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If you are a temporary resident holding a 457 visa, it’s possible to apply for a home loan, provided you have a stable job, and you gain approval from the Foreign Investment Review Board (FIRB) to purchase a house.

 

How much can 457 visa holders borrow to purchase a house?

It’s generally possible to borrow up to 80% of the value of the property you wish to buy. The remaining 20% must be paid upfront as a deposit.

The amount of money you can borrow also depends on your repayment capacity, which is based on your income and existing liabilities.

Lenders typically prefer to work with borrowers who have stable incomes and employment histories. Having genuine savings further increases your chances of approval because it demonstrates good financial planning.

To assess your income, lenders will ask you for your recent payslips and bank statements. Income through investments or pension from a foreign country may not be considered as part of your earnings to determine your home loan serviceability. However, a few lenders may allow foreign earnings as part of the loan assessment criteria, provided you declare your foreign earnings on your income tax returns in Australia.

It may also happen that you have a stable job and earn well enough to service a home loan but don’t have a 20% deposit. In such cases, you may find it convenient to pay for Lender’s Mortgage Insurance (LMI), a type of insurance that protects the lender if you default on your home loan. Even though the cost of LMI can run into thousands of dollars depending on the size of the loan, it can make you eligible to borrow up to 90-95% of the property price.

If you are buying with an Australian citizen or a permanent resident, you may be able to borrow more than 80% of the property price and also access government grants like the First Home Owners Grant (FHOG), which is not available to temporary visa holders.

 

What is the eligibility criteria to qualify for a temporary resident home loan?

  • 20% deposit of genuine savings in Australia.
  • A stable job with a steady income. Medical professionals may qualify for interest rates discounts or LMI waivers.
  • FIRB approval

It also helps to have at least one year remaining on your visa when you apply for a home loan.

 

What about government approval?

As a temporary visa holder, you can buy one established dwelling as your residence, subject to approval from the Foreign Investment Review Board (FIRB). However, you are required to sell the property within three months of it ceasing to be your principal place of residence. It’s not possible to purchase an established dwelling as an investment property.

Things are a little different if you are buying a new dwelling. While FIRB approval is mandatory, none of the other restrictions mentioned above apply. Thus, you can start building your property portfolio by investing in new dwellings instead of established ones.

FIRB approval isn’t required if you are buying with your spouse who is an Australian citizen or a permanent resident.

 

Working with a mortgage broker can help

Even though there’s no difference between a home loan for a permanent resident and a temporary resident, the way a lender assesses your mortgage application may differ. It’s possible that you don’t have a credit history in Australia, or foreign earnings form a significant part of your income. In such cases, you may find it challenging to narrow down on a lender that deals with borrowers in your situation. A good mortgage broker will acquaint you with your options and help you find competitive home loan deals for your situation.

If you are looking for more information on home loans for temporary residents, you may pose your queries to our mortgage experts online.

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