A Complete Guide to Home Loans for Students in Canberra

Securing a home loan as a student in Canberra often feels like an uphill battle. Between juggling inconsistent income, a lack of credit history, and the demands of university life, the barriers can seem overwhelming. 

But don't lose hope—while the path may be challenging, with the right information, a strategic approach, and guidance from experienced brokers, homeownership is within reach. 

In this guide, we’ll walk you through the process, eligibility criteria, and key considerations to help you overcome these hurdles.

The Canberra Property Market in 2025

Canberra’s property market has remained resilient in 2025, with median house prices hovering around $900,000. Despite fluctuations in other major cities, Canberra’s market has shown steady growth, making it a promising location for property investment. 

Domain’s latest report highlights that the city has a strong demand for housing, partly driven by its stable public sector employment and growing student population.

Canberra’s Housing Key Statistics:

• Median House Price: $900,000
• Median Unit Price: $620,000
• Annual Growth Rate: 6.2%

Understanding Home Loans for Students

Securing a home loan as a student in Canberra comes with its own set of challenges. Limited or inconsistent income, a lack of credit history, and minimal savings are often significant barriers. 

However, with the right knowledge and approach, these hurdles can be overcome. Let’s break down what you need to know and identify which students in Canberra are most likely to qualify for a home loan.

Who Can Qualify for a Home Loan?

Not all students will face the same challenges, and some are better positioned to qualify for a home loan. Here’s a look at the types of students who may be eligible:

1.Full-Time Working Students:

• Why They Qualify: These students balance their studies with consistent part-time or even full-time employment. Their steady income provides lenders with the assurance that they can manage regular loan repayments.
• Key Considerations: The income ratio (income vs. loan amount) is a crucial factor. Lenders will want to ensure that your income is sufficient to cover both living expenses and loan repayments.

2. Graduate Students with a Stable Income:

• Why They Qualify: Graduate students, such as PhD students, often have established careers or are on higher income trajectories, making them more attractive to lenders. Additionally, some banks offer special "Graduate Loans" with favourable terms.
• Key Considerations: A solid credit history and proof of income, such as a contract of employment, can significantly boost chances for loan approval.

3. Students with University Scholarships or Grants:

• Why They Qualify: Scholarships or grants provide a reliable source of income that can be counted towards loan eligibility. Some lenders may also consider government-funded scholarships, such as those provided by Services Australia.
• Key Considerations: These students should ensure that their scholarship income is well-documented and consistent over the loan period.

4. International Students with Financial Support:

• Why They Qualify: Some international students have access to significant financial support from family or government bodies in their home countries. This backing can serve as proof of ongoing income and financial stability.
• Key Considerations: International students may need to provide additional documentation, such as proof of funds or a guarantor, to satisfy the lender’s requirements.

5. Students with a Guarantor:

• Why They Qualify: Students who may not meet the income or credit history requirements on their own can still qualify if they have a guarantor, often a parent or guardian, who agrees to take on the financial responsibility if the student defaults.
• Key Considerations: The guarantor’s financial situation, including their credit history and income, will be heavily scrutinised by lenders.

6. Students in Certain Fields with Promising Job Prospects:

• Why They Qualify: Students studying in fields with high demand, such as medicine, engineering, or law, may be viewed more favourably by lenders due to their future earning potential.
• Key Considerations: Some lenders may offer tailored loan products recognising the long-term financial stability of these students.

7. Students Eligible for Government Grants or Assistance:

• Why They Qualify: Eligible students may access government grants or first home buyer schemes, reducing the upfront costs of purchasing a home. These can include the First Home Owner Grant (FHOG) or stamp duty concessions available in the ACT.
• Key Considerations: These grants often come with specific eligibility requirements, so it’s crucial to verify your status before applying.

Eligibility Criteria

The first step in securing a home loan is understanding the eligibility criteria. Most lenders will look at several factors:

• Proof of Income: As a student, this can include part-time job income, university scholarships, or even Youth Allowance.
• Credit History: Even with limited credit history, timely payments on personal loans or a credit card can boost your chances of approval.
• Deposit Requirements: Typically, you’ll need a minimum deposit of 5-10% of the purchase price, but having genuine savings can improve your chances of securing a loan.
• Loan Repayments: Lenders will assess your ability to make ongoing loan repayments based on your income and expenses.
• Government Grants: Eligible students may access first home buyer grants or government guarantees that can reduce initial costs.

Loan Types Suitable for Students

Traditional mortgages, with their strict income and credit requirements, may not always be the best fit. However, several loan options are specifically tailored to accommodate the unique financial situations of students. 

Here are five loan types that could be more suitable for students looking to step into the property market:

1. Basic Home Loan

A Basic Home Loan is a no-frills loan product that typically offers a lower interest rate and minimal fees. This option is ideal for students who are looking for a straightforward, affordable way to enter the property market without unnecessary extras that might drive up costs.

