Stipend Income Mortgages Explained

Stipends are a specific type of income that could affect your ability to get a mortgage. Here, we identify what stipend income means and whether it’s possible to buy a property while claiming these earnings.

We also investigate how PhD students, in particular, are affected, how much stipend earners, in general, could potentially borrow, and how much deposit they need. Finally, we highlight which lenders accept this income and how to start an application on the right foot.

What is stipend income?

A stipend is a type of income given to workers instead of a salary. It’s often paid to PhD students, members of the clergy, or charity workers, to name just a few. A stipend is meant to cover basic costs incurred by individuals in those positions, such as food, petrol, phone, or rent.

Can stipend income be used to qualify for a mortgage?

Yes, it can be harder, but it’s possible—even if you are a sole applicant. Accepting a stipend mortgage will depend on some or all of the following factors.

• Your current stipend source. Some lenders prefer particular types of stipends. For example, a clergy stipend is generally more widely accepted than others (like PhD applicants). That’s down to being perceived as a more reliable, long-term income.
• Stipend length. The longer you have had your stipend, the better. Lenders will see the income as far more likely to continue – reducing the risk of lending to you.
• Your future employment. If your stipend is not long-term, mortgage providers may want to see evidence that you have an employment offer for when your stipend ends. Sometimes, they may factor in your earnings for a future job. As a result, certain professions (such as doctors) will be considered more favourably than others.

Can a PhD student get a mortgage?

These are possible but can be difficult to get on your own. The majority of lenders don’t perceive a PhD stipend as reliable enough. However, having a guaranteed job at the end of your studies will improve your chances.

Studying for particular types of PhD can help, too, especially if they are more likely to lead to higher-earning jobs. If you are studying for a PhD and want a mortgage, using a broker to highlight the potential lenders would be beneficial.

Joint mortgage applications using a stipend

One way to improve your chances is to apply with someone else – if they strengthen your application.

To do so, the other applicant can earn a salary or also be on a stipend – increasing your total income and potentially how much you can borrow. This could prove essential for those with particularly low stipends.

Plus, the range of lenders available to you could increase if they earn a salary. Additionally, joint mortgage applications allow you to pool and increase your deposit amounts, lowering the perceived risk of lending to you. It means you can access a better rate for your loan repayments.

How much can you borrow?

If you are applying independently, mortgage providers usually lend up to 4-4.5 times your income – if they accept stipend applications. Some lenders might be more willing to offer a higher income multiple, especially for joint applications, allowing borrowing up to 5 times your income or possibly more. A broker would be your best bet to find these lenders as they’re less common and often have even more stringent eligibility requirements.

When calculating how much you can borrow, a lender will conduct an affordability assessment, which involves looking at your expenditures and income. If you have large outgoings, you may find that the multiple used is even lower than 4 times.

Our calculator below will give you a good idea of what you can borrow.

How to get a mortgage with a stipend income

Your first step should be to find a specialist mortgage broker who has experience arranging mortgages for people with this type of income. This will boost your chances of getting approved at the best terms available.

Using our broker-matching service, you can speak directly with the right broker by simply making an enquiry online.

They’ll be able to help with:

• Readying all the necessary documents and paperwork
• Downloading your credit reports
• Finding the right lender and securing the best deal for you

How much deposit will you need?

As with a standard mortgage application, the bigger your deposit, the better. It improves your loan-to-value ratio, which can help you secure a better interest rate. There may be some providers happy to go as low as a 5% deposit, but at least 10-15% is the average standard requirement. A broker could help you find a lender with your deposit amount.

Which lenders will accept stipend income?

Big names such as TSB, NatWest, and Halifax consider these sorts of applications. However, these are subject to change, and each lender will have its specific eligibility requirements. For example, Halifax currently only accepts this income type from members of the Clergy and requires a letter of confirmation from a religious order to prove it.

There are smaller lenders, too, that could be possibilities for you, such as Newbury Building Society, Teachers Building Society, or Melton Building Society. Currently, the Teachers Building Society will only accept 60% of a stipend as part of its affordability calculations, whereas Melton uses 100%.

Speak to a specialist stipend broker

Getting a stipend mortgage can be difficult, as mortgage applications using this income alone are complex. However, it’s not impossible. Talking with a specialist broker can be invaluable as they’ll know which lenders will consider your application given the specific circumstances of your situation. Plus, with their help, they could maximise your borrowing while minimising the interest rate you can access.

Our no-obligation broker matching service will connect you with the best stipend broker. Call us on 0330 818 7026 or enquire with us today so we can connect you with a specialist.