How to get a home loan as an Australian expat

Get an Australian home loan while overseas. Expert guide covers lenders, documents, deposits & why specialist brokers are essential for expat success.

Living overseas doesn’t mean you have to miss out on the Australian property market. Whether you’re an Australian citizen working abroad, a permanent resident stationed internationally, or planning your move to Australia, securing a home loan while living overseas is absolutely possible – though it requires navigating a more complex process than domestic buyers face. Consider James, an Australian engineer working in Singapore, who discovered that his $180,000 annual salary would only be assessed at 70% of its value by most Australian lenders. Despite this initial setback, he successfully purchased a $750,000 investment property in Melbourne by working with a specialist expat mortgage broker who knew exactly which lenders would work with his circumstances. The expat lending landscape has evolved significantly, with some lenders tightening their policies while others have developed sophisticated programmes specifically for overseas borrowers. Understanding these nuances, along with the documentation requirements, income assessment methods, and additional costs involved, can mean the difference between a smooth approval process and months of frustrating rejections.

Understanding the expat lending landscape

The first reality every expat faces is that not all lenders will consider your application. Some banks don’t lend to borrowers living overseas, while others may only accept applications from expats in certain countries or working in particular industries. This immediately narrows your options and highlights why understanding the lending landscape is crucial.

Australian citizens and permanent residents living overseas generally have access to more lending options than foreign nationals, but even within this group, policies vary significantly. Lenders have different policies for expats with some lenders also accepting borrowers who are Australian Permanent residents. Some major banks maintain dedicated expat lending teams, while others have quietly exited the market entirely.

The distinction between different expat categories matters enormously for your borrowing capacity. Australian citizens typically access the most favourable terms, followed by permanent residents, with foreign nationals facing the most restrictions. If the buyer is not a citizen or permanent resident, permission from the Foreign Investment Review Board is needed when purchasing real estate.

This is where specialist expat mortgage brokers prove invaluable. They maintain current knowledge of which lenders are actively lending to expats, understand the specific criteria each lender applies, and can match your circumstances to the most suitable options. Without this expertise, you could waste months applying to unsuitable lenders

The foreign income challenge

One of the biggest surprises for many expats is discovering how conservatively lenders assess foreign income. Even if you’re on a high income, most lenders will only consider 70-80% of your foreign income in their borrowing capacity calculations. This “shading” or “haircut” reflects lenders’ concerns about currency volatility and the perceived risks of overseas employment.

The currency you’re paid in significantly impacts your borrowing power. You will have a better chance of getting approved on a home loan if you receive your income in the following currencies: United States Dollar (USD), New Zealand Dollar (NZD), along with British Pound (GBP) and Euro (EUR). These “Tier 1” currencies typically face smaller discounts.

However, other currencies tend to carry restrictions, which depend on the lender. Often, you won’t be able to borrow more than 80% of the value of the home with the following currencies: Bahrain Dinar (BHD) and other less commonly traded currencies.

Tax considerations add another layer of complexity to income assessment. Some lenders will use Australian tax rates rather than the tax rate of the country you live in, which can limit your borrowing power. This can be particularly disadvantageous if you’re working in a low-tax jurisdiction like Singapore or the UAE, where your actual take-home income is much higher than what Australian tax rates would suggest.

An experienced expat mortgage broker understands these nuances and knows which lenders apply the most favourable income assessment policies for your specific currency and tax situation. They can often increase your borrowing capacity significantly by choosing the right lender from the start.

Documentation requirements and processes

Gathering the required documentation from overseas represents one of the most frustrating aspects of the expat lending process. Lenders may require original signed documents, certified copies, or even that some forms be witnessed. Depending on where you live, this can involve booking time with a notary, solicitor, or a visit to your nearest Australian embassy.

The specific documentation requirements vary significantly between lenders and can include employment contracts, payslips, bank statements, tax returns, and proof of assets. Many lenders require documents to be certified by specific authorities, and some insist on original signatures rather than electronic versions.

Fortunately, the digital transformation accelerated by recent global events has improved this situation somewhat. The good news is that digital documentation is becoming more widely accepted, and some lenders now allow electronic witnessing under specific conditions. However, don’t assume all lenders have embraced digital processes – some still maintain traditional requirements that can cause significant delays.

Power of Attorney arrangements often become necessary for expats, allowing someone in Australia to act on your behalf during the property purchase process. Most lenders require you to have a Power of Attorney (POA) set up with someone in Australia. This person can sign documents, attend settlements, and handle various administrative tasks, but establishing POA requires careful legal preparation before you need it.

A specialist broker will guide you through these documentation requirements from day one, helping you avoid the common mistake of gathering documents that don’t meet specific lender requirements. They understand which lenders accept digital documentation and can streamline the entire process.

Deposit requirements and loan-to-value ratios

Expat borrowers should expect to provide larger deposits than domestic buyers. Most loan deposits are around 10% to 20%, but expat home loans can often require anywhere from 20% to 40%. The exact requirement depends on your residency status, income currency, employment type, and the specific lender’s policies.

Australian citizens and permanent residents typically access the most favourable LVR options. Expat borrowers with PAYG income may be able to borrow up to 90% of the property value which means borrowers will require at least a 10% deposit plus extra funds to cover additional costs like stamp duty and legal fees. However, this maximum LVR usually requires Lenders Mortgage Insurance (LMI) and meeting strict income and employment criteria.

Foreign nationals face more restrictive LVR limits. According to Homeloan Experts, one of Australia’s brokers, most lenders require at least a 30% down payment with interest rates ranging from 6.50% to 8% per year. Some lenders have more favorable rates - under 5% - if you can provide a larger down payment of 45% or more.

