The PhD Stipend Mortgage Guide | PhD Mortgage

The PhD Stipend Mortgage Guide

If you’re doing a PhD and you’re ready to buy a home, you may be annoyed at the lack of PhD stipend mortgage options. Rest assured, you can get a mortgage with stipend income.

After reading this page you should read the pages on do you qualify for a stipend mortgage and how much can you borrow with a stipend mortgage.

Last updated: 20th October 2023

Stipend Mortgages

Can stipend income be used to qualify for a mortgage?

Yes. Not many mortgage lenders will consider offering you a mortgage based on stipend though. If you are set on buying a home while doing a PhD (which is often a great idea) it is possible with stipend, however, you will have to approach the right lender.

A specialist stipend Mortgage Broker will be able to tell you your options. Most mortgage brokers are not familiar with stipend and may tell you it is not possible but it absolutely is.

Why don’t most banks consider stipend for mortgages?

Can you get a mortgage on a graduate programme?

Do you need to apply with somebody else who isn’t on stipend?

No. There are stipend mortgage options if you are buying by yourself, and all your income is from stipend. You may be able to borrow up to 4.5 times your annual stipend amount.

There are also some lenders that will only consider your stipend if there is somebody else named on the application with a salary, so in this scenario you have more options.

What documents are needed?

To get you a mortgage using your stipend I’ll request the following:

  • A letter from your university or doctoral centre confirming your dates of enrolment and your stipend amount and duration
    • If you get stipend remittance statements that’s great but they aren’t essential
  • At least 3 months bank statements showing your stipend and expenditure
    • If you’ve only just started receiving your stipend I just need to see it on one statement
  • Proof of your deposit
  • Depending on your circumstances a couple of other things like a sheet for you to complete about your spending, and your credit file, just standard mortgage stuff regardless of a stipend being involved.  
 

Can two people on PhD stipend apply for a mortgage together?

Yes. There are PhD stipend mortgages available even when two people are buying together on a joint application and all their income is from stipend.

You’ll both be able to be on a joint mortgage and own the home together. You don’t need to be married or even in a relationship, you could purchase with a friend or relative, and you don’t need a guarantor. 

How much can you borrow with a PhD stipend mortgage?

As a rough guide most banks and building societies will allow a maximum mortgage of about 4.5 times your usable income. Your usable income varies between lenders, and most don’t include stipend, though a couple do.

They will then reduce what you can borrow depending on how much your credit commitments are. These include loan payments, including car finance and credit card balances.

 

How much you can borrow examples

With the right amount of deposit and income it can be possible to borrow five times total income. Between 4 and 4.5 times your income is more common though.

The How Much Can You Borrow page goes into greater detail as to what you may be able to borrow.

What can be used as income alongside your stipend is discussed in the Do You Qualify page.

 Can I use a side job to increase what I can borrow?

Yes. Income you earn elsewhere from employment or self-employment could be used to increase the size of your mortgage.

We will need to demonstrate to a lender that it is sustainable. They may want you to have been in employment for the last 6 to 12 months and may check that the hours are realistic.

Somebody with a PhD stipend may not get a mortgage if it requires them to work a 40 hour a week job on top of their research. It will be treated on a case-by-case basis. Cases where your employed work compliments your PhD are treated more favourably with some lenders. 

In fact, some lenders will only use your stipend if it can be classed as secondary income. This means there is at least one other source of income on the application.

There are loads of extra rules when using a second job. I cover the on the Do You Qualify for a Stipend Mortgage page.

What size deposit is needed for a stipend mortgage?

At the moment the smallest deposit needed is 5%. You can boost your deposit by opening a Lifetime ISA.

Most banks will allow your deposit to come in part or entirely from a gift from a close family member. Some even allow it from non family member too.  There are a few ways parents can help you buy a place while doing your PhD.  Your parents (or other relative or even a friend) could even take a legal charge on your property if they wanted to gift you a large amount to help you buy a place, but still have their money protected to some degree. You could then repay this when you sell or have a salary large enough to allow you to remortgage the property for a larger amount.

The larger the deposit you have the lower the interest rate you can expect. A larger deposit will make the repayments on your mortgage lower overall too.

Keep in mind that to qualify with a smaller deposit your credit score will have to be good. It can help if you can show a history of good credit over no history at all. Having repaid a small loan in the past might give a bank more confidence in you, but it’s not guaranteed. People with no history of borrowing in the form of a loan or using a credit card are still regularly accepted though.

The minimum size deposit on a new build house is 10%. A. For new builds taking into account stipend income the minimum deposit for a fixed rate mortgage is currently 15%.

Read about deposit sizes in more detail.

 Are interest rates higher for PhD stipend mortgages?

No. Interest rates are in line with high street rates. The lowest interest rate I have secured for a PhD candidate is 0.99% which surprised even me. This was in a period in 2021 of extremely low rates though.

The interest rate will be in line with those accessible by non-stipend earners and is influenced more by the size of deposit that you have.

 Can a First time Buyer get a PhD stipend mortgage?

Absolutely. There are lenders that will consider your stipend income for a mortgage to help you buy your first home. They’ll consider PhD stipend for moving home too or remortgaging. 

Buying your own place could leave you better off each month as mortgage payments are often lower than rents on the same property. It’s important to consider your entire financial position before making the decision though.

