First things first, it's not gonna be a walk in the park.
Students, whether domestic or international, often face higher barriers when getting approved for a home loan in Australia. So while you're not outright excluded from the market, several structural and financial factors make it significantly difficult to get the green light from lenders.
Banks and other mortgage lenders are legally required to assess whether a would-be borrower can reasonably afford the loan without undue hardship. This means your income, spending habits, and ongoing expenses will be scrutinised - this applies to everyone, including students.
Your repayment capability will also be tested at a buffer rate, typically 3 percentage points above the actual interest rate, to determine whether you can manage it.
Between saving for a deposit when you only rely on limited or irregular income and navigating bank assessments when you may have little formal credit history or a "thin" credit profile, getting your foot onto the property ladder can be a challenging endeavour, not to mention a serious financial commitment.
Can a student apply for a home loan in Australia
Both local and international students can apply for a home loan in Australia, as long as they meet the other standard requirements. This includes being at least 18 years old and having government-issued proof of identification (passport or driver's licence) and a source of income.
Domestic students
Australian citizens and permanent residents who are students can apply for a home loan. However, while age and residency boxes may be ticked, the big hurdle is usually income.
As with every would-be borrower, many lenders want to see a stable, ongoing income and a good credit history, which some may not have yet. A steady income often comes from full-time employment, which may be difficult for a full-time student to juggle.
Even if you receive regular allowances from scholarships or your parents, lenders generally do not consider them an acceptable source of income. However, students with part-time or casual work, a history of saving, and responsible money management can still be in the running. Some lenders may also accept Centrelink benefits as income for a mortgage application.
International students
Foreigners studying in Australia can also get a home loan Down Under, but it can be a bit tougher.
Stricter lending conditions usually apply to international students, which could include higher deposit requirements and proof of stable income within the country. If you are an international student holding a Student Visa (Subclass 500), you may be perceived as higher risk by lenders due to the temporary nature of your stay in the country.
Here are the following types of Visas that are generally accepted for a loan:
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Student Visa (Subclass 500)
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Skilled Recognised Graduate Visa (Subclass 476)
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Skilled Graduate Visa (Subclass 485)
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Skilled Regional (Provisional) Visa (Subclass 489)
In some cases, having a local co-borrower (such as a partner) or guarantor may increase your chances of getting approved for a home loan.
Foreign Investing
In many cases, foreigners are banned from buying existing properties, with only new builds allowed. This means a new house likely far out in the suburbs in a new estate or a new apartment in a building closer to cities and metro areas. This is done to promote the construction of new properties and supply.
If you are not a citizen or permanent resident, it can be very difficult to buy residential real estate in Australia. All applications are processed through the Foreign Investment Review Board.
Challenges students may face when applying for a home loan
By itself, being a student doesn't impact your eligibility for a home loan, and therefore, becoming a homeowner. However, you will have to meet the usual requirements (plus a few additional conditions, in some cases) that can be tough to meet if you're still studying.
Limited or unstable income
The first thing a lender will assess is your ability to service the loan. This means having a stable, regular income from full-time employment to cover monthly repayments. That said, casual or part-time work may not be enough to satisfy their serviceability criteria.
Some non-bank lenders may offer specialised mortgage products for borrowers employed in casual or part-time jobs, or have non-standard income streams (e.g., freelancers) - basically those who fall outside the "prime" lending criteria of major banks. These are called low-doc loans and may have higher interest rates. However, you may still have to demonstrate a consistent flow of income over a certain period.
You may also seek the help of a specialist broker with experience working with students to find a suitable product for you.
See Also: Borrowing Power Calculator
Insufficient credit history
Many students haven't yet built a strong credit profile. With no history of credit cards, loans, or long-term bills in their name, lenders struggle to assess the student's reliability as a borrower.
This lack of credit history - often referred to as a "thin file" - can be just as problematic as bad credit. Lenders may either reject the application outright or offer a loan at a significantly higher interest rate.
If this particular hurdle stands in your way toward becoming a homeowner, start by establishing a good credit history.
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Have at least one utility bill (e.g., electricity, gas, Internet, etc.) in your name. This applies even if you're living in a share house as long as you're on the lease. Just make sure your housemates pay their share on time.
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Have a postpaid phone plan in your name and pay it off on time.
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Set up direct debits or reminders to ensure all debts and bills are paid by the due date to avoid negative marks.
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Avoid frequent credit applications; if you're declined for one product, don't immediately apply for another, and find out why and address it first.
Did you know?
You are entitled to a free credit report once a quarter from the major providers - Illion, Equifax, and Experian. You can also check your score more regularly.
Low or no savings for a deposit
Saving for a substantial deposit can be challenging without full-time employment. Ideally, you need to fork over a minimum deposit of 20% of the property's purchase price (especially if you're a non-resident) to avoid paying lenders mortgage insurance (LMI).
However, some lenders may accept as little as 5% for domestic borrowers buying their first home using the Australian Government's Home Guarantee Scheme (HGS), explained more below.
Typically, lenders will also want proof that your deposit came from "genuine savings", which means money saved gradually over time or held untouched for a minimum period. Gifted funds are generally unaccepted unless they've been in the account long enough to demonstrate financial responsibility.
Visa restrictions (for international students)
Temporary visa holders, such as international students, are considered high risk due to their non-permanent residency status. If a lender approves your application, they may impose additional conditions such as shorter loan terms, higher interest rates, and larger deposit requirements.
