Getting a mortgage can be a daunting process, especially if you have a low or complex income such as self-employed or contractor. Lenders look at a lot of things when checking your mortgage application - this includes verifying your income.
Mortgage lenders will need to assess and verify your income as part of the application process. They need to make sure you'll be able to afford the monthly repayments without struggling.
The way you show your income will depend on whether you’re self-employed, or employed by a business that’s not your own.
In this Guide, you’ll find all the information about making a mortgage application with a low income, plus links to other useful Guides to help you with your mortgage application.
Yes, it's definitely possible to get a mortgage even if you have a low income. It's harder, but not impossible. Different mortgage companies have their own criteria for lending. The type of mortgage you're getting and how much you want to borrow will also determine whether you get accepted.
Mortgage companies will carry out an affordability check to see if you can manage the repayments without getting into financial difficulty. They won't want to risk missed payments - or worse, repossession.
As part of your mortgage application, they’ll examine your total budget and the size of the mortgage you want, to check if you can cover:
The mortgage repayments
Your household bills
Any other living costs
They’ll also factor in how you'd manage if your circumstances changed or if interest rates were to rise.
You may be worried about passing a mortgage lender's affordability checks. Some big banks and high street lenders might turn you down if you have a low or complex income. In this case, you'll need a specialist mortgage broker who knows the market and which lenders will be most likely to accept you. A broker will make your application look as good as possible to potential mortgage companies. If you need a mortgage but are worried about getting accepted with a low income, make an enquiry here.
Your earnings are the most important requirement when it comes to your mortgage application, but many lenders will look at other sources of financial stability when it comes to looking at your mortgage application such as child support, or disability benefit. If you’re a contractor or freelancer, some lenders might also be willing to consider your savings if you have enough money in the bank. Each mortgage company is different. That's why it's a good idea to work with a specialist mortgage broker. Someone who knows the market, knows how to make your application look good, and who knows which lenders are likely to accept you. Get matched to your perfect broker by making an enquiry.
As part of your mortgage application paperwork, you’ll need to provide some documentation to prove your income. These include:
Proof of identity - a current passport or driving licence
Physical bank statements - usually from the last three months
Payslips - usually three months, but it varies from lender to lender
SA302 - usually two or three years' worth if you're self employed
P60 - if you get bonuses alongside your income
Utility bills - dated within the last three months and must show your name and current address
Council tax bill - the most recent one
It might take a while to collate everything you need, so it’s good to make a start as soon as you can.
When you apply for a mortgage, you'll need to prove you earn what you say you do. Lenders will then work out what kind of mortgage you can afford. Different lenders have different criteria for approving you, but they'll usually assess the following:
Income – your regular cash flow
Credit report – they’ll be prefer a positive credit history
Assets – anything that could offer financial stability
Deposit – how much you've been able to save
When you get a mortgage, your mortgage legal document is underwritten. This means you and your lender enter into an agreement where they grant you a loan, and you agree to pay it back.
What do I need to provide a mortgage lender if I’m self-employed?
If you're self-employed, proving your personal income can be trickier than if you were an employee. After you've worked out all your costs, a lender might not be convinced that your earnings will cover the mortgage. We don't think that's fair, which is why we developed a solution.
If you're self-employed, you'll need to provide the following on your mortgage application:
A SA302 or tax year overview (a summary of your reported income, provided by HMRC after you've submitted your tax return - find out how to get it)
Signed company accounts (how far back you need to go will depend on the mortgage company)
An accountant’s reference
Remember, if you’re a limited company director you’re classed as self-employed in the eyes of a mortgage lender. Same goes if you’re employed in a Construction Industry Scheme (CIS) job role. A mortgage broker will be able to advise you of how you need to prove your income in both of these cases.
There are five million self-employed people in the UK, with the number increasing since the start of the COVID-19 pandemic. When you're self-employed, your income isn’t as straightforward as it would be if you were on a salary. This can sometimes make getting a mortgage difficult, as some lenders just aren't set up to deal with complex incomes. We don't think that's fair. That's why we specialise in getting mortgages for people who don’t fit the typical mortgage applicant mould. You can read more in our Guide: The Self-Employed Mortgage Guide.
It’s possible to get a mortgage without proof of regular income, but it’s more difficult than if your earnings were straightforward. 73% of freelancers think mortgage lenders will discriminate against them because of their employment status, with one in five prepared to quit their current work to make getting a mortgage easier. If you’re a freelancer or contractor, you may struggle to provide proof of stable income, but getting a mortgage isn’t impossible. Most big banks are unlikely to approve you without evidence of income, but there are some specialist lenders who may be willing to consider you on a case by case basis.
