Mortgage for People on Benefits or Universal Credit | Mortgage Bridge Explains

Many households rely on certain benefits as part of their income, and one of the most common questions is whether lenders will accept this when assessing a mortgage application. The good news is that many lenders do consider applications from people who receive benefits, including Universal Credit, although criteria vary.

This guide explains how lenders assess a mortgage for people on benefits or Universal Credit, which benefits count towards affordability, and what you can do to strengthen your application. This article provides general information only and does not offer regulated mortgage advice.

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Do Lenders Accept Benefits for a Mortgage?

Yes — several lenders accept benefit income either fully or partially when assessing affordability. However, not all benefits are treated the same way, and each lender applies different rules.

Lenders focus on:

• Stability of income
• Whether the benefit is long-term
• Whether it is likely to continue
• The type of benefit received
• How the benefit interacts with employment income

Even applicants with no employment income may still be considered by certain lenders, depending on the benefit type and deposit size.

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Which Benefits Can Lenders Accept?

Below are common benefits lenders may include in affordability calculations.

1. Universal Credit

Some lenders consider Universal Credit, especially where:

• It supplements employment income
• A history of stable payments is shown

Others may only include a proportion of the amount.

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2. Child Benefit

Often accepted, especially for younger children.
However, some lenders cap the amount or stop counting it once children reach a certain age.

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3. Working Tax Credit / Child Tax Credit

Still accepted by a number of lenders, though these are now largely replaced by Universal Credit.

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4. Disability Living Allowance (DLA) / Personal Independence Payment (PIP)

Generally accepted because they are long-term and not income-dependent.

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5. Carer’s Allowance

Accepted by several lenders, especially if long-term.

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6. Income Support

Accepted by fewer lenders but still possible with the right profile.

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7. State Pension / Pension Credit

Accepted widely for over-55s and retirees.

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8. Attendance Allowance

Typically accepted as it is long-term support.

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Not all lenders accept every benefit, and some will accept one type but not another. This affects borrowing capacity.

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How Much Can You Borrow on Benefits or Universal Credit?

Borrowing is calculated using affordability models that consider:

• Total income (benefits + employment if applicable)
• Regular spending
• Credit commitments
• Future sustainability of income

Income Multiples

Most lenders work with:

• 4× income
• 4.5× income

Some may apply lower multiples for applicants whose income is solely benefit-based.

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Deposit Requirements

Deposit size significantly affects your lender options.

5% Deposit

Possible with lenders accepting a mix of benefits and employment income.
Rare for benefit-only applicants.

10%–15% Deposit

More options become available.
Helpful if Universal Credit is part of your total income.

20%+ Deposit

Strong applications regardless of income type.
Higher deposits reduce risk and expand lender choice.

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Can You Get a Mortgage If Benefits Are Your Only Income?

Yes — but options are more limited. Lenders will look closely at:

• Long-term stability of payments
• Whether benefits are guaranteed or review-based
• Bank statement conduct
• Age of dependants (if using Child Benefit)
• Deposit size

Some lenders will lend where benefits are the primary income, especially where:

• PIP or DLA forms a large portion of income
• The applicant has a substantial deposit
• Outgoings are low

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What Lenders Check When You Receive Benefits or Universal Credit

Lenders apply the same core assessments as any mortgage application but pay closer attention to a few additional factors.

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1. Evidence of Regular Payments

Bank statements must show consistent payments from benefits without interruption.

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2. Sustainability of Income

Lenders assess:

• Is the benefit ongoing?
• Is it age-based?
• Is it linked to employment?
• Does it expire within a known timeline?

For example, Child Benefit is assessed differently for toddlers versus teenagers close to benefit cut-off age.

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3. Bank Statement Conduct

Lenders look for:

• No unarranged overdrafts
• No returned direct debits
• Predictable spending
• A clear ability to manage finances

This becomes especially important if benefit income is your main income source.

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4. Credit History

Lenders review:

• Missed payments
• Defaults
• CCJs
• Payday loans
• High credit utilisation

Clean recent conduct is essential.

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5. Outgoings

High household spending may limit borrowing, especially if benefit income varies.

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How to Strengthen a Mortgage Application When You Receive Benefits

(General Information Only)

1. Keep Your Credit File Clean

Recent missed payments may significantly reduce borrowing options.

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2. Maintain Stable Bank Conduct

Aim for 3–6 months where:

• Bills are paid on time
• There is no unarranged overdraft
• Spending is predictable

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3. Provide Clear Documentation

This may include:

• Award letters
• Bank statements showing payments
• Evidence of dependants (for Child Benefit)
• Employment documents (if applicable)

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4. Reduce Credit Commitments

Lower monthly payments increase borrowing capacity.

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5. Build a Larger Deposit

Every additional 5% reduces risk and increases lender choice.

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6. Check All Three Credit Reports

Review Experian, Equifax and TransUnion for accuracy.

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Example Scenarios

Scenario 1: Applicant on Universal Credit + Part-Time Income

Several lenders may consider full affordability using both income sources.

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Scenario 2: Applicant on PIP Only With a 25% Deposit

Some lenders will consider this due to the long-term nature of the benefit.

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Scenario 3: Family Using Child Benefit + Employment Income

Child Benefit is often counted, particularly for younger children.

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Scenario 4: Retired Applicant Using State Pension + Attendance Allowance

Widely accepted across many lenders.

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Summary

Applying for a mortgage for people on benefits or Universal Credit is entirely possible, though lender criteria vary. Borrowers can strengthen their chances by demonstrating stable income, maintaining clean bank conduct, reducing credit commitments and providing clear documentation.

Lenders base decisions on:

• Type and stability of benefits
• Deposit size
• Affordability
• Credit history
• Bank statement behaviour

With the right preparation, many applicants receiving benefits are successfully approved for a mortgage.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.