Home Loan While on Maternity Leave: What Lenders Want to See in 2026

By Andrew Paterson

Applying for a home loan while on maternity leave can feel like pushing on a closed door. Your income has dropped, a baby is on the way and the lender wants proof of everything.

You can still get approved. Lenders assess applications from people on parental leave all the time.

What matters is knowing what they look for and which lender’s policy fits your timeline. Below we cover how assessment works, the documents you need and how a strong application comes together.

This article is general information only. It does not take into account your personal objectives, financial situation or needs and is not financial or credit advice. Entitlements, government schemes and lender policies change, so please seek advice specific to your circumstances before acting.

Can you get a home loan on parental leave in Australia?

Yes. Many lenders assess your ongoing capacity on your return-to-work income rather than your reduced leave income.

They also want to see how you will cover repayments during the leave period, before your normal pay resumes.

Anti-discrimination laws protect people from unfair treatment because of pregnancy or parental status. Lenders can still apply their own lending rules, so your best tool is a clean, well-evidenced application.

How lenders assess your income on parental leave

Lenders are answering one question. If the loan settles while your income is lower, what covers the repayments until your full pay comes back?

To answer it, they usually look at:

• Your confirmed return-to-work date
• Your role, hours and base salary when you return
• Your paid leave income during the gap, from your employer and the government
• Your savings buffer or offset balance
• Your partner’s income, if you are buying together
• Expected childcare costs once you are back
• Existing debts and commitments

A defined return date carries a lot of weight. “Sometime next year” makes lenders nervous, while “1 March 2027, three days a week, at my current base” gives them something concrete.

For the wider picture, our guide on how lenders calculate borrowing power explains the serviceability formula that applies here too.

Does Parental Leave Pay count as income?

Government Parental Leave Pay is a taxable payment made through your employer or directly by Services Australia. For leave days taken in 2026-27, the rate is $200.94 a day, or $1,004.70 for a five-day week, before tax.

Many lenders will count it during your leave, but treatment varies. It is worth checking each lender’s policy before you apply.

Parental leave entitlements for 2026-27

The government scheme has expanded each year since 2024, so older figures online are often out of date. These are the current settings according to Services Australia.

Entitlement	Current setting
Parental Leave Pay rate (before tax, leave taken in 2026-27)	$200.94 a day or $1,004.70 per five-day week
Total days, births or adoptions from 1 July 2026	130 days (26 weeks)
Total days, births or adoptions from 1 July 2025 to 30 June 2026	120 days (24 weeks)
Days reserved for the other parent in a couple (births from 1 July 2026)	20 days
Super on Parental Leave Pay (births from 1 July 2025)	Paid by the ATO at the super guarantee rate (12%) after the financial year ends
Individual income test (adjusted taxable income)	$186,487 or less in 2025-26
Family income test, if you miss the individual test	$386,525 or less in 2025-26

Under the National Employment Standards, eligible employees can take up to 12 months of unpaid parental leave and request up to 12 months more. By agreement, you can also work up to 10 keeping in touch days in each period.

Your paid leave breakdown matters for your loan because it shows the lender how the gap before your return gets covered.

Why lender choice matters more than usual

Parental leave policy varies a lot between lenders. Some are comfortable with longer leave periods, while others prefer shorter leave or want most of it to be paid.

Westpac is a good example of a lender that spells its policy out. It recognises paid parental leave and back-to-work income on new applications, provided you supply an employer letter with your leave period and return salary.

For existing customers, Westpac also offers a parental leave option on eligible variable loans. It can reduce repayments by up to 50% for up to 12 months, subject to conditions such as at least 10% equity.

Apply with one bank and you get one policy. If your timeline does not fit, a decline can make your next application harder, so we compare policies across our lender panel before anything is lodged.

A worked example: how the application comes together

Take a couple where one partner is on maternity leave and the other works full time.

• Partner A is on leave and returns on 1 March 2027, three days a week, on a $78,000 base salary (about $46,800 pro-rata)
• During leave, Partner A receives employer paid leave plus Parental Leave Pay at $1,004.70 a week
• Partner B earns $95,000 full time
• The couple has a $28,000 buffer sitting in an offset account

This is how the file is presented to the lender.

1. Serviceability uses Partner A’s confirmed return income plus Partner B’s salary, which reflects their ongoing capacity.
2. The employer letter confirms the return date, the three-day arrangement and the base salary.
3. The $28,000 buffer and paid leave income show how repayments are covered until Partner A is back at work.
4. Childcare costs for the three work days are included, so the budget reflects real life once both are working.

