptable?

The list of benefits that can be accepted as part of a mortgage application includes (but is not limited to):

  • Personal Independence Payments (PIP)
  • Attendance allowance
  • Carers Allowance
  • Child Benefit
  • Child Tax Credit
  • Disability Living Allowance (DLA)
  • Incapacity Benefit
  • Industrial Industries Benefit (IIB)
  • Maternity Allowance
  • Pension Credit
  • Severe Disablement Allowance
  • Universal Credit
  • Widow’s Pension

Note: The housing element of any Universal Credit received will not be included as income as it will cease once you get a mortgage. It’s important to stress that not all benefits are acceptable to all lenders, and you must pass affordability and eligibility checks to get approved.

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How to get a mortgage on benefits

Follow these steps to maximise your chances of approval:

Get together details of all your income

This should include salary, benefits, child maintenance and any other money you have coming in. Ideally, you should have payslips, official confirmation of each source of income and bank statements proving receipt.

Don’t worry too much if there are a couple of items missing. Your broker will advise you on what to do in this case.

Work out a budget and save for a deposit

This is crucial if you’re looking to get a mortgage on a low income.

Not only will it help you understand how much you can afford to pay, but it may also help you identify any unnecessary expenses like subscriptions that you don’t use.

While saving for a deposit could be difficult in these circumstances, the more you have the better your chances of approval could be.

Monitor your credit reports

Make sure all credit payments are up to date and check your credit files for any inaccuracies or out of date information – if you spot anything you should take steps to have it removed. You can download your credit files for free for a limited period by clicking here.

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Speak to a broker who specialises in mortgages for people on benefits

Once you’ve checked your credit reports and saved for a deposit, the next logical step is to speak with a mortgage broker. They will be able to identify the mortgage lenders who are more willing to help.

The brokers we work with have whole of market access and insider knowledge of getting a mortgage on benefits. This means they can quickly find the best provider in the country to match your situation and help you package your application to get it approved.

Which lenders accept benefit income?

There are a few lenders who will accept benefit income, including major high street banks such as:

  • Barclays
  • Halifax
  • Santander

However, each have their own eligibility criteria and not all of them accept every type of benefit.

This is why it’s best to speak to a broker who knows each provider’s attitude to including benefits as part of your income and can make sure you maximise your borrowing power.

What’s the maximum amount you can borrow?

Some lenders cap lending for people on benefits at £250,000.

Regardless of any loan amount, the maximum amount you can borrow is calculated by multiplying your total annual income (according to the lender’s criteria) by the providers’ income multiple. Typically, this is between 3 and 4.5 times income.

As an example, at 4.5 times your income on a salary of £20,000 and acceptable benefit payments of £6,000, the maximum amount you could borrow (subject to meeting all other criteria) would be £117,000 (£26,000 x 4.5).

To find out how much you might be able to borrow, enter your declarable income from all sources into our mortgage calculator.

Mortgage Affordability Calculator

Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.

Input full salaries for all applicants

Your Results:

You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

Get Started with an expert broker to find out exactly how much you could borrow.

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Are there government schemes to help people on benefits get a mortgage?

Yes. There are several government schemes designed to help people into home ownership. Your broker will help you decide which, if any, is best for you.

These include:

What to do if you have gone onto benefits while you already have a mortgage

If you have an existing mortgage and are now receiving Universal Credit, you may be eligible for government support through the Support for Mortgage Interest (SMI) scheme.

When you come to remortgage, if you’re still receiving benefits, you should speak to a remortgage broker to make sure you get the best deal available to you as you may no longer meet the criteria for your current lender.

Get matched with a broker experienced in dealing with benefits income

Getting a mortgage on benefits doesn’t need to be stressful. With an experienced broker onside, you can apply with confidence. They’ll find the right lender and best product for you – and guide you through the whole buying process.

Our unique broker matching service will pair you up with an expert broker who has a track record of securing great mortgage deals for people in your situation.

To get matched with your ideal broker call 0808 189 2301 or enquire online.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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