You can read more about mortgage lenders’ criteria and how they verify your income in our Guide: What Mortgage Lenders Look For in Mortgage Applicants.
Each lender is different, but most will want to check your employment. Submitting your payslips is usually enough proof, but some mortgage companies may call your workplace to check the salary information you've given is correct. This doesn't happen often - usually only when they need to clarify something in your application.
Yes, some lenders will contact HMRC using the Mortgage Verification Scheme. The scheme was created to tackle mortgage fraud, and lets lenders get in touch to check the numbers on your mortgage application match HMRC records. This isn't ideal if you're a freelancer or contractor and have used your gross contract rate on your mortgage application. A lot of mainstream lenders don't have the expertise of dealing with complex incomes, which is why it's a good idea to use a specialist broker. A broker will be able to match you with a lender who's dealt with people just like you. You can read more on our Self-Employed Mortgage page
It’s never a good idea to lie on any type of loan application, especially for a mortgage. Providing fake documents or trying to cover up aspects of your financial history may not seem like a big deal, but it can be seen as mortgage fraud. This is a serious matter which could mean losing your home, facing a hefty fine, or even prison time. It's just not worth it. We work with specialist mortgage brokers who deal with people just like you. They'll know how to get you the best deal, and will work with specialist lenders who'll be likely to approve your mortgage. Get started by making an enquiry.
Getting a mortgage when you have low income can be a challenge, but it’s not impossible. There are other steps you can take to give yourself the best possible chance of being accepted.
Check your credit score
Along with your income, lenders will be looking at your credit score. Lenders use this score to see how risky you are to lend to. If your income is low but you have a good credit rating then this will work in your favour. Check it regularly (we recommend checkmyfile) and do all you can to keep the number high and your record looking good. Get simple credit tips in our Guide: How to Improve Your Credit Score Before a Mortgage.
Get to grips with your income
Compared to someone with a salary or fixed income, the amount you’ll be able to borrow can be tricky to calculate. Lenders try to tackle this by looking at your annual income from the last three years and will take an average or lowest figure to work out how much you’ll be able to pay back. Start going through your accounts to get an idea of numbers. You can then use a Mortgage Calculator to see how much you could potentially borrow.
Choose the best time
Timing is everything. If you can, it’s best to wait until your income is more stable (for example if you’re working on a long-term project) before submitting your application. You want to look as good as possible to potential lenders.
Show off your work
Having repeat customers or long-term contracts will prove a certain level of stability. Showing potential lenders your track record and earning potential will make you more appealing as a mortgage applicant.
Put down a bigger deposit
If you’re a first time buyer, putting down more money upfront will do more to offset the risk for potential mortgage lenders. It also shows you’re a good saver, and will open you up to more competitive deals.
Work with a mortgage broker
The mortgage market is big. It can be especially overwhelming if you’re worried about low income. Most of the low income mortgages aren’t available to you directly as an applicant, they’re only available through brokers. A specialist broker knows the whole of the market, will know which lenders are most likely to accept you, and will be able to make your application look as good as possible. You can read more in our Guide: 6 Reasons You Should Work With a Mortgage Broker.
If you’re ready to be a homeowner but are concerned about low income, there are a number of government schemes available to help you buy a property.
Help to Buy
Help to Buy is where the government grants you an equity loan to put towards the cost of a new-build home (up to 20% of the property price). You can get a Help to Buy mortgage with only a 5% deposit - a good option if you can’t save much money and want a newly-built home. Read more about Help to Buy
Right to Buy
The Right to Buy scheme allows council tenants in England to buy their council home. If you qualify for Right to Buy, you'll be able to buy your home at a discount. Most mortgage lenders will then accept your discount as a deposit. Read more about Right to Buy
Shared Ownership is where you buy part of a property from a council or housing association, and rent the rest. You take out a mortgage on the part you're buying, then pay a reduced rent on the part you don't own. You can buy some or all of the remaining property share later on. Specific shared ownership schemes are also available for people with disabilities and older people Read more about Shared Ownership
Over 13 million people in the UK are classed as low income, so you'd think the mortgage world would keep up. Being low-income can make getting a mortgage complicated. We don't think that's fair, so we developed a solution.
Our platform uses a clever algorithm to match you to the perfect low income mortgage broker for your unique situation. Someone who’s up for the challenge, and has a proven track record of making mortgages possible for people just like you. Get started
50% of mortgages for people who are self-employed or have bad credit aren’t available directly to you. They’re only available through specialist brokers. Using our platform guarantees you’ll be matched with a broker who has a proven track record of making mortgages possible for people like you. Less processing, more understanding.
Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.