Can You Get a Mortgage on Benefits?

A lot of people today who are on long-term benefits might feel overlooked by lenders or worry that their income won’t be considered in the same light as employment or investment income – but that’s not true.

Whether your income comes entirely from benefits or just makes up part of your overall earnings, you can still be eligible for a mortgage and make steps towards achieving your dream home.

So, how can you get a mortgage on benefits, and what does the process look like?

In this article, we explain the A-Z on benefits and mortgages. From the different types of benefits lenders will accept, to what proof of income you will need and how your income will be assessed. By the end of this article, you’ll know exactly what and how benefits can be used to secure your mortgage. Let’s jump in.

What Types of Benefits Can Be Used for a Mortgage?

There are many different benefits that can be used for a mortgage, including long-term disability support, Personal Independence Payments (PIP), pension income, armed forces compensation, veterans benefits, and more. Lenders will look at each benefit in their own way, and whether it matches their criteria will often come down to how steady the payment is and how long it is expected to last.

Like most mortgages, the main concern of lenders will always be on your ability to repay the loan. With that in mind, different benefits will be treated differently depending on stability, longevity, and the lender’s unique policy. Some benefit types will provide reliable, long-term income that lenders will usually accept, while others are considered temporary or inconsistent.

Below, we outline which benefits are most likely to be accepted and which are rarely counted when applying for a mortgage on benefits.

Benefits That Are Commonly Accepted by Lenders

As a general rule of thumb, lenders will prefer and accept benefits that are both long-term and predictable. These payments are often used alongside other income sources, or as the main income for applicants, such as retirees or people with long-term health conditions, including:

• Long-term disability benefits
• Personal Independence Payment (PIP)
• Pension income, including state, private, or occupational pensions
• Armed Forces Compensation or Veterans disability payments
• Court-ordered child maintenance

Each of these forms of income are typically consistent and well documented, providing lenders with the confidence that repayments can be maintained.

If you’re concerned about your specific benefit allowance being accepted by your chosen lender, it’s always best practice to check with your chosen lender’s criteria or work with a trusted mortgage broker like Boon Brokers. Our dedicated mortgage advisers will be able to confirm and compare lenders that are likely to work with your situation, and can help you through the whole application from start-to-finish.

Benefits That Are Rarely Accepted

On the other hand, there are some benefits that are difficult for lenders to include in any affordability checks. This is usually because they are either short-term benefits, variable, or uncertain.

In short: Lenders cannot reliably assess or project income from short-term benefits over the long term, making it difficult to know whether it will continue in the future. These types of benefits can include:

• Short-term welfare support, temporary assistance, or payments with no clear continuity
• Universal Credit where the payments change month to month
• Unemployment benefits

While these lists provide an overview of generally accepted benefits, it’s important to note the value of understanding the intricacies of what lenders will and won’t accept. This is why working with a mortgage broker who understands which lenders are more flexible can make all the difference when applying for a mortgage with benefits.

At Boon Brokers, our dedicated mortgage experts will provide you with completely fee-free, whole-of-market mortgage advice. We will help you find and compare lenders who accept your benefits as income. We take the time to understand your unique circumstances, tailoring our advice to match you with the mortgage that meets your needs.

Can You Get a Mortgage on Universal Credit?

The short answer is yes, it is possible to get a mortgage on Universal Credit. However, lenders tend to be more cautious because Universal Credit can vary from month to month. As Universal Credit payments are designed to support living costs, they can be directly affected by your total income and personal circumstances.

As a result, lenders will usually only consider Universal Credit if it is consistent and ongoing, and is often assessed alongside other income sources, such as part-time work, pensions, or other accepted benefits.

Much like any mortgage application, the rule to follow is the more stable and predictable your total income, the stronger your application for a mortgage with benefits will be.

If you receive Universal Credit, you may improve your chances of approval by combining it with other income and showing evidence of stability over time. Documents such as award letters, bank statements, and proof of continuity will all help demonstrate your income reliability to lenders.

What Proof Do I Need to Show for Benefits Income?

Whether you’re relying on benefits for a mortgage or want to use a mix of benefit and employment income, lenders will want to see clear evidence that your income is consistent and reliable. Providing the correct documentation as evidence of your income and payments can help reassure lenders of your total affordability and strengthen your application as a whole.

The key word is income, and a lender’s main concern will be assessing your total affordability and risk as a borrower. With this in mind, providing documentation on income is about proving that you could make regular repayments and have sufficient long-term funding that will cover your mortgage repayments.

Here are the main types of income proof that lenders will typically require:

• Award Letters or Confirmation of Benefits

Official award letters from the Department for Work and Pensions (DWP) or other issuing bodies will show the type, amount, and expected duration of your benefit payments. For lenders, this is the primary document that will be used to verify your income stability — specifically for benefit payments.

• Bank Statements

Lenders will want to see a history of bank statements (typically several months, though the exact period may vary depending on your lender) showing regular payments of your benefits. These statements provide evidence of the benefits you receive, showing both the payment amounts and how regularly they are paid.

• Legal Documents for Child Support or Alimony

If part of your income assessment includes court-ordered child maintenance or alimony benefits, then lenders will want to see official legal documents. These documents will show the exact amount, the payer, and the regularity of the payments, providing your lender with all the information they need.

• Proof of Continuity

A main factor that lenders will be concerned with is how long any selected benefit income is expected to continue. For example, an award letter or any official statement showing that payments are expected to continue over a long period will help reassure lenders that your income will be stable throughout your mortgage term.