Laid out this way, the file shows the lender how every repayment gets paid from the first month.

If your buffer sits in an offset, check it is linked to the loan correctly. The ASIC review of offset account errors found some offsets were never set up at all.

Your document checklist

A complete evidence pack makes approval smoother. Gather these before you apply.

Employer return-to-work letter

This is the key document. It should confirm:

• Your return date
• Your role and hours on return, full time or part time
• Your base salary when you return
• That your position is being held for you

Supporting evidence

• A breakdown of paid and unpaid leave
• Your Parental Leave Pay details from Services Australia, if you receive it
• Savings and offset statements showing your buffer
• Your partner’s payslips or employment letter
• Estimated childcare costs on return
• Existing debts such as credit cards, car loans and buy now pay later

A missing or vague employer letter is a common reason these applications stall, so request it early. Our 6-month countdown to getting loan ready covers the rest of the preparation lenders expect.

Where are you in your leave?

Your stage of leave shapes the approach. These are the three situations we see most often.

1. Pregnant and not yet on leave

Applying before your leave starts can work well because you are still on full income. Just remember that pre-approval has a shelf life, so line it up with when you plan to buy.

Under the National Employment Standards, you generally give your employer written notice at least 10 weeks before your leave starts. That is a good time to ask about the return-to-work letter as well.

2. On leave with a set return date

This is very workable. The employer letter and a healthy buffer do most of the heavy lifting.

The main task is finding a lender comfortable with the length of leave you have left.

3. Already back part time

This is often the simplest of the three. You have payslips at your new hours, so there is less about the future to prove.

A short run of payslips under your new arrangement is usually what lenders ask for.

Buying your first home in Victoria?

If this is your first home, several government schemes can work alongside your loan.

• 5% Deposit Scheme: since 1 October 2025, eligible first home buyers can buy with a 5% deposit and no LMI, with no income caps or place limits. The scheme’s growth shows how widely it is used, and price caps apply by location.
• Single parents: eligible single parents and legal guardians can buy with a 2% deposit and no LMI under the same scheme.
• Victorian stamp duty: first home buyers pay no duty on homes up to $600,000, with a sliding concession up to $750,000.
• First Home Owner Grant (Victoria): $10,000 for eligible buyers of new homes valued up to $750,000.

Avoiding LMI can save a large amount upfront, depending on the loan size and lender. Our explainer on how lenders mortgage insurance works covers what it costs and who it protects.

Rates and your buffer

As at mid-September 2026, the RBA cash rate is 4.35% after it was held in August. Annual inflation to July 2026 was 3.5%, so further rate moves are possible.

Lenders test your application at an assessment rate above the actual rate. Building some extra room into your leave buffer gives you breathing space if repayments rise while you are on reduced pay.

How a broker can help

Going straight to your own bank means one policy and one chance. If your leave does not fit their rules, you may need to start again elsewhere.

We compare lender policies against your leave length and return date, then build the file around the evidence each lender wants. We also handle the back and forth, so you are not chasing a bank with a newborn at home.

If you would like to know where you stand, book a free chat and we will talk through what is achievable for you.

Frequently asked questions

Can I get pre-approval while pregnant?

Yes. Lenders assess your current income, and some will also ask about your leave plans, so be upfront about your due date. Our guide to pre-approval vs conditional approval explains how the approval stages work.

Is superannuation paid on Parental Leave Pay?

Yes, for children born or adopted from 1 July 2025. The ATO pays a contribution at the super guarantee rate into your fund after the financial year ends, with no separate claim needed.

What if my return date changes after approval?

Tell your broker or lender before settlement. A later return date or fewer hours can change your borrowing capacity, and the lender may need an updated employer letter.

Can I get a loan if I am returning part time?

Yes. The lender assesses the income from your part-time hours, so your borrowing capacity may be lower than it was on full-time pay. Childcare costs are also factored into your expenses.

Can I reduce repayments on my existing loan while on leave?

Some lenders offer parental leave options, such as reduced repayments or a pause if you are ahead on your loan. Interest usually keeps accruing, so ask how the option affects your total cost before you sign up.

Can a lender turn me down because I am on parental leave?

A lender must not treat you unfairly because of pregnancy or parental status. It can still decline an application that does not meet its serviceability rules, which is why matching your situation to the right lender matters.