Yes, they can, but lenders routinely misread or ignore significant portions of ministry income, which means applications are declined or borrowing capacity is understated. Stipends, salary packaging, housing and car allowances, FBT-exempt/ non-cash benefits are all legitimate income but as they aren’t all standard, banks automatic processing can’t assess them well.

A broker that understands church employment structures, who knows how to demonstrate your full income will get you the best result.

Why do banks decline home loan applications from ministry workers?

Banks have a standard process for evaluating income and expenses to determine if there is sufficient borrowing power to provide a loan. They require payslips, statements, tax returns and various other documents and assessors will “tick a box” confirming the existence and evidence of this.

The issue for clergy and other ministry workers is that the total income is often not represented on the payslips, statements or tax returns.

Non-taxable income may appear on a payslip but will not appear on a Notice of Assessment. Likewise, any non-cash benefits are often provided through a card owned by the church not under the ministry workers name. This will not be on payslips or notice of assessments. Lastly, allowances may appear on payslips or they may not. There may also be a manse or car provided which provides real economic benefit but is not accounted for anywhere. We can often get a monetised benefit from this and have it added back to gross income.

Example:

A ministry worker has the following package:

• $60,000 stipend with $30,000 being non-taxed income
• $29,000 housing allowance
• $8,000 car allowance

This worker on a $97,000 package may appear to only earn $67,000 on their payslip.

As a ministry informed broker, we can add back allowances and include all non-taxed income in our application to show how their income is actually $97,000 gross.

Not only is this amount difference substantial but lenders will view allowances and non-tax income differently. Some will take only 80% of the total, some 100%. Our relationships and knowledge of lenders and their policy means we can maximise your income for borrowing.

What income counts toward your borrowing capacity as a minister or pastor?

The following income and benefits can be attributed to your income:

• Stipend or salary: this is your standard pay which is taxed and reported on. It is easy for the banks to see.
• Non-taxed income is used for borrowing capacity and it is a powerful addition to your complete borrowing picture. Some lenders will use 100% of this while others only take 80% or less.
• Salary packaging such as meals cards, extra contributions (on top of compulsory) can be added back as income if we can demonstrate that it can be converted to income instead if need be. A simple email or letter from employer is enough to satisfy this requirement.
• Non-cash benefits such as the provision of housing or a car largely reduce your expenses rather than add to income, however, some lenders will attribute back an amount to income if you are provided a vehicle.
• Other allowances that account for housing, travel, hospitality costs and other expenses can be added back to income if it is a reoccurring and attributed expense outlined in a contract.
• Your non-taxed income and salary packaging can be used. Any non-cash benefit you receive, and allowances can be used as income or expense reducing items.
• Compulsory superannuation cannot be attributed back as income.

It can be surprising how much income can be used for serviceability purposes if it is documented and presented well to the right lender.

Which lenders assess ministry worker income more generously?

As lender policy changes regularly, it is not wise to list specific lenders but common policies that we look at with lenders include:

• How much non-taxable income is accepted. Some lenders take 80%, some 100%. On a $30,000 allowance, the difference between an 80% and 100% lender policy could mean $24,000 vs $30,000 assessed. This translates to around $30,000 extra in borrowing capacity.
• How the lender will treat allowance and salary packaging as addbacks to income.
• If the lender attributes an income amount if a vehicle is provided.
• Some lenders are not comfortable with lending to ministry and charity workers and others have a real appetite. This difference shows itself in how easily they understand and process these different types of income.

How does a ministry-informed broker present your income differently?

As a ministry and NFP sector informed broker, we know first hand how all your different income and benefits can be documented differently. We like to call it “connecting the paper trail”.

There may be a single contract outlining your allowances, non-cash benefits and income or it may be presented in separate agreements. At times there is no documented breakdown of income and benefits and so we work with the churches HR, diocese or accountants to get a clear outline of your income.

A generalist broker does not understand how different denominations are structured and how they pay their staff. Various denominations from Pentecostal to Presbyterian pay and document this information differently. We know who to ask for what information in each denomination.

Frequently asked questions — home loans for clergy and ministry workers

• Can I use my housing allowance as income for a home loan? Yes you can, this can be added back to your gross income with the right lender.
• Does salary packaging affect my borrowing capacity? It can if you don’t have a lender that will allow you to add it back to income. Common salary packaging can be extra super contributions, meal and entertainment cards, housing repayments.
• What if I live in church-provided housing, can I still borrow? Yes, this may come in the form of an allowance and that can be used as income or it may reduce your housing expenses and we can show this expense reduction  to the banks through your employment contract.
• Are there lenders who specialise in ministry worker home loans? Although none will say they “specialise”, some lenders have lending policies much more favourable to ministry workers. There are a handful of major banks and second tier lenders that we use that are comfortable providing lending to ministry and charity workers.
• What’s the difference between reportable and non-reportable fringe benefits on a mortgage application? Reportable fringe benefits can be added back to your income to increase your borrowing where as non-reportable fringe benefits are not able to be added back to income but they can be used to reduce your expenses which in turn increases borrowing. This just needs to be captured clearly in the documentation we send to the lender.

Stewardship, not just strategy our approach to ministry worker finance

The finance industry is built around one question: how can I make more money? We think that’s the wrong starting point.

A home loan is a significant act of stewardship, it’s a long-term commitment of your income, your capacity, and your margin. Before we talk numbers, we want to understand what this loan is for, what it makes possible, and what it might constrain.

We’re not against wealth-building. Scripture is clear that providing for your family, investing in your future, and participating generously in your community are good things. But they require margin. So, we’ll ask questions like “Does this debt load leave room for generosity? Will this commitment bring rest or anxiety? Are you borrowing toward a life you want, or toward a number that feels like success?”

Here’s something we think you should know, we’re paid more when you borrow more. We’re telling you that because it should make you ask hard questions of any broker, including us. Our answer is simple we’ll recommend what’s right for your life, not what’s best for our commission.

Book a free 30-minute discovery call. We can talk through your income picture and what is possible.