Stipend Income Mortgages

Find out what a stipend income means and whether it’s possible to buy a property whilst claiming these earnings.

Firstly, do you currently receive a stipend income?

Home Income Types Stipend Income Mortgages

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 15, 2024

Stipends are a specific type of income, which could affect your ability to get a mortgage. Here, we identify what stipend income actually means and whether it’s possible to still buy a property whilst 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 get an application off on the right foot.

What is stipend income?

It’s a type of income given to workers in place of a salary. They’re 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 that individuals in those positions incur – such as food, petrol, phone costs or rent.

Can stipend income be used to qualify for a mortgage?

Yes, it can be harder to do, but it’s possible – even if you are a sole applicant. Being accepted for a stipend mortgage will depend on some or all of the following factors.

  • Your current stipend source. Some lenders prefer particular types of stipend. For example, generally, having a clergy stipend is more widely accepted than many others (like PhD applicants). That’s down to being perceived to be 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 going to be long term, mortgage providers may want to see evidence that you have an employment offer for when your stipend ends. Or, sometimes, they may factor in the earnings you could potentially receive for a future job. As a result, certain professions (such as doctors) will be considered more favourably than others.

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Can a PhD student get a mortgage?

These are possible, but they can be difficult to get on your own. The majority of lenders don’t perceive a PhD stipend as reliable enough. However, if you have a guaranteed job at the end of your studies, that 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, if they earn a salary, the range of lenders available to you could increase. Additionally, joint mortgage applications allow you to pool and increase your deposit amounts, lowering the perceived risk of lending to you. It means you may be able to access a better rate for your loan repayments.

How much can you borrow?

If you are applying on your own, mortgage providers will 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 specifically, a lender will conduct an affordability assessment which involves looking at your expenditure as well as your 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 may be able to borrow.

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
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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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How to get a mortgage with 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 as this will boost your chances of getting approved at the best terms available.

Using our free broker-matching service you can speak straight away to the right broker by simply making an enquiry online. They’ll be able to help with:

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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 would be able to help find a lender with the deposit amount you do have.

Which lenders will accept stipend income?

Big names such as TSB, NatWest and Halifax consider these sorts of applications. These are subject to change however, and each lender will have its specific eligibility requirements. For example, the Halifax currently only accepts this income type from members of the Clergy and requires a letter of confirmation from a religious order proving 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 their affordability calculations, whereas Melton uses 100%.

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Speak to a specialist stipend broker

Getting a stipend mortgage can be difficult to do on your own as mortgage applications made using this income alone is 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 free, no-obligation broker matching service will connect you with the best stipend broker for you. Call us on 0808 189 2301 or enquire with us today so we can put you in touch with a specialist.

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FAQs

Yes, it’s possible. You’ll usually need to pass these eligibility criteria:

  • The rental income of your potential property needs to cover your mortgage repayments and more. Monthly income often needs to be around 125-145% of the mortgage repayment.
  • Deposits for BTL mortgages are usually around 25%.
  • Lenders sometimes like you to have a minimum income amount too – usually from around £15,000.

All lenders have their own requirements which can vary a lot, so seeking the help of a broker is advisable.

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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!

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Pete Mugleston

Mortgage Advisor, MD

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