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Can I get a mortgage on a low income?
If you’re worried about being approved for a mortgage due to being on a lower income, this page will take you through what you need to consider before you apply.
What is a low income?
A ‘low’ income is relative but could be defined as below the national average. How much you earn will affect how much you can borrow from a lender, as they want to be sure you can afford the monthly repayments.
That said, income is not the only factor a lender will look at when deciding to offer you a mortgage. For example, if you have a large deposit, but low income, you could still be eligible for a mortgage.
One of the key methods of checking your mortgage eligibility is to apply for an Agreement in Principle.
1. Prove you can afford the repayments
To get a mortgage on a low income, you’ll need to prove you can afford the repayments and handle your money responsibly.
There are some simple ways you can do this, such as:
- Raising your credit score. Your credit history is a sign of how trustworthy you are as a borrower. The higher it is, the more likely lenders are to accept your mortgage request.
- Reducing your debts. It’s a good idea to repay any debts or loans before applying for a mortgage. The lower your monthly outgoings, the better chance you may have of being accepted.
- Saving up for a bigger deposit. The higher the deposit, the less you’ll need to borrow. This can mean lower, more affordable monthly repayments.
- Lowering your costs. Lenders will want a rough idea of your expenses. Reducing how much you spend on subscriptions or socialising can help.
2. Apply with another person
Buying with another person can also help you to afford a mortgage. This is because a lender will look at your joint income to decide how much you can borrow.
Both parties will be responsible for paying off the mortgage. So, it’s important to check that the other person is in a secure position to do so.
Learn more about joint mortgages.
3. Apply for Government Schemes
There are many schemes out there to help you get on the property market.
- Shared Ownership. You can buy a share of a home through a mortgage. Then rent the rest at a lower rate from the government or housing association.
- Help to Buy Equity Loans. First time buyers looking to buy a newbuild home can borrow 20% of the home value as a government loan. This loan is interest-free for the first five years.
- First Homes Scheme. It helps first time buyers buy a new build property at a discounted price in England.
Good to know
In short, all that matters is that you can afford the repayments. There is not a set wage you need to earn to get a mortgage. If you can prove that you’ll be able to repay your mortgage long term, your income shouldn’t stop you getting a mortgage.
Let’s look at the details
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When looking at your mortgage request, lenders will mostly focus on three factors.
- Your income – including your annual salary.
- Your outgoings – any loans or credit card payments may affect how much you can borrow.
- Monthly repayments – your mortgage is usually offered at a fixed rate for a set period. So lenders may assess whether moving to a higher interest rate would affect your ability to repay.
But they’ll also consider other factors, such as:
- Deposit size
- Extra sources of income
- Savings
- Credit history
- Living costs
- Type of home you want to buy.
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It’s still important to think about what you can afford, both now and in the future. Remember, there are many costs attached to applying for a mortgage. This includes legal and conveyancing fees and insurance.
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