The Commonwealth Bank has changed its credit policy to allow home buyers to rent out a room and use the rental income to service their home loan.
Rental Income Now Included in Home Loan Serviceability
The ability to use rental income from a boarder toward serviceability calculations will be particularly helpful for first-home buyers, as it boosts both income and borrowing power.
Under the new policy, CBA will allow up to $150 a week from one boarder to be included in loan assessments, potentially enabling eligible homebuyers to borrow an extra $50,000.
To qualify, borrowers must sign a statutory declaration confirming that a boarder is legally paying to live in the property.
Who’s Eligible for the New Policy?
While this policy does not apply to bridging and investor loans, it does include:
Borrowers using a guarantor
Borrowers claiming the First Home Owner Grant
Borrowers under the Home Guarantee Scheme
A Gamechanger for First-Home Buyers
George Samios, founder of Madd Loans, told moneymag.com that the change is an instant gamechanger:
“This move will mean that many people can rent a room to a family member or friend and purchase a home, when before they may not have met eligibility criteria.”
He added:
“In some cases, you now can pay zero stamp duty, access the first home buyer grant, and use up to $650/month income towards your mortgage. And if you’re building a new home, there’s no purchase price limit.”
CBA Leads the Way Among Major Banks
Baber Zaka, CommBank’s General Manager of Third-Party Distribution, told brokerdaily.com:
“We’re pleased to have expanded our rental income policy to allow the use of boarder income in home loan serviceability.
At CommBank, we’re constantly reviewing our policies to meet customer needs while maintaining prudent lending standards.”
He said this update, which is a first among the major banks, reflects the bank’s ongoing efforts to evolve based on broker feedback.
Positive Industry Response and Potential Industry Shift
Vincent Moore, broker partner at Entourage Finance, praised the move:
“It’s a smart, progressive move. For many first-home buyers, especially those living with a friend or sibling who helps with the mortgage, this can significantly increase borrowing capacity.”
He highlighted how small, incremental changes can have a big impact for those trying to enter the property market.
Now, all eyes are on how successful this policy will be—and whether other banks will follow suit.
