Can a temporary resident get a home loan?

Temporary residents holding a 457 visa may be able to obtain a home loan in Australia, though you’ll need to meet a few eligibility and financial requirements before you can make an application.

When you apply for a home loan, you’re agreeing to repay, with interest, the money you’re borrowing over an agreed term, often between 20 and 30 years. If it’s uncertain whether you’ll be residing in Australia for the long term, a lender may be less likely to approve your mortgage application, as there’s a risk you may not be able to reliably meet all of your loan repayments.

Types of loans available for temporary residents

Home loans for temporary residents in Australia are standard packages similar to those available to permanent residents and citizens. The differences may be in the deposit requirements and maximum loan amounts. Based on your employment stability and income, you may only be able to borrow up to a certain percentage of the property value as the loan amount.

The types of loans may include:

• A basic loan with a lower variable rate of interest and a loan term of 30 years, with the option to pay interest-only for up to a total of 15 years.
• A standard variable home loan with a competitive rate of interest, plus a redraw facility that allows you to withdraw any extra repayments you make.
• A fixed-rate loan for a rate of interest that remains constant over a one to five year term.

Is foreign income considered in your loan application?

Temporary residents may earn an income through investments, pension, or a business from a foreign country, and use this income to help pay off an Australian home loan. However, not all lenders accept foreign earnings as part of your income to determine loan eligibility. Some institutions may consider this income if you’re an Australian resident for taxation purposes and declare the foreign earnings on your Australian income tax return.

There may be a few lenders that accept international tax returns, pension statements, and rent receipts as income to determine your home loan eligibility. Generally, institutions limit this income to 80% of your borrowing power to allow for fluctuations in foreign exchange rates.

You should check with lenders about non-resident home loans to determine your eligibility.

To assist with your home loan application, you may want to consider the obstacles you may face and how you might improve your chances of becoming a successful candidate for a mortgage in Australia.

How much can you borrow for a home loan?

To determine your home loan amount, lenders will typically examine the type of visa you hold, your employment status and stability, local income and overall financial situation. Generally, the applicable limits are as follows:

• If you work under the short-term skilled occupation list (STSOL) for one or two years, the amount you can borrow is limited to 80% of the property’s value.
• If you have stable employment with a steady income and work under the medium and long-term strategic skills list (MLTSSL) for four years, lenders may grant 90% of the property value as a loan amount.
• Irrespective of your visa status, if you are married or in a de facto relationship with an Australian citizen or permanent resident, you may be eligible for a loan of up to 95% of the property value.

As a temporary resident, eligible to apply for a home loan, you’ll generally receive the same terms and conditions as those available for permanent residents and Australian citizens with no additional monthly fees or charges. In some circumstances, lenders may allow you to delay your mortgage payments or use an offset account.

How to apply for a home loan as a temporary resident

You will require approval from the Foreign Investment Review Board (FIRB) before applying for a home loan. You’ll need to submit an electronic application via the Australian Taxation Office’s website and pay fees.

There’s a statutory timeframe of 30 days for making a decision on an application. It can take up to five days for funds to be cleared from your financial institution before being sent to the ATO. Applications are unable to be fast-tracked or escalated for priority processing.

If you meet these requirements, you may be able to apply for a home loan in the same way as Australians or permanent residents do. See RateCity’s guide on how to apply for a home loan to understand the steps and processes involved in making an application.

It’s important to note that temporary residents cannot take advantage of the First Home Owner’s Grant (FHOG) or any other government benefits unless a property is purchased jointly with an Australian citizen or spouse that’s a permanent resident.

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