Ultimately, providing clear and organised documentation will bolster your application and help lenders accurately assess your borrowing power and overall affordability when applying for a mortgage with benefits.

Will All Lenders Accept Benefits as Income?

No, not all lenders will accept benefits and some may only accept a portion of your benefit income when assessing affordability for a mortgage. In addition, lenders will have their own unique criteria, meaning that the accepted benefits and rules that apply to those benefits can vary depending on the type and amount received.

With that said, there still are some lenders — both popular high street and specialist providers — who are more flexible when it comes to accepting benefits as part of your income. When searching directly for lenders that accept people on benefits, it’s important to remember that every lender will have their own criteria. Working with a whole-of-market mortgage broker can help you navigate this hurdle.

At Boon Brokers, our fee-free and whole-of-market access allows us to compare options across the entire UK mortgage market. We can help you identify lenders who are most likely to accept your benefits as income and guide you through every step of your application.

Can I Combine Benefits with Other Income to Get a Mortgage?

Yes, many borrowers will use a mix of earnings and benefits in their affordability assessment when applying for a mortgage. By combining earnings with benefits, applicants can improve their overall borrowing power while also demonstrating a greater reliability to lenders.

In short: Mortgage applications that show higher earnings alongside benefits will often be seen as lower risk. Naturally, a longer history of stable, long-term employment can further help lenders view the applicant as a dependable borrower.

It’s important to note that lenders will want to look at the full picture of your financial standing, rather than focusing on a single income type. As such, you can usually combine different income sources alongside your benefit income, such as:

• Employment Income: Either full-time, part-time, or self-employed work
• Rental Income: Any form of consistent payments from tenants
• Pension Income: Either State or private pensions can contribute to your overall affordability

Crucially, lenders will assess the total income to mortgage ratio by reviewing all reliable income sources. This helps them calculate what percentage of your income should go toward your mortgage and whether the repayments fit within their affordability criteria.

How Much Mortgage Can I Get If I’m on Benefits?

The exact amount you can borrow for a mortgage will wholly depend on your financial circumstances. Lenders will complete a full and comprehensive assessment of your total financial picture, including any benefits, earnings, and any other regular income, alongside your expenses and debts, to determine how much they are willing to lend.

After confirming your total affordability, lenders will calculate your borrowing power by applying an income multiplier. As a general rule of thumb, many lenders will allow you to borrow around 4.5x your combined annual income; however, this multiplier can vary depending on your financial circumstances and chosen lender’s criteria.

Below we have listed some of the main factors that will influence your borrowing power:

• Monthly Income

Your total monthly income, including benefits, wages, pensions, and any other reliable sources, will most likely be the starting point for lenders. In general, the higher and more stable your income, the greater your potential borrowing power could be.

• Debts or Financial Commitments

Against your total income will be existing loans, credit cards, or any other financial obligations. This creates what is known as a debt-to-income ratio and will provide the lender with an accurate idea of how much of your current income is already set aside for other loans. Lenders will assess your debt-to-income ratio closely to ensure you can afford the mortgage repayments alongside your other commitments.

• Credit Score

While sometimes overlooked, your credit history can play a key role in determining your eligibility and the interest rates you may be offered. Credit score is closely linked to reliability and risk assessment. A higher credit score demonstrates reliability and can increase your borrowing potential, while a lower score may limit options.

• Lender Criteria

Finally, every lender will have their own policies and criteria regarding benefits and income. Some may accept benefits as part of your total income, while others may place limits or require additional income to meet their affordability rules. Understanding your chosen lender’s policies can help you prepare your application and choose a lender that will maximise your borrowing potential.

An Example of Calculating Borrowing Power

Below we have provided a common example of how borrowing power works in practice:

Let’s say that you receive £10,000 per year from benefits and £27,000 per year from employment.

• Your total income would then be £37,000.
• Your other debt and financial commitments come to £3,000 per year.
• This creates your final income figure of £34,000 per year.
• A lender would then apply a 4.5 multiplier, resulting in your borrowing power being £153,000 (34,000 × 4.5).

Important Disclaimer: This is just an example calculation and your exact borrowing power will always be subject to credit history, debts, and lender-specific criteria. Not all lenders will use 100% of your benefit income when calculating affordability. Some may only include a portion, and this varies by benefit type. Benefits that are due to end when you purchase a property — for example, housing-related support — may not be considered at all. Lenders need to see that income will reliably continue throughout the mortgage term.

With that said, by understanding these factors, you can get a realistic view of your borrowing potential when applying for a mortgage on benefits.

Calculate Your Mortgage with a Trusted Fee-Free Mortgage Broker

Calculating how much you can borrow and finding a lender that accepts part or all of your income from benefits is not always straightforward and can feel overwhelming at times. Between affordability checks, lender criteria, and gathering the right paperwork, it’s easy to get lost on where to start.

A trusted mortgage broker can take the stress out of the process, helping you understand your borrowing potential and guiding you to lenders who are likely to consider your income.

At Boon Brokers, our dedicated mortgage experts provide a completely fee-free, whole-of-market service. With access to the whole market, we can compare deals across 100+ UK lenders, including those more flexible with mortgages on benefits, present your application in the strongest possible way, and guide you through every step from start to finish.

Looking to calculate your mortgage and explore all your mortgage options with confidence?

Contact Boon Brokers today and find a mortgage deal that matches your needs.