Getting a home loan is difficult while you are receiving weekly workers compensation (workers comp), because lenders see the payments as temporary. Most wait until you are back at work in your usual role, ideally with payslips and an employer letter confirming it. A lump sum settlement can help with a deposit, and income protection payments are treated case by case.

Workers compensation and home loans at a glance
Situation How lenders usually see it
On weekly payments, off work Usually not counted as income
Back at work on full hours Normal salary counted, often after recent payslips
Back on reduced hours Current hours counted
Lump sum settlement Can be used as savings or deposit
Income protection payments Case by case; usually only if long term

Why don’t lenders count weekly payments?

Weekly compensation replaces wages while you recover and is meant to end when you return to work or reach a set point in the claim. Lenders must be satisfied you can repay over the long term, and a payment designed to stop does not show that. Applying while you are off work can also lead to a decline that sits on your credit file as an enquiry.

When can you apply again?

Once you are back in your usual role. Lenders like to see recent payslips at your normal hours and a letter from your employer confirming your position, hours and pay. If you have returned on a graded plan, lenders usually count the hours you are working now, not the hours you expect to reach. The employer letter template shows what to ask for.

Can a lump sum settlement be a deposit?

Yes, usually. A settlement paid to you is your money and can fund a deposit, though lenders may not treat it as genuine savings, which matters for deposits under 10%. Keep the settlement documents to show where the money came from. The genuine savings page explains the rule.

What about income protection insurance?

Income protection payments are taxable and declared in your tax return. Some lenders will count them when they are expected to continue for a long period, such as under a policy paying to age 65 for a lasting condition. Short benefit periods are treated like temporary income.

What if a partner is still working?

A partner’s income can carry the application while you recover, provided it is enough on its own. Lenders will still ask about your situation, because your living costs remain part of the household. Telling the lender honestly is essential; leaving it out is a breach of the application.

What if you already have a mortgage?

Your current loan continues as normal. If weekly payments are lower than your wages and repayments are a strain, contact your lender early: lenders must consider hardship requests, and options can include a temporary reduction or a repayment pause. Do not let payments fall behind without speaking to them, because missed payments go on your credit report. Some mortgages have repayment insurance attached, and some income protection policies cover this situation, so check what you hold.

What should you do now?

  1. Focus on recovery and a stable return to work.
  2. Keep records of the claim, any settlement and your return-to-work plan.
  3. Ask your employer for a letter once you are back on normal duties.
  4. Have a broker check timing before any credit application.

Questions people ask

Can I refinance while on workers comp?

It is difficult for the same reasons, unless the new loan does not rely on your income, for example a partner can service it alone. Talk to your current lender about hardship options first; see mortgage hardship help.

Is workers compensation taxable?

Weekly payments that replace wages are generally taxable. Lump sums depend on what they are for, so check with your tax agent.

How long after returning to work can I apply?

Some lenders accept a few recent payslips with an employer letter; others want longer. It depends on the lender and your history.

Charles Touma works out when your application has the best chance and which lenders take a practical view of a return to work. A free 30-minute call covers it. General information only, not credit, legal or tax advice.

Sources: ATO, compensation and insurance payments; ASIC, Regulatory Guide 209, checked 18 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.