Your income and employment type directly determine how much you can borrow and which lenders will consider your application.
In Torquay, where the median property price continues to reflect demand from both sea changers and local families, understanding how lenders assess your income can make the difference between securing the home you want or settling for less. Lenders don't just look at your salary figure. They examine how stable your income is, what portion of it they can count toward borrowing capacity, and whether your employment type carries additional risk in their assessment model.
How Lenders Calculate Usable Income
Lenders calculate what they call 'usable income' by taking your gross income and deducting tax, existing debts, and living expenses. The amount left over determines how much they'll lend you.
Consider someone earning $95,000 annually in a permanent role at one of Torquay's larger employers. A lender will typically accept 100% of their base salary in the calculation. If that same person earns $75,000 base plus $20,000 in annual bonuses, many lenders will only count 80% of the bonus component, and some require you to show at least two years of consistent bonus payments before they'll include it at all. This drops the usable income figure and reduces what you can borrow, even though the total earnings are identical. The difference could be $40,000 to $50,000 in available loan amount depending on the lender's calculation method.
Shift allowances, overtime, and commission all receive similar treatment. If your income relies heavily on these components, you'll need payslips covering several months and often a letter from your employer confirming the work pattern is ongoing.
Self-Employed and Contract Workers in Torquay
Self-employed borrowers and contractors need to show at least two years of tax returns, and lenders use the average of those years after adding back certain deductions.
Torquay has a growing number of self-employed residents, from tradespeople servicing the building boom to online business owners who've relocated for the lifestyle. In our experience, contractors and sole traders often earn more than their PAYG counterparts but can borrow less because lenders deduct business expenses before calculating income. A tradie showing $120,000 turnover but $45,000 in deductions will be assessed on $75,000, even though their take-home feels much higher.
Some lenders offer 'low doc' products that require less documentation but charge higher interest rates and typically cap your loan to value ratio (LVR) at 80%, meaning you'll need a 20% deposit to avoid Lenders Mortgage Insurance (LMI). For a $750,000 property in the Torquay area, that's $150,000 upfront rather than the $75,000 you might manage with a 10% deposit as a PAYG employee. Choosing the right lender for your employment type can change both your deposit requirement and your interest rate.
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Casual and Part-Time Employment
Casual workers need to demonstrate at least 12 months of continuous employment with the same employer, and lenders will only count 80% of your average income.
This affects younger buyers in Torquay's hospitality and retail sectors, where casual roles dominate. If you've been earning $55,000 annually as a casual employee at a local cafe or surf shop, lenders will assess you on around $44,000. That reduction directly impacts your loan amount. Most lenders also want to see your employer confirm in writing that your hours are likely to continue, which can be difficult in seasonal businesses where summer trade far exceeds winter.
Part-time employees on permanent contracts are assessed more favourably. The same $55,000 earned across guaranteed weekly hours will typically be counted at 100%, giving you access to a higher loan amount even though your take-home pay is identical to the casual worker.
Probation Periods and Job Changes
Most lenders won't approve a home loan application if you're still in a probation period, even if you've signed a permanent contract.
Switching jobs just before applying can delay your purchase by three to six months. As an example, someone moving from Melbourne to take up a role in Torquay might find their dream property only to discover lenders won't proceed until they've passed probation. Some lenders will make exceptions if you're moving within the same industry at a higher salary level and can show a strong employment history, but this requires a conversation with your broker before you make an offer. Timing your application around job changes, even positive ones, can mean the difference between securing a property or watching it sell to someone else.
If you're planning to relocate to the Torquay area for work, speak with a mortgage broker in Torquay before you resign from your current role. There are strategies to lock in pre-approval while still employed, giving you certainty before the move.
Income Assessment for Couples and Co-Borrowers
When two people apply together, lenders assess both incomes but may apply different calculations depending on each person's employment type.
A couple where one partner earns $80,000 as a teacher and the other earns $60,000 on a contract renewed annually will find some lenders treat the $60,000 as less reliable, particularly if the contract has less than 12 months remaining. This can reduce their combined borrowing capacity by more than you'd expect. Other lenders take a more balanced view if the contractor can show three or more years in the same role with consistent renewals. The lender you choose changes the outcome, not your actual financial position.
How Kardinia Finance Can Help
Your employment type doesn't lock you out of the property market, but it does determine which lenders will give you the strongest outcome. We work with residents across Torquay to match your income structure with lenders who assess it favourably, whether you're a contractor, self-employed, or moving between roles. Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Do lenders count overtime and bonuses in my income?
Most lenders count 80% of bonuses and overtime if you can show they've been consistent for at least two years. Some lenders have stricter requirements and may only count 50% or exclude them entirely, depending on your industry and role.
Can I get a home loan if I'm self-employed?
You can get a home loan when self-employed, but you'll need at least two years of tax returns showing consistent income. Lenders assess your income after business expenses, which often results in a lower borrowing capacity than PAYG employees earning the same amount.
How long do I need to be in a job before applying for a home loan?
Most lenders require you to have completed any probation period, typically three to six months. If you're casual, you'll need at least 12 months with the same employer before lenders will consider your application.
Will changing jobs affect my home loan application?
Changing jobs during the application process can delay or stop approval, even if your new role pays more. Lenders prefer to see you past probation in your new position before proceeding with a loan.
How do lenders assess casual income?
Lenders typically count 80% of your average casual income over 12 months, and they'll want confirmation from your employer that your hours are likely to continue. This reduces your borrowing capacity compared to permanent employees earning the same amount.