The source of your deposit also matters significantly. In most cases, your deposit must come from genuine savings. But some lenders will accept other funds if you already own an Australian property or can demonstrate other acceptable sources. Genuine savings requirements typically mean funds held in your accounts for at least three months.

Understanding these deposit requirements upfront is crucial for planning your purchase timeline. An experienced broker can advise on optimal deposit strategies and identify lenders with the most favourable LVR policies for your situation.

Additional costs and considerations

Beyond the standard costs of buying property, expats face several additional expenses that can significantly impact the total investment required. Foreign Investment Review Board (FIRB) approval represents a major cost for non-citizens, with both FIRB and stamp duty costs based on the value of the home you’re buying. FIRB fees start at around $1,000 for properties under $1 million but can reach tens of thousands for higher-value purchases.

Foreign buyer stamp duty surcharges add substantial costs in most states. This will depend on your state, but you can typically expect an additional 3 to 8% for non-resident buyers. Note that the NT and ACT currently have no stamp duty surcharge for foreign buyers. These surcharges can apply even to Australian citizens in some circumstances, particularly if purchasing with a foreign national partner.

Legal and establishment costs also tend to be higher for expat purchases. Legal fees: Up to 3,000 AUD for conveyancing and contract review, Loan establishment fees: Up to 1,000 AUD for setting up your mortgage. Additional complexity in documentation and longer settlement processes can drive these costs higher than domestic purchases.

Currency transfer and exchange rate risks represent ongoing considerations. Transferring large sums for deposits and settlement requires careful timing and potentially specialist foreign exchange services to avoid poor bank exchange rates. Ongoing mortgage repayments in Australian dollars while earning foreign currency creates ongoing exchange rate exposure that needs management.

A comprehensive broker service includes guidance on all these additional costs and can connect you with specialists in foreign exchange, tax planning, and legal services to optimise your overall investment structure.

Choosing the right lender and loan structure

Not all lenders are created equal when it comes to expat lending. In most circumstances there is no interest rate margin/penalty attaching to being an expat and you will access the same interest rates as Australian residents applying to same lender for the same product. However, this equal treatment only applies with lenders who actively support expat borrowers.

The challenge lies in identifying these expat-friendly lenders. Major banks may offer competitive rates but have restrictive policies, while smaller lenders or non-bank institutions might be more flexible but charge premium rates. Some will disqualify you from discounted loans if you live abroad, while others will offer discounts in certain cases.

Professional packages can provide significant benefits for expat borrowers. Professional packages can reduce interest rates significantly, depending on the size of the loan, and offer other account benefits in return for the payment of an annual account fee. These packages often include fee waivers, rate discounts, and additional banking services that can offset their annual cost.

Loan structure decisions become more complex for expats. Fixed rates might provide certainty against currency fluctuations, while variable rates offer flexibility and potential savings. Both variable-rate and fixed-rate mortgages are available and it is possible to arrange a “split rate” loan, which contains both a variable and fixed rate component.

Investment versus owner-occupier considerations also impact loan structure. Loans to be for Investment purposes only is a common restriction for expats, as many lenders prefer the additional security of investment property rental income projections over uncertain overseas income for owner-occupier purchases.

This is where broker expertise becomes invaluable – they understand which lenders offer the best rates and terms for your specific expat situation and can structure your loan for both immediate approval and future flexibility.

Working with specialist expat mortgage brokers

The complexity of expat lending makes specialist broker support not just helpful, but often essential for success. Working with a mortgage broker who understands expat lending criteria is critical as they’ll know which lenders are expat-friendly. This knowledge can save months of applications to unsuitable lenders and potential rejections that could impact your credit rating.

Specialist expat brokers understand the nuances of income assessment, documentation requirements, and lender policies that can make or break your application. A broker who understands the expat market will know which lenders to approach, how to present your income, and what documents are needed from day one. They’ll guide you through the witnessing process, help you avoid unnecessary delays, and make sure your loan is structured in a way that supports both your short-term investment goals and long-term plans.

The value proposition of specialist brokers extends beyond just loan approval. They can coordinate with other professionals including accountants, solicitors, and foreign exchange specialists to ensure all aspects of your purchase are properly managed. Many also provide ongoing support for refinancing and portfolio growth as your circumstances change.

Cost considerations for broker services are generally favourable, as most brokers are paid by lenders rather than borrowers. In most situations, no cost attaches to the use of a mortgage broker and, in our case, you will have access to almost all mortgages available in the Australian market. This means you gain access to specialist expertise and a broader range of lenders at no additional cost.

The track record and experience of your chosen broker matters significantly. Look for brokers with specific expat experience, demonstrated success with your particular circumstances (country, currency, employment type), and strong relationships with expat-friendly lenders. The time saved and improved outcomes typically far outweigh any costs involved.

Securing a home loan as an expat requires navigating a more complex landscape than domestic buyers face, but it’s absolutely achievable with the right preparation and guidance. The key success factors include understanding which lenders work with expats, preparing comprehensive documentation early, having realistic expectations about deposit requirements and income assessment, and most importantly, working with specialists who understand the expat lending market.

The investment in specialist broker support typically pays for itself through access to more suitable lenders, better loan structures, faster approval times, and avoiding costly delays or rejections. Whether you’re planning to return to Australia, building an investment portfolio, or simply want to maintain property exposure in your home country, the opportunities are there for well-prepared expat borrowers.

Don’t let distance or complexity stop you from achieving your Australian property goals. The right specialist support can transform what seems like an impossible process into a smooth, successful purchase.

Further questions

This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.