Can I get a home loan while on parental leave?

Each lender has their own lending criteria. And for many, seeing "parental leave" on a mortgage application would make you a high-risk borrower.
Dawn Teh
Written by
Dawn Teh
Ava Crawford
Reviewed by
Ava Crawford
Last updated
May 17, 2024
0 minute read
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Couple sitting on the couch with their new baby after buying a house while on maternity leave

If you're on parental leave, you're technically still employed. So it shouldn't be an issue getting your home loan application approved, right?

Not quite.

Each lender has their own lending criteria. And for many, seeing "parental leave" on a mortgage application would make you a high-risk borrower. So it can be a lot harder to get a home loan in this situation.

This applies even if you receive supplemental government benefits like Parental Leave Pay.

But don't give up hope just yet. There are ways you can still get a mortgage while on parental leave — keep reading to find out how!

Can you get a mortgage while on parental leave?

It's possible to get a home loan while on parental leave. But, it can be harder because lenders do not view your break from work as a positive point regarding your eligibility as a borrower.

However, there are ways to strengthen your odds of getting approved, which we'll cover later in the article.

No one pictures moving their family into their 'forever rental'. If you can afford mortgage repayments but need help with the deposit, you might find OwnHome helpful.
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Does maternity leave affect borrowing power?

Yes, maternity or paternity leave can affect your borrowing power when applying for a home loan. This is especially so if you're on unpaid maternity leave. Check your buying power with the OwnHome Buying Power Calculator.

When you apply for a home loan, lenders essentially want to know that you can make your monthly repayments.

When they see "maternity leave" on your application, it's taken as a risk to your income.

They worry your job security is on the line. Or that if you're a first-time mum, you might decide not to return to work.  

Even if they do approve your application, you might not be given the best mortgage terms (e.g. higher interest rates).

However, that's not the end of the story. There are ways to prove to your lender that you are and will remain in good financial standing.

How to get a home loan while on maternity leave?

The steps for applying for a home loan are the same whether you're on maternity leave or not.

Firstly, your lender must assess your financial situation to see if you and your partner can service your requested loan amount.  

They will mainly look at three things:

  • Income
  • Expenses
  • Debts

If you're on parental leave, here is some additional information they'll need from you:


Details about your employment and parental leave. This includes:

  • Payslips
  • Information about your leave period
  • Whether you're working full-time or part-time
  • Whether you're on unpaid or paid parental leave
  • Proof of your return-to-work date


In addition to your usual daily living expenses, they'll also consider anticipated increases in your spending (e.g. childcare, added costs of having a dependent).

How to improve your chances of getting a home loan while on parental leave

There are certain steps you can take to improve your eligibility for a home loan while on parental leave. This includes:

  • Grow your savings, borrow less: Building up a sizeable deposit (at least 20%) will allow you to borrow less and help strengthen your application.
  • Borrow with another person: Having a co-applicant who has a steady source of income will help reassure the lender that together, you both will have enough to make your home loan repayments.
  • Show that your job is secure: Demonstrate that you have a clear return date or return schedule along. Also, indicate how much your salary will be during this period and when you're back in the office. You could ask your employer to write a letter supporting this information in your application too.  

The lowdown: Should I apply for a home loan while on parental leave?

In general, it might be wiser to wait till you're back at work to apply for a home loan in Australia. While you're still on maternity leave, you'd be deemed a high-risk borrower in the eyes of the lender, which could affect whether your application gets approved.

However, this doesn't mean it's impossible, and there are things you can do to improve your chances of securing a mortgage.

In a nutshell, you must demonstrate that you have a healthy financial history (and future).

Things like having a clear plan for your return to work and showing steady income (this could be from other sources like investments, too) will help to reassure lenders you are capable of paying back your loan.    

With a little preparation and persistence, you could be well on your way to owning your new home while celebrating the arrival of your little one!


How do I manage my mortgage while on maternity leave?

There are a few common home loan features that could help you manage repayments while you're on maternity leave. These include:

  • Repayment holidays allow you to take a break from making your regular loan repayments for a period of time. If you've made extra repayments before your parental leave, you're more likely to access this feature. Bear in mind that this won't change your loan term. So your mortgage repayment sum will likely need to change after the repayment holiday to ensure that you stick within the scheduled loan term.
  • Offset accounts and redraw facilities. You could access funds in your offset account or redraw facility to stay on track with your repayments.
  • Interest-only payments. Ask your lender if they're agreeable to interest-only repayments for a limited period while you're on maternity leave.
  • Variable and fixed rate home loans. If you want the flexibility to make extra repayments at no extra cost, then swapping to a variable-rate loan might be better. On the other hand, moving to a fixed-rate home loan might suit you if you prefer to have more certainty.

What is the best home loan option?

No one home loan option will suit every person.

The main notes of importance are that you do your research, read the product disclosure statement (PDS) thoroughly, and consult with a financial advisor or mortgage broker if required.

If you are a first-time home buyer, a single parent, or buying in a regional area, it may be worth looking into government schemes to allow easier access to the property.

Am I still a first-time home buyer if my partner has owned property before?

The definition of a first-time home buyer will differ depending on what it is being used for, and generally, if your partner has owned property, you will not qualify for assistance.

For instance, if you apply for the First Home Owners Grant, home ownership is looked at for yourself and your partner. If your partner has owned property before, you will not be eligible.

The same goes for the First Home Guarantee.

However, the First Home Super Saver scheme is determined on an individual basis, so you may be eligible to use this scheme even if your partner has owned properties before.

Can I buy a house using my parents' house?

It's possible for your parents to put down part of their home equity as security for your own home loan. This is called a guarantor loan. It can help with getting your home loan approved if you cannot come up with the full 20% deposit. 

This article is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation, or needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS), or other offer documents before making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).
Prepared by OwnHome Services Pty Ltd ACN 664 492 059. This information does not take your personal objectives, circumstances or needs into account. Always read the disclosure documents for products and services before deciding on a product or service, and consider seeking independent legal, financial, taxation or other advice for your unique circumstances.

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