Do you receive Family Tax Benefits (FTB) from Centrelink but aren’t sure what the bank will make of this income when you apply for a home loan?
Are family tax benefit payments considered as income?
FTB payments are government benefits designed to help Australian families who earn a low annual household income to cover basic living costs for them and their children.
There a number of lenders that will accept FTB Part A and B as supplementary, or even your sole source of household income, when assessing your home loan application.
As an extension of FTB, there are even some lenders that will take into account any benefits you receive through Centrelink’s Large Family Supplement scheme.
In order for a bank to accept FTB and Large Family Supplement income, you’ll have to meet standard lending requirements regarding your income, asset position, credit history and your overall capacity to pay back the home loan.
In addition to this:
- You will need to provide your most recent Centrelink statement: This means providing all pages of the statement, including the blank ones. You can can download a statement from the Department of Human Services website via your user portal.
- The older your children are, the fewer lenders will accept your FTB income: This is particularly true of children over the age of 11. Despite this, there are actually some specialist lenders that will accept 100% of your FTB payments regardless of the age of your children.
To get a free assessment for a Family Tax Benefit home loan, please call us on 1300 889 743 or complete our free assessment form today.
How much can I borrow?
There aren’t specific borrowing limitations if you receive Family Tax Benefits. The amount you are eligible to borrow will be determined by your overall income (plus the benefits you receive from Centrelink) and current interest rates.
For banks, it all comes down to the risk of your application and it applies to all types of mortgages, not just Family Tax Benefit home loans.
To get a pretty good idea of how much you can borrow, here’s what you can do:
- Based on your latest Centrelink statement, work out your fortnightly income.
- Multiply this amount by 26 to find your annual tax free income.
- Based on you or your partner’s last payslip, calculate your annual taxable income.
- After that, use the ‘How much can I borrow?’ calculator to get a pretty accurate estimate of your maximum borrowing capacity.
Call one of our mortgage brokers on 1300 889 743 or complete our free assessment form to find out how much you can borrow with a Family Tax Benefit home loan.
Can I still get the same interest rates?
The great news is that if you receive Family Tax Benefits as a supplementary income, you can get the same interest rates as someone applying for a standard home loan!
If you receive FTB as your sole source of income, for example, you’re a single parent with children, you’ll likely need to go through a specialist lender. In this case, you may be charged a premium of anywhere between 1.5-2% above the standard variable rate.
Keep in mind, we will endeavour to get you approved with a major lender in order to avoid higher interest rates.
Can I still get the same home loan packages?
Yes, you can get the same mortgage packages with all of the same features as a standard home loan.
The only exception is if you receive FTB benefits as your sole income and we need to go through a specialist lender. In this case, the home loans on offer would be basic packages meaning you’ll have access to a redraw facility but no extra features like an offset account, a credit card or a line of credit.
If I’m a single parent, do I need a job?
If you’re a single parent, family tax benefits alone may not be enough for the bank to be satisfied that you can afford to make regular mortgage repayments, otherwise known as meeting “serviceability”.
Family Tax Benefits benefits are provided to cover basic living expenses to provide for you and your children: there really isn’t the capacity to meet serviceability requirements.
However, we may be able to help you qualify for a Family Tax Benefit home loan if you have any of the following:
- An existing property: You’ll either need to own the property outright or have significant equity.
- A significant deposit: You’re looking at around 50% of the property value as a deposit.
We often help people who have recently divorced and have been paid out by their ex partner and are currently receiving FTB payments to look after their children.
If this is you, complete our free assessment form and we can let you know if you can get a Family Tax Benefits home loan!
What if I receive a different type of Centrelink benefit?
We may be able to help you if you receive child support/maintenance payments from Centrelink so go to the Mortgage With Centrelink Benefits page for more information.
Service, age and widow pensions may also be accepted as extra income by some lenders so check out the veteran pension home loan page for qualifying criteria.
Unfortunately, we are unable to help you qualify for a home loan if you receive any of the following Centrelink benefits:
- Carer’s Allowance / Payment.
- Disability Support Pension.
- Foster Care Allowance.
- Pension: Age.
- Pension: Overseas.
- Rent Assistance.
- Parenting Payments.
- Pharmaceuticals Allowance.
The reason for this is that many of these Centrelink benefits are provided by the government for a specific purpose and aren’t ongoing, that is, they are only paid for a short to medium term period.
FTB benefits, on the other hand, are paid regularly and often for many years until your children leave your care or either you or your partner begin working again and earn enough to meet your costs of living without the need for Centrelink assistance.
Case study: Family Tax Benefits as supplementary source of income
Michael and Julie are married with two children aged 3 and 5.
As a single income household, Michael earns $50,000 a year as a council worker while Julia stays at home to look after the kids.
With no existing debts, a clear credit history and the fact that their children are under 11 years of age, Michael and Julie are eligible for a home loan with a major bank.
Because they have a 10% deposit to cover the genuine savings requirement, they are in as position to borrow as much as $230,000 for a property.
How does the FTB scheme work?
If you’re eligible to receive Family Tax Benefits (you can find criteria on the Department of Human Services website), you can choose to receive payments through fortnightly instalments or an annual lump sum.
FTB Part A is a payment you receive for each child while Part B are payments designed to help single parents and families with one main income.
The amount you can claim for both FTB Parts A and B really depends on your actual family income, how many children you have and their age.
- Depending on Centrelink’s child support assessment and whether you or your child have been outside Australia for more than 6 weeks, the base rate for each child is $57.68 per fortnight.
- 0-12 years of age (maximum fortnightly payment rate): $179.76.
- 13-19 years of age: $233.94.
- 0-19 years of age: $57.68 (specific requirements apply).
- A supplement of up to $726.35 for each child is paid after the end of the financial year once your payments have been balanced.
- Payment depends on age of your youngest child.
- Under the age of 5 (maximum fortnightly payment rate): $152.88.
- 5-18 years of age: $106.82.
Disclaimer: The above information regarding Centrelink’s Family Tax Benefits is correct as at 16 October 2015. Benefits and qualifying criteria are regularly updated and will vary depending on your circumstances and a comprehensive assessment by Centrelink.
The Department of Human Services has a really easy-to-use FTB rate calculator that provides more accurate figures.
There are other benefits you may be eligible for and specific requirements for receiving particular benefits so please visit the Department of Human Services Family Tax Benefit website for important information.
Speak with a mortgage broker today
There are only a handful lenders that will accept Family Tax Benefits as a source of income when assessing your ability to qualify for a home loan.
We’re specialists in helping people who have an income source that is out of the ordinary qualify for a home loan.
Call us on 1300 889 743 or complete our free assessment form today to discover if you’re eligible for a Family Tax Benefit mortgage.