What to know when applying for a home loan while pregnant

It is unlawful for lenders to inquire about an applicant's pregnancy when they are applying for a mortgage. Such inquiries may be considered discriminatory.

The legislation is explicit in prohibiting differential treatment based on an individual's parental or caregiving responsibilities. Therefore, any attempt by a lender to ask such questions could constitute a violation of the law. 

That being said, lenders also have an obligation to make sure that you can adequately repay your loan. One of the ways lenders determine whether or not you can meet these financial requirements is by asking about your past, current and future financial situation.

Lenders may consider parental leave as a time when you are not actively employed, which could raise concerns about your ability to make mortgage repayments. They want to ensure that you have a stable and reliable source of income to meet your financial obligations.

However, it's worth noting that being on parental leave doesn't necessarily mean you won't be able to secure a home loan. There are factors that can work in your favour, such as applying for the mortgage jointly with someone else; having additional sources of income, like rental properties or investments; or having substantial savings.

The paid parental leave scheme - which provides 20 weeks off at minimum wage - was expanded to include additional Dad and Partner Pay entitlements as part of last year’s federal budget, meaning both parents can now split their leave. The amount of paid parental leave will increase by two weeks’ each year, to a maximum of 26 weeks by 2026/27.

Certain banks or lenders may have stricter policies that could limit your options. Before going on parental leave, it might be sensible to consider strategies that can help you meet your repayment requirements. It might be sensible to explore different lenders and discuss your situation with mortgage brokers who can provide guidance and explore the options available.

Being pregnant doesn't necessarily have to impact your home loan application but this will depend on your individual circumstances. here are many ways a pregnancy can distract or deter the application process. For example, there may be times when you are unable to attend in-person meetings or feel too ill to perform some of the tasks.

It's worth noting that lenders may calculate your future expenses based on the size of your future family, which could change the loan you're approved for. Being prepared offers the greatest opportunity for a successful application.

There are some specific documents that lenders may ask you to produce in order to process your home loan application. Most lenders will ask for evidence of your employment and income. You may be asked to provide:

• A letter from your employer outlining the terms of your parental leave and highlighting the return date and your intended employment status when you rejoin work - will you be coming back full time, part-time or as a casual?
• Payslips from the last three months before going on parental leave.
• Documents detailing your living expenses, including utilities, childcare and healthcare.

The policies and criteria of banks often evolve over time, so it's best to directly contact the bank or lender you wish to apply with for the most accurate and up-to-date information regarding mortgage applications for pregnant buyers or those on paid parental leave.

By working out how much you can borrow, you can calculate the size of a home loan you can afford. Enter your income and expenses below to estimate how much you could borrow for a home loan with RateCity's home loan borrowing power calculator.

Lenders evaluate loan applications on a case-by-case basis. However, you may be able to improve your chances of being approved on your home loan while pregnant if you consider the following:

• Be realistic: Review your current income and expenses carefully while zeroing in on an amount to borrow. Think about how your life will be affected during parental leave if you have to live on one income.
• Be ready with at least 20% deposit: Most lenders will not approve a loan that exceeds 80% of the property value. If you have a 20% deposit ready, your application has a greater chance of being approved. Plus, you might not have to pay lenders mortgage insurance (LMI).
• Shop around: Before submitting a full application, talk to the prospective lender. Let the lenders know that you’re on parental leave, as some lenders could reject your home loan application if they get to know this after you have submitted all documentation. A rejected loan application does not look good on your credit score.
• Talk to a mortgage broker: A mortgage broker can have a good idea about which lenders are likely to accept your home loan application. Talking to a broker before deciding on a loan may save you a lot of trouble, stress and money.