International students buying a property in Australia are also required to get approval from the Foreign Investment Review Board (FIRB).
Temporary residents are restricted to certain types of property to ensure their investment does not impact housing supply for local buyers. Applying for FIRB approval also comes at a cost, which can go up to a few thousand dollars depending on the property's purchase price.
How to improve your home loan approval chances
Certain strategies can enhance the likelihood that your home loan application will be approved.
Have a steady income (or apply with a partner working full-time)
Having a full-time job and staying in it for at least three to six months can greatly enhance your chances of home loan approval. But if it's not feasible due to your circumstances and schedule, you may consider getting part-time employment or casual work. For non-full-time roles, however, you may need to stick to the same employer for at least six months or longer.
Alternatively, you may opt for the joint application route for your home loan if you have a partner with a steady job. Lenders assess the household income, which is why it's generally easier for two applicants to be approved instead of one.
For international students, a partner who is an Australian citizen or permanent resident can strengthen your application. Lenders may view the combined income and the partner's stable residency status favourably, potentially improving loan terms and approval chances.
Have a guarantor
Lenders are more likely to approve your loan application if the risk is shared, and having a guarantor provides an extra layer of security that makes them more willing to offer you a loan.
A guarantor could be your parent or a close family member who agrees to take responsibility for repaying the home loan if you fail to do so and offer up their property as security. This can, however, present a risk to the guarantor as they could lose the property in a worst-case scenario.
Having a guarantor, you may be able to borrow more than you qualify for and skate around the 20% deposit requirements to avoid paying LMI.
Consider interest-only home loans
An interest-only (IO) home loan can be a practical short-term option if you're a student buying a home but have limited cash flow.
With an IO home loan, you only repay the interest on the amount borrowed for a set period - usually up to five years - before switching to principal and interest (P&I) repayments. This makes your monthly repayments lower initially compared to a standard loan, thus providing you with greater cash flow flexibility.
Read Also: Home Loan Types Explained
However, note that you don't reduce the principal amount during the interest-only period, which can cost more in total interest over the long term. Additionally, once the interest-only term ends, repayments can increase significantly.
Ultimately, IO loans can offer short-term affordability, which is beneficial for students with limited finances, but they require careful planning and exit strategies.
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Use the Home Guarantee Scheme
If you're buying your first home, you may be eligible for the Home Guarantee Scheme (HGS), such as the First Home Guarantee (FHBG), which addresses some of your biggest barriers to entry.
The HGS is a federal government initiative that supports eligible home buyers by guaranteeing part of their loan. This means you may be able to buy a home with as little as a 5% deposit without having to pay LMI, which is typically required if your deposit is below 20% of the property's purchase price.
Read Also: Home Guarantee Scheme Explained
There is nothing in the HGS criteria that outlaws students from applying, though you still have to fulfil the following standard requirements:
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Must be an Australian citizen or permanent resident
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Must be at least 18 years of age
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Must be a first home buyer or a home buyer who hasn't owned a property in Australia in the past 10 years
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Must live in the purchased property (owner occupier)
Single applicants, married or de facto couples, and joint applicants (i.e., friends, siblings, and other family members) may apply for HGS' First Home Guarantee and Regional First Home Buyer Guarantee schemes.
You may also check if you qualify for a First Home Owner Grant in your state or territory. This program provides cash grants to first-time home buyers who meet the respective state/territory's criteria.
Buy a property you can realistically afford
Buying a home is one, if not the most, expensive purchase you'll make. And if you're still studying, it may be best to buy a property within your means.
Choose a property that aligns with your current income, lifestyle, and long-term financial goals. Prices vary depending on where in Australia you're looking to buy. As at 31 March 2025, the national median dwelling value in capital cities is over $900,000, according to CoreLogic. In regional areas, it's more than $666,000.
Assuming you're buying a $750,000 home in the city, you'd need a 20% deposit of $150,000 to skate around paying LMI. Say you got a 5.70% p.a. principal and interest mortgage for the remaining 80% ($600,000) over a 30-year loan term, you'd be looking at paying $3,482 monthly. That's a huge amount you have to squeeze into your budget, especially if you're still a student.
See also: InfoChoice Home Loan Calculator
Further, just because a lender is willing to approve a certain amount doesn't mean you should borrow the full figure. Overcommitting can lead to mortgage stress or even default. Aim to keep your repayments at a manageable percentage of your income (below 30%). This may limit you to cheaper apartments, which come with their own considerations.
Should you buy a home while studying or wait until after graduation?
This largely depends on your current financial situation and other personal circumstances.
Buying a home while you're still studying can offer long-term benefits, such as entering the property market early and avoiding further house price rises. However, it also comes with significant financial risks, not to mention overall stress, especially if your income is low and unstable and you have to juggle responsibilities as a student and a homeowner.
If you're an international student, you'll also face stricter requirements, higher upfront costs, and possibly limited loan options and unfavourable rates and terms.
In most cases, it is better to wait until after graduation to buy a home. After graduation, you're more likely to secure full-time employment, which improves your borrowing capacity, helps build a consistent credit history, and enables you to save for a larger deposit.
However, if you financially can, and you have family financial support and access to a guarantor, buying while you're still studying could be viable.
Ultimately, the best time to buy depends on your financial readiness, not just your student status or age (you may want to be a homeowner while still relatively young). Waiting can reduce risk and give you more flexibility, but early entry into the market may pay off if you're prepared.
Header and in-text images by Buro Millennial, RDNE, cottonbro, and Yan Krukau on Pexels