2. Interest-Only Loan

Interest-Only Loans allow borrowers to pay only the interest on the loan for a set period, usually between 1 to 5 years. This can significantly reduce monthly payments, making it an attractive option for students who are juggling education costs and other living expenses. 

However, it’s important to note that the principal remains unchanged during the interest-only period, which means higher repayments will be required later on.

3. Guarantor Loan

A Guarantor Loan involves a family member, often a parent, agreeing to secure the loan by using their own property as additional collateral. This can help students who might not meet the lender’s strict income or deposit requirements on their own.

It’s an excellent way to enter the property market without a large deposit, but it does involve significant risks for the guarantor.

4. Graduate Loan

Some lenders offer specific products called Graduate Loans, designed for recent university graduates. These loans come with more flexible terms and conditions, recognising the potential for future income growth as the graduate transitions into full-time employment.

5. Variable Rate Loan with Offset Account

A Variable Rate Loan with an Offset Account can be particularly beneficial for students who manage to save regularly. An offset account allows you to reduce the interest payable on your loan by offsetting your savings against the loan balance.

This is ideal for students who might have sporadic income but can occasionally save lump sums, such as from scholarships or part-time work.

Extra Costs to Consider

Beyond the loan deposit, there are several upfront costs to factor in:

• Stamp Duty: In the ACT, stamp duty can range from $20,000 to $40,000 depending on the property price. However, eligible students may qualify for concessions.
• Legal Fees: Budget around $2,000 to $3,000 for legal fees associated with the contract of sale.
• Lenders Mortgage Insurance (LMI): If your deposit is below 20%, you’ll likely need to pay LMI, which protects the lender in case of default.

Case Study: Emma’s Journey to Homeownership

Emma, a full-time student at ANU, worked part-time and saved diligently. With a steady income from her job and a small Youth Allowance, she managed to save $30,000. Emma approached a broker, who guided her through the loan application process. 

She secured a basic home loan with a 10% deposit and bought a unit in Canberra’s Belconnen area for $450,000. By leveraging a government grant and making timely payments, Emma now owns her first home.

Navigating Additional Challenges

Being a student borrower often means dealing with additional challenges, but knowing what to expect can make all the difference.

Limited Income Sources

Many students rely on part-time work, university scholarships, or government assistance like Youth Allowance. While these income sources can be considered, they often need to be supplemented by a guarantor, such as a parent, who can provide additional financial security to the lender.

Credit History Considerations

As a student, you might not have an extensive credit history. However, paying off a credit card or making timely payments on a personal loan can demonstrate financial responsibility. Some lenders may also look at your HECS-HELP loan and its impact on your overall financial stability.

Government Grants and Assistance

The ACT Government offers several grants and concessions for eligible home buyers. For example, the First Home Owner Grant (FHOG) can provide up to $7,000 towards your purchase. Additionally, some students may qualify for stamp duty concessions, which can save you thousands of dollars upfront.

Tips for Improving Your Chances of Loan Approval

Improving your chances for loan approval requires careful planning and preparation. Here are some tips to help you succeed:

1. Increase Your Deposit: The larger your deposit, the less risk you pose to lenders. Aim for at least 10%, but 20% is ideal.
2. Build a Solid Credit History: Make timely payments on existing debts and avoid accumulating unnecessary credit card debt.
3. Show Genuine Savings: Lenders prefer borrowers who have saved consistently over time rather than relying on lump sums or gifts.
4. Consider a Guarantor: If your income is limited, having a parent or guardian act as a guarantor can boost your application.
5. Reduce Outstanding Debt: Pay off any existing debts before applying, as this will improve your debt-to-income ratio.
   

FAQs

Can international students apply for home loans in Canberra?  

Yes, but the eligibility criteria are stricter. You may need a larger deposit and proof of a steady income.

What is the minimum deposit required for student home loans? 

Typically, a 5-10% deposit is required, but 20% is preferred to avoid Lender’s Mortgage Insurance.

Are there any government grants available for students? 

Yes, eligible students can apply for the First Home Owner Grant (FHOG) and stamp duty concessions.

Can I use my Youth Allowance as proof of income? 

Yes, but you may need additional income sources or a guarantor to strengthen your application.

What are the extra costs involved in buying a home as a student? 

Expect to pay for stamp duty, legal fees, and possibly Lender’s Mortgage Insurance (LMI).

How can I improve my chances of loan approval as a student? 

Increase your deposit, build a solid credit history, and consider having a guarantor.

What types of loans are best for students? 

Interest-only loans, basic home loans, and graduate loans are typically suited for students.

Final Thoughts: Your Path to Homeownership as a Student

Becoming a homeowner as a student in Canberra is more achievable than it might initially seem. By understanding the various loan options available and carefully planning your finances, you can take confident steps toward owning your first home. 

Remember, you don’t have to do it alone. With the right guidance and support, finding the best loan for your situation can be straightforward and rewarding.

Ready to take the next step? Home Loan Brokers Canberra is here to help you every step of the way. Call us at 02 6173 6397 to discuss your options and start your journey toward homeownership today.