Key takeaways:
You can apply for a home loan while on parental leave, subject to lender criteria and your financial circumstances.
Lenders assess parental leave income differently, including how they treat current and return-to-work income.
You may be able to refinance while on parental leave, but changes to your income can affect your available options.
Preparing early can help you get application-ready. Organise your income, parental leave and return-to-work documents before applying.
Consider reviewing your mortgage before your income changes. Check your budget, repayments and loan features, and seek help early if needed.
If you're planning to buy a home or refinance, you may be wondering whether you can apply while on parental leave. The short answer is yes, you can apply, but how your income is assessed will depend on the lender's criteria and your individual circumstances.
Lenders may take different approaches to parental leave and return-to-work income, so understanding their requirements can help you prepare before applying.
This guide explains how parental leave may affect a home loan application or refinance, what to consider when managing your existing mortgage repayments, and how to prepare before or during leave.
Can you get a home loan while on parental leave?
Yes. Being on parental leave does not automatically prevent you from applying for a home loan. However, approval will depend on the lender's criteria, how they assess your income, and your financial circumstances.
Because parental leave can temporarily change your income, lenders may ask for additional information about your leave arrangements and expected return to work.
Imran Ali, Aussie Mobile Broker, says lenders will generally look beyond a borrower’s current income to understand how the household plans to manage both the leave period and the return to work.
“When assessing a home loan application involving parental leave, lenders generally consider three key factors: the applicant’s income before taking leave, their intended return-to-work date and employment arrangements, and whether the household has enough savings or other income to manage the period of reduced earnings,” he said.
How do lenders assess your application while you're on parental leave?
When you apply for a home loan while on parental leave, lenders assess whether you can afford the proposed repayments under their lending criteria. If your income has temporarily changed, they may also consider your parental leave arrangements and expected income after you return to work.
Depending on the lender, the assessment may consider:
Income during parental leave: Lenders may consider paid leave income, although how they treat it varies.
Parental leave arrangements: This can include employer-funded paid leave, unpaid leave and government-funded Parental Leave Pay.
Return-to-work date: Lenders may ask when you expect to resume work.
Post-leave income and hours: Your expected salary and whether you plan to return full-time, part-time or under another agreed arrangement may be relevant.
Other applicant's income: For a joint home loan application, lenders will also assess the other applicant's income and financial position.
Savings and available funds: A lender may ask about savings or other funds available to help cover expenses while your income is reduced or unpaid. How these are treated varies by lender.
Debts and expenses: Existing loans, credit commitments, living expenses and other financial obligations form part of the lender's broader serviceability assessment.
What is a return-to-work letter?
A return-to-work letter is written confirmation from your employer outlining your expected employment arrangements after parental leave. Depending on the lender, it may need to confirm your return date, employment status, working hours and expected salary.
Ali says having a clear return-to-work plan can be particularly important when lenders are assessing income after parental leave.
“Applicants will usually need to demonstrate a clear and realistic return-to-work plan, including the expected date of return, proposed working hours and anticipated salary,” he said.
“Lenders may request supporting evidence, such as an employer letter confirming the applicant’s position and return-to-work arrangements.”
Documentation requirements vary between lenders, so it can help to check what evidence you'll need before submitting your application.
For more information on the factors that can affect your borrowing capacity, see our guide to how much you can borrow. You can also learn how lenders test your ability to manage repayments in our guide to the home loan serviceability buffer.
Why don't all lenders assess parental leave the same way?
Lenders set their own policies for assessing parental leave income, so the income they accept and the home loan options available can vary. Depending on the lender’s policy, return-to-work arrangements may also be considered where its criteria and documentation requirements are met. The lender's approach may also depend on:
Whether your parental leave is paid, unpaid or a combination of both;
How long you have before returning to work;
Your confirmed return-to-work date; and
Whether you plan to return full-time, part-time or under another agreed working arrangement.
These factors can influence your borrowing capacity, but lenders will also assess your broader financial position, including your expenses, debts and other commitments.
Ali says this variation between lender policies is one reason borrowers may benefit from comparing more than one option.
“Each lender applies its own parental-leave policy. Some may assess the applicant’s expected return-to-work income, while others take a more conservative approach,” he said.
“Working with a mortgage broker can help applicants identify a lender whose policy is appropriate for their circumstances and present the application with the required supporting evidence.”
Why comparing lenders matters
Parental leave policies can differ between lenders, so comparing options may help you understand which lending criteria better suit your circumstances rather than relying on one lender's approach.
An Aussie Broker can compare options from participating lenders and help you understand how different lenders may assess your parental leave and return-to-work arrangements.
You might also be interested in: Types of home loans in Australia: How to compare your options
Can you refinance while on parental leave?
You may be able to refinance while on parental leave, subject to lender eligibility, lending criteria and your financial circumstances. Because refinancing involves applying for a new home loan, changes to your income during leave may affect how much you can borrow and which options are available.
You might consider refinancing to:
Compare interest rates: Check how your current rate compares with other available home loan rates.
Review loan features: Consider whether features such as an offset account or a redraw facility suit your needs.
Review your loan structure: Assess whether your current home loan structure still suits your household circumstances.
So, should you refinance during parental leave or wait until you return to work?
Whether it makes sense to refinance during parental leave or after returning to work will depend on your circumstances and the lender’s criteria.. Returning to work may change how lenders assess your income and the options available, but you may still have refinancing options while on parental leave.
You might also be interested in: Banks vs non-bank lenders: What’s the difference (2026 guide)
Paid Parental Leave: What does the government scheme cover?
The Australian Government's Paid Parental Leave scheme provides Parental Leave Pay to eligible parents caring for a newborn or recently adopted child.
For children born or adopted from 1 July 2026, families can receive up to 130 days (or 26 weeks based on a five-day working week), subject to eligibility.
Parental Leave Pay is taxable and based on the national minimum wage. For 2026–27, the rate is $200.94 per day or $1,004.70 per five-day week before tax. The rate generally changes on 1 July each year.
Eligibility includes income, work and residency requirements, and rules apply to how Parental Leave Pay days can be used and shared. Check Services Australia's Parental Leave Pay page for current rates, eligibility and claiming requirements.
What can you do about mortgage repayments during parental leave?
If your household income will drop during parental leave, reviewing your mortgage repayments before your income changes can help you plan for the months ahead. Your options will depend on your home loan, lender and financial circumstances.
Consider these steps:
Review your budget: Compare your expected parental leave income with your mortgage repayments, living expenses and other financial commitments to identify potential shortfalls early.
Check your offset or redraw: If available, understand how your offset account or redraw facility works, including any access rules, fees or conditions, before relying on those funds.
Ask about repayment flexibility: Check whether your lender offers repayment options that could help during parental leave. Features, eligibility and conditions vary between lenders and loans.
Seek help early if repayments become difficult: If you expect to struggle with repayments, contact your lender as soon as possible to discuss financial hardship assistance or other available options.
Review your home loan: Consider whether your current interest rate, features and loan structure still suit your circumstances.
How can you prepare for a home loan or refinance before parental leave?
If you're planning to apply for a home loan or refinance around parental leave, preparing early can give you time to organise your finances and supporting documents before your income changes.
Ali says the starting point should be a budget based on what the household expects to earn during parental leave, rather than its income today.
“The most important step is to prepare a realistic budget based on the household’s expected income during parental leave, not simply its current income,” he said.
“Having a child introduces many new costs, including medical expenses, baby essentials and childcare, while household income may temporarily decrease.”
1. Build a savings buffer.
If possible, set aside savings to help cover the difference between your usual income and your expected parental leave income. Factor in the length of your leave, mortgage repayments, living expenses and any changes to household costs.
Ali also cautions against assuming that return-to-work plans will play out exactly as expected.
“One of the most common mistakes I see is prospective parents overextending themselves or being overly optimistic about how quickly they will return to work,” he said.
“Return dates and working arrangements can change, so borrowers should consider whether they could still manage their commitments if parental leave lasted longer than expected or if they initially returned on reduced hours.”
2. Organise your return-to-work letter.
If required by the lender, ask your employer for a return-to-work letter confirming details such as your planned return date, employment arrangements and expected income. Requirements vary by lender, so check what information it must include.
3. Review your existing debts.
Check your loans, credit cards and other credit commitments before applying. Taking on additional debt can affect your borrowing capacity because lenders consider your existing financial commitments when assessing your application.
4. Gather your supporting documents.
Document requirements vary, but you may be asked to provide:
Recent payslips and other income evidence;
Details of your parental leave arrangements;
Evidence of employer-funded parental leave, if applicable;
Details of government-funded Parental Leave Pay, if applicable;
A return-to-work letter, if required; and
Other financial documents the lender requests.
Check the lender's requirements before applying to make sure you have the relevant documents ready.
5. Speak to a broker before applying.
Speaking to a broker before parental leave begins can help you understand how different lenders may assess your circumstances and what information you'll need to provide.
An Aussie Broker can review your circumstances, explain the application requirements and compare home loan or refinancing options from participating lenders. Approval remains subject to lender eligibility and lending criteria.
You might also be interested in: When and when not to refinance your home loan
Home loans and parental leave: Planning your next step
Parental leave can change how lenders assess your income, and policies vary between lenders.
Whether you're buying a home, refinancing or reviewing your existing mortgage, understanding how lenders may assess your income and return-to-work arrangements can help you prepare.
An Aussie Broker can review your circumstances, explain the information you may need and compare available options from participating lenders.