Many of my clients plan to transfer their mortgage to a buy to let mortgage once they finish their PhD.

See more things to consider when arranging your first mortgage.

 How does student debt affect getting a stipend mortgage?

Amazingly your student debt shouldn’t actually count against you.

Banks determine how much they are happy to lend to you by looking at your income and your commitments. However, if you aren’t earning enough money to repay your student loans then the banks won’t penalise you for having them. They are more interested in your monthly payments as opposed to the total level of debt.

You can see the thresholds at which you start to repay your student loan here, but as stipend isn’t usually classed as taxable income you might not be affected even if your stipend is over these thresholds.

Read more about how student loans affect getting a mortgage.

Please be aware that by clicking onto the above link you are leaving the Jamie Thompson Mortgages website. Please note that neither Jamie Thompson Mortgages nor PRIMIS are responsible for the accuracy of the information contained within the linked site accessible from this page

 Does other debt affect getting a stipend mortgage?

Other debts absolutely do affect how much a lender will loan to you for a mortgage. This is true whether you are looking for a PhD stipend mortgage or a regular mortgage.

When making their decision on how much you can borrow a bank will look at your committed monthly expenditure. They’ll consider the total level of debt, but they are more interested in your monthly payments.

For every pound you are committed to paying a personal loan or car finance, this is a pound that cannot be used to fund the mortgage. This causes the bank to reduce what they will lend.

For example, somebody with a £10,000 loan repaying £180 back per month over 5 years may actually be able to get a larger mortgage than somebody with a £5,000 loan who is repaying £220 per month over 2 years. This is true for car finance too.

Credit card balances have the same affect. Lenders take three to five percent of the balance and add this as a monthly commitment, even if you have an interest free account.

 

 Getting a PhD stipend mortgage with bad credit

It can be possible to get a mortgage using a stipend if you have some history of bad credit.

Each case is reviewed on an individual basis by reviewing your credit profile. Arrears, CCJs, defaults and late payments will all show on your credit profile and will affect a lenders decision. They may decline you if the bad credit was too serious in their view. However, you can absolutely still be considered, especially if you have a larger deposit.

Read more about getting a stipend mortgage with bad credit.

Do you need your stipend income to be paid monthly to qualify for a mortgage?

No. You can be considered for a stipend mortgage even if it is paid quarterly. Some lenders may consider other payment frequencies too.

Just make sure that it is being paid into your UK bank account.

 

How long do you need to have been receiving stipend to apply for a mortgage?

So long as you have received your first payment you stand a good chance. Some lenders will ask you to prove that you have been receiving stipend for many months, or years, to consider you for a mortgage. 

I can check if you will qualify for a stipend mortgage before your payments even start though. I can help you do this by reviewing all your documents and then getting you an agreement in principle with a stipend friendly mortgage lender. Then we can apply as soon as your first payment comes in.

They are usually more concerned with how long is left remaining on the stipend though.

To have the most options you need 12 months remaining. If you have over six months remaining, you still can be considered. Under six months it is difficult though once you have a job offer you may be able to get a new job mortgage, even if this is on a fixed term contract

The Do You Qualify for a Stipend Mortgage page goes into more detail on this. Select your individual circumstances and see if you are likely to qualify.

Does my field of study affect if I qualify for a PhD stipend mortgage?

Not really.  We will just need to demonstrate to the underwriter at a lender that accepts PhD stipend, that your future income and earning potential will meet or exceed what your stipend is when you become employed. I’ve helped people doing PhDs in everything from feminist literature to engineering and medicine.

Can Clergy receiving stipend get a mortgage?

Yes. Most of what has been said in this article also applies to Clergy receiving stipend. Charity workers are also acceptable, not just PhD students! In fact, clergy on a stipend actually have more options than PhD students. This includes more lenders and leniency over your provided accommodation and main residence.

Clergy can even get a residential mortgage using their stipend income and permission from the lender to let the property out from day one of owning it. This is available where you plan to retire into the property. This means it must be on a repayment basis and affordable on your income, not the expected rental income like buy to let mortgages are assessed. The term must finish before your planned retirement age, but this could be as old as 75.

 

Why do most banks decline applications for a stipend mortgage?

Banks and building societies want to be confident somebody they lend money to will be able to afford the repayment over the entire term of the mortgage. Given that mortgages usually span many decades and stipend is only paid for a few years, this can make them nervous. For the same reason they are very cautious when lending to people on fixed term contracts as the income isn’t guaranteed for the term of the mortgage.

“But somebody with a full-time job isn’t guaranteed to have an income for the term of a mortgage” I hear you cry. And you’re right. They could lose their job for a whole load of reasons. And there’s no guarantee they’ll find a new one. 

Most banks say we know for a fact that your stipend will end, we don’t know for a fact an employed person will lose their job.

This is where we need to find a lender with a common-sense approach. A lender that recognises that if you can afford a mortgage on stipend before you get full time employment, you’re quite likely to be able to afford it when you finish your PhD. It’s thanks to these lenders who recognise your earnings potential that you can buy a home while doing a PhD.

 Can you use PhD stipend income with the Help to Buy equity loan scheme?

The Help to Buy scheme may accept stipend in some circumstances, however it has now ended for new applications