Can you get a mortgage while claiming benefits?
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At a glance:
If you claim Universal Credit or other benefits, you may still be accepted for a mortgage.
We will consider some benefits while looking at your income.
Lenders will look at income, spending, debts and credit history when you apply for a mortgage.
What benefits are considered by lenders?
Every mortgage lender is different and the benefits they accept will not be the same.
YBS may use 60% of the annual amount from the following benefits, as long as there is also accepted “earned income” on the application:
Disability Living Allowance
Scottish Child Disability Payment
Personal Independence Payment
Industrial Injuries Disablement Benefit
Carer’s Allowance
Contribution-based Employment and Support Allowance
Accepted parts of Universal Credit.
Personal Independence Payment (PIP) and YBS mortgages
For Personal Independence Payment (PIP), you must show that the payment is for someone who will live in the household or someone who is a carer (who will live in the household).
Other YBS rules around benefits
Other benefits have different rules:
Child Benefit
With a mortgage from YBS, this may be used when no applicant earns more than £60,000. If a child is aged 16 or 17, YBS will ask if the payment will continue (if the child stays in full-time education).
Foster carer income
YBS may use all current income for a long-term placement lasting until adulthood.
Guardian’s Allowance
YBS may use the full amount. The child must live in the property.
Special Guardianship Allowance
YBS may use the full means-tested amount if the child is under 18 and the award letter says the payment is expected to continue.
Some other benefits may only be considered by YBS following an individual review, including:
Disabled Person’s Tax Credit
Incapacity Benefit
Widowed Parent’s Allowance
Severe Disablement Allowance and payments under the Armed Forces Compensation Scheme.
Does universal credit income count as income?
Universal Credit can count as income for a mortgage, but there is no single rule followed by every lender.
Certain benefits might be accepted, while other may not be. It depends on who you apply for a mortgage with.
Universal credit and mortgages from YBS
We will consider Universal Credit when looking at the income of someone applying for a mortgage.
Not every part of a Universal Credit payment will be accepted. We won’t include the following as income:
Housing allowance
Service charge allowance
Child element for a child aged 11 or over
Children in childcare element.
Universal credit and other income
There will need to be other income on the application too – this is called “earned income”. An applicant can’t earn more from universal credit than from their “earned income”.
Your mortgage adviser will explain what is accepted as “earned income” on top of any benefits you receive.
What documents will I need if I apply for a mortgage with universal credit?
YBS may ask for the latest three months of bank statements and a Universal Credit award letter. These help to show that payments are being received and explain what each part of the award is for.
What else will a lender look at?
Benefit income is only one part of a mortgage application. A lender will look at lots of things when deciding if to offer a mortgage:
Income from employment, self-employment, pensions
Regular spending and bills
Loans, credit cards and other financial commitments
Childcare and maintenance payments
How many people who depend on the applicant financially
Mortgage deposit and the amount being borrowed
Credit history
Whether the income is regular and expected to continue.
Lenders may ask for documents such as:
Payslips
Bank statements
Benefit award letters
Evidence of self-employed income.
If a lender accepts benefits as part of your income, it doesn’t mean that an application will be successful. A lender will look at lots of factors before making any decisions.
The content on this page is for reference. It is not financial advice. For help with money issues, try MoneyHelper.
