Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Getting a Home Loan While on Parental Leave
Being on parental leave doesn't automatically prevent you from getting a home loan, but it does require careful lender selection and the right documentation. Lenders assess your income differently during parental leave, and how they treat your return-to-work income varies significantly across our panel.
The critical document in any parental leave application is the employer's return-to-work letter. A letter confirming your position, salary and confirmed return date allows many lenders to assess your application based on your pre-leave income rather than your current parental leave payment. This single document often determines whether the application is straightforward or very difficult.
How Lenders Assess Income on Parental Leave
Lenders Who Use Return-to-Work Income
Many lenders, including several major banks, will accept a confirmed letter from your employer stating your return date and salary. They assess your application on your pre-leave income, not the parental leave payment. This is the most favourable assessment method and the one we target wherever possible.
Lenders Who Use Current Income Only
Some lenders will only assess your current income, the parental leave payment. This includes both employer-funded parental leave (if your employer supplements government PLP) and the government Parental Leave Pay of $14,671 (2026 rate). This approach significantly reduces assessed income and borrowing capacity.
What Documentation Is Required
- Employer letter: On company letterhead, confirming your position, pre-leave salary, confirmed return-to-work date, and that your position is guaranteed on return
- Last 3 payslips before leave commenced: Confirms your pre-leave income
- Services Australia PLP confirmation: If receiving government PLP
- Standard loan documents: ID, savings statements, property details
Worked Example: Applying During Parental Leave
- Applicant: Marketing manager, 3 months into 6-month parental leave
- Pre-leave salary: $110,000 p.a.
- Current PLP: ~$14,671/year (government)
- Return date: Confirmed in employer letter, 3 months away
- Lender using return-to-work income: Assessed at $110,000
- Lender using current income: Assessed at $14,671, loan declined
- Purchase price: $950,000 | Deposit: $190,000 (20%)
- Outcome: Approved with lender using return-to-work income assessment
Timing Your Application
If possible, applying before you commence parental leave is the simplest approach, your full employment income is current and documented. If you're already on leave, the return-to-work letter becomes the critical document. Applying very close to your return date (1–2 months away) is often the best window, the return is imminent enough to be credible, and you may be able to use recent payslips from just before leave commenced.
Partner's Income
If your partner is also working, their income is assessed jointly. In many cases, a partner's income is sufficient to support the loan while you're on leave, with your confirmed return-to-work salary providing additional security. Joint applications during parental leave are generally more straightforward than sole applications.
