Applying for a home loan while on parental leave is possible, but it requires careful timing and documentation. Lenders must consider your full-time return salary if you intend to return to work — refusing an application solely because of pregnancy or parental leave is illegal — but they do have legitimate serviceability concerns about current reduced income.
The issue is not leave status per se, but current and near-future ability to service the loan. On parental leave, income is typically reduced to government parental leave pay or employer-paid leave — potentially far below normal salary. Lenders need confidence that you intend to return to work, your employer will take you back, and the household income post-return will comfortably service the loan.
The most important document for a parental leave application is a letter from your employer confirming your return-to-work date, your position title, employment type (permanent full-time or part-time), and your salary upon return. Without this letter, lenders assess you on reduced parental leave income alone. With it, most lenders will use your pre-leave salary for serviceability assessment.
The Australian Government Paid Parental Leave scheme provides up to 22 weeks (from July 2024) at the national minimum wage (approximately $882.75/week in 2025–26). Some lenders count this as assessable income; others do not. Family Tax Benefit (FTB) Part A and Part B are generally counted as ongoing income by most lenders once established, though the amounts are modest relative to a salary.
Discrimination is illegal: Under the Sex Discrimination Act 1984 and the National Consumer Credit Protection Act, lenders cannot refuse or unfavourably change loan terms solely due to pregnancy or parental leave. Complaints can be lodged with the Australian Human Rights Commission.
If you have a working partner, a joint application is far more powerful during parental leave. The working partner's income anchors serviceability and your return income adds future capacity. Applying alone requires a very clear return-to-work commitment and a lender comfortable with complex income timing.
Once you return to work, net childcare costs reduce your assessed borrowing capacity. After the Child Care Subsidy, typical net costs run $50–$120 per child per day. At 4–5 days per week that is $3,000–$6,000 per month per child — a meaningful reduction in assessed borrowing power. Factor this into your budget, not just for the loan approval but for the ongoing monthly cash flow.
Model scenarios with your return-to-work income and childcare costs.
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