Updated: December 10, 2021

Low Income Mortgages

Worried that your low income might stop you from getting a mortgage? The experts we work with could help you get approved.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 10, 2021

Many people think that they will have a hard time getting a mortgage if their income is low. The truth is, if you have enough money to make your monthly payments and show that you will be able to pay them in the future, then there is likely still hope for getting approved. So if you want more information on how to go about getting a loan with a low income, read on!

This guide will cover the steps needed for applying for a mortgage as well as some tips on credit score, mortgage lenders and how to connect with a broker who has been through it all before and knows the ropes.

Can you get a mortgage on a low income?

Yes, this is possible. Your chances of mortgage approval might hinge on the size of the mortgage you need, how much deposit you can put down and whether you have any other sources of capital or assets to declare on the application.

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How to get a mortgage on low income

In today’s market, you can still get approved for a mortgage if you are on a low income. Here are some tips to help boost your chances of approval…

  1. Save as much deposit as possible: Saving a larger deposit will increase your chances of approval as the amount you’d need to borrow would obviously be lower. Larger savings can demonstrate self-discipline and reduce the sum of the mortgage needed.
  2. Speak to a mortgage broker: A mortgage broker who specialises in low-income borrowers will know how to help you prepare for your application and increase your chances of success. They can take you directly to your best-match mortgage provider who is most likely to give the green light and guide you through the application.
  3. Apply! Your broker will help you make an informed decision about which lender and mortgage deal to choose and will guide you through the rest of the process from here. They might suggest applying for an agreement in principle at this point to find out how much you could borrow, though some lenders go straight to full application.

Tips to help you get approved

Doing the following could boost your chances of getting approved for a mortgage with low income.

  1. Make a joint application – If you’re in a position to, applying with somebody else, combining two incomes can boost your chances of passing the mortgage lender’s affordability assessment. This doesn’t necessarily have to be your partner – some lenders are happy to approve mortgages with friends and family members.
  2. Supplement your income: In addition to regular income, lenders often take other sources of capital into account, such as child support payments, disability benefits and freelance work on the side. You’ll need to provide proof of these income sources along with the application form. Assets can also be used to support your affordability, including investments, stocks, shares, pension funds or trust fund income.

Lenders who offer these mortgages

Income is one of the biggest determining factors when it comes to mortgages, but there are lenders who offer loans to applicants on a low income. Even if you earn under £15,000 per year, you could still qualify for a loan.

Lenders who offer mortgages to borrowers on low income include…

Bullet Tick Halifax
Bullet Tick Lloyds Bank
Bullet Tick First Direct
Bullet Tick Virgin Money
Bullet Tick Yorkshire Bank
Bullet Tick Clydesdale Bank

One thing to keep in mind, though, is that approaching a mortgage lender directly isn’t recommended. If you were to go direct, you would only have access to that lender’s range of rates and products, and might miss out on a better deal elsewhere.

Speaking to a broker who specialises in low-income mortgages will give you access to an entire market of products and boost your chances of landing a good deal.

Schemes that could help you get a mortgage

Below are some schemes and government incentives that may open doors to homeownership for you if your income is low…

  • Guarantor mortgages: A guarantor helps you get on the property ladder by securing a mortgage against their name. Your spouse, parent or another close family member can act as your guarantor, but they must be UK-based and be a homeowner, or have sufficient savings to secure against the mortgage. A guarantor helps the loan application process to go through successfully as it provides a bank with certainty that the funds borrowed can be returned – even if you’re on a low income or default on payment.
  • Shared Ownership:  Shared ownership is a relatively new and exciting way to get into home ownership. However, it comes with a few requirements: you must be a first-time buyer, be able to demonstrate that if you previously owned a home you can’t afford to buy one now, or be an existing shared ownership homeowner who is looking to move. If you’re living outside London, you’ll need an annual household income of less than £80,000 to qualify for shared ownership – in London this is capped at £90,000 per year. This is a middle ground between buying and renting and it involves buying a share of the property and paying rent on the rest. You can increase the stake you own over time through a process called staircasing.
  • The Help to Buy Scheme: The government is providing new would-be homeowners with a 20% repayable equity loan. The current scheme is set to run until March 2023 with the goal to help first-time buyers and low income earners who need it most. It includes regional property price limits and helps to ensure you can secure a great interest rate mortgage deal, even on a 5% deposit.
  • The Right to Buy scheme: This government scheme allows council tenants on low income to buy their council houses with a discount of up to £112,800 within London and £84,600 outside London. But there are some eligibility requirements; the property must be self-contained and your main or only home and you must be a secure tenant with a public sector landlord for three years.

These are merely a handful of the schemes and mortgage products that could help you get on the property ladder. Speak to a broker to find out whether other alternatives there might be.

What do lenders class as low income?

It all depends on who you ask. According to the UK Government, a household made up of a couple with no children would be on low income with an annual income of up to £17,100 before housing costs are factored in, and £14,800 after, but mortgage providers have their own individual criteria for this.

Lenders don’t usually reveal this criteria, but don’t let that deter you from applying once you’ve done your research and prepared. Look at your credit score history and how much you will be able to afford in terms of monthly payments and interest rates.

The amount you can borrow on a mortgage can be based on anything between 4 and 6 times the borrower’s income, but it may be possible to find a lender who lets you declare other sources of capital such as benefits, assets, investments and more to bulk up your affordability.

Ask yourself whether the mortgage repayment will be feasible within your budget, based on your total earnings, even if other unexpected expenses arise during the repayment period. Legal or processing fees can come up when buying a property so be sure to factor in a financial buffer.

The best way to get the amount you need is by being prepared and ensuring that a mortgage, no matter what its cost, will still allow for affordable repayments.

Getting a mortgage on minimum wage

All it takes to get a mortgage at the minimum wage is a steady income, an acceptable credit history and enough deposit to meet the lender’s requirements.

Some lenders are surprisingly flexible when it comes to approving mortgages for low-income workers and will allow you up to five times your annual salary, but keep in mind that you’ll be better placed to secure you a mortgage that’s over 4.5 times your salary if you use a mortgage broker.

Factors that typically determine your borrowing limits include annual salary, deposit size, and whether or not you’re applying through a government mortgage scheme.

Mortgages for zero-hour contract workers

In the past, mortgage lenders often turned down employees with zero-hours contracts as it can be difficult to determine how much an applicant with variable income can afford to regularly pay each month.

However, some banks have begun offering more leniency when considering applications from zero-hour workers – but, of course, not all! An experienced mortgage broker will be able to direct you to providers who are best placed to approve your application in this scenario.

Get matched with a broker who works with low earners today

With the right preparation and research it is possible to get a mortgage, even if your income is on the lower side. A mortgage broker who specialises in low-income applicants can help you overcome any obstacles to find the best deal for your needs – even if you have been turned down before or are unsure about what size mortgage you could afford.

We offer a free broker-matching service that will quickly assess your needs, circumstances and income to pair you with the broker who has the exact knowledge and experience you need to get a mortgage with the best possible rate attached.

Our service is simple, fast and free – and an initial conversation with the broker we match you with carries no obligation to take things further. Call 0808 189 0463 or make an enquiry to be matched with your ideal mortgage advisor today.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

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 OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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