Home Loans for Teachers

How Much Can Teachers Borrow?

There are several options that you can choose from, which we explain below. Consider which is right for you depending on your personal situation.

Borrow up to 90% of the property value with NO LMI

This is the most appealing option for many teachers and educators because a 10% deposit is generally achievable, and avoiding Lenders' Mortgage Insurance (LMI) saves tens of thousands of dollars in upfront costs. Most lenders do not have a minimum income requirement for borrowing 90% of the property's value without LMI. The property must be a residential property and can be used as a Principal Place of Residence or as an investment property.

Borrow up to 98% of the property value (First-Home Buyers only)

If you are a first home buyer, you may be able to borrow up to 98% of the property value, with LMI included in the loan. Essentially, you need a 5% deposit on the property, and then you can borrow 95% of the value of the property as well as up to 3% for LMI which is consolidated into the loan. Speak to us about your specific circumstances to see if we can help you maximise your borrowing power up to 98%.

Borrow up to 110% of the property value

If you have someone willing to act as a guarantor on your mortgage, it allows you to borrow up to 110% of the property's value, including additional costs such as stamp duty and solicitor fees. This option can be highly advantageous, particularly for first-time buyers, as it eliminates the need for a large deposit and exempts you from paying Lenders' Mortgage Insurance (LMI), saving tens of thousands of dollars. A guarantor essentially uses the equity in their own home as security for a portion of your loan, enabling you to secure 110% financing.

However, while this setup can fast-track homeownership, it comes with significant risks. If you fail to meet your mortgage repayments, the guarantor's property could be at risk, and they may be required to cover the repayments or even face the possibility of foreclosure. It is essential for both the borrower and the guarantor to fully understand the potential consequences and seek financial advice to ensure this option is viable and manageable in the long term.

Do Lenders Consider Overtime When Calculating Income?

Yes, lenders will consider teachers' overtime when calculating income for home loans, but the extent to which it is counted can vary depending on the lender. Many lenders will only consider 80% of the overtime income, to account for the variability in overtime hours. Teachers and educators with consistent overtime or extra duties like tutoring or extracurricular activities may have a stronger case for including this income in their borrowing assessment, but lenders will usually require evidence of consistent overtime over at least 6 to 12 months.

Lenders will also assess how regular and reliable the overtime is, as they want to ensure it will be ongoing. As with all income assessments, teachers looking to include overtime in their home loan application should provide clear documentation, such as payslips or contracts, to prove their overtime income. For the most accurate advice, it's recommended that teachers consult with a mortgage broker. At EE Mortgages, we will help you find lenders that are more flexible in considering overtime income, and negotiate with them to maximise the amount you can borrow.

What If I am a Casual Teacher?

If you are a casual teacher, accessing LMI waivers may be more challenging, but it is still possible in certain cases. Casual employment is common for new or part-time teachers, and lenders are often cautious when assessing casual income. To calculate your serviceability, lenders typically annualise your year-to-date income but consider only around 40 weeks of work per year, rather than the full 52 weeks, as they assume time off during school holidays.

If you have been working in a casual position for at least 3-6 months and can provide at least three months' worth of payslips showing consistent income, some lenders may consider you for an LMI waiver. Some lenders may be more flexible with casual employees, especially in professions like teaching, which are seen as more stable. It's essential to demonstrate consistent income and secure employment, even in a casual role. Working with a top mortgage broker who specialises in home loans for teachers will improve your chances of approval.

Which Teachers are Eligible?

A wide range of educators are eligible for teacher home loans, including:

• High school teachers
• Primary school teachers
• School principals
• University lecturers
• University tutors
• TAFE teachers
• Child care workers
• Special needs teachers
• Trainers (within a professional capacity and related to Education)
• Student studying Education or Teaching
• Employees of the following organisations:
  • Government Schools (Primary, Secondary, Specialist)
  • Non-Government Schools (Primary, Secondary, Specialist)
  • Catholic Schools
  • Universities
  • TAFEs
  • Preschools and Kindergartens
  • Child Care Centres
  • Family Day Care Australia
  • Education Unions
  • Department of Education and Training
  • Private Colleges

If you are unsure whether you are eligible, contact us and we can help you with your situation. Even if you do not qualify for a teacher officer home loan, we can help you find the best mortgage for your needs.

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