Home Loan on Workers Comp? Here's How to Get Approved

For many Australians, owning a home is a cherished dream, but life’s unpredictability can sometimes make that goal seem out of reach. If you're currently receiving workers' compensation, you might be wondering if a home loan is still within your grasp. You're not alone—many people face this situation and have successfully navigated the mortgage landscape while on workers' comp. Let's explore how you can achieve your homeownership dreams, even if you're dealing with the financial complexities of workers' compensation.

Understanding Home Loans While on Workers' Compensation

Workers' compensation is a financial support system designed to assist Australians who are unable to work due to a work-related injury or illness. It typically covers medical bills and a portion of your lost wages. However, when it comes to securing a home loan, lenders may view workers' comp payments differently from regular income due to its temporary nature and potential instability.

Lenders assess your ability to repay a loan based on your income stability. While workers' compensation provides essential financial support, it doesn't always offer the long-term income security lenders prefer. However, this doesn't mean obtaining a home loan is impossible—it simply requires a strategic approach and understanding of the mortgage market.

Home Loan Options and Requirements

When applying for a home loan while on workers' comp, it's crucial to understand the various options and requirements that lenders might have. Here's what you need to know:

Interest rates in 2026 have remained relatively stable, with the average home loan rates ranging from 6.49% to 12% depending on the lender and the borrower's credit profile. As a potential borrower on workers' compensation, your financial stability and creditworthiness will be closely scrutinized.

Eligibility criteria may vary, but common requirements include:

• A stable financial history and good credit score.
• Evidence of ongoing workers' compensation payments.
• Additional sources of income or financial support.
• A significant deposit—usually between 10% to 20% of the property value.

Steps to Secure a Home Loan on Workers' Comp

Securing a home loan while on workers' compensation requires careful planning and preparation. Here’s a step-by-step guide to help you through the process:

1. Assess Your Financial Situation: Review your current financial standing, including your workers' comp payments, savings, and any additional income sources. This will help determine how much you can afford to borrow.
2. Improve Your Credit Score: A solid credit score can improve your chances of getting a loan. Pay off any outstanding debts and ensure all bills are paid on time.
3. Gather Necessary Documentation: Prepare documents such as proof of workers' comp payments, bank statements, and evidence of other income or savings.
4. Consult with a Mortgage Broker: At Esteb and Co, we have access to over 83 lenders. Our brokers can help you find lenders that are more likely to consider your application favorably.
5. Consider a Guarantor: If possible, having a guarantor can provide additional security to the lender and might improve your loan application’s success rate.
6. Submit Your Application: Work with your broker to submit applications to selected lenders and ensure all required information is accurate and complete.
7. Negotiate Terms: Be prepared to negotiate terms and interest rates with lenders—your broker can assist with this process to secure the best possible deal.

Tips and Considerations

Here are some expert tips to consider when applying for a home loan while on workers' compensation:

• Be Transparent: Clearly communicate your situation to potential lenders. Transparency can help build trust and improve your chances of success.
• Explore Different Lenders: Different lenders have varying policies regarding workers' comp. Use Esteb and Co’s extensive lender panel to find those more accommodating to your situation.
• Plan for the Future: Consider how long your workers' comp payments will last and have a plan for transitioning back to work or another source of income.
• Save Aggressively: The larger your deposit, the better your borrowing terms will likely be. Focus on accumulating savings to strengthen your application.

Frequently Asked Questions

• Can I use workers' compensation as income for a home loan?
  Yes, but lenders will scrutinise it closely as it is considered temporary income.
• Will my credit score affect my home loan application?
  Absolutely. A higher credit score can improve your chances of approval and attract lower interest rates.
• What if my workers' comp payments end?
  Lenders will want to see a plan for income replacement, such as returning to work or accessing other income sources.
• Can a mortgage broker help me?
  Yes, especially at Esteb and Co, where we can connect you with lenders more willing to consider your situation.
• Do I need a guarantor for a home loan on workers' comp?
  While not always necessary, having a guarantor can improve your chances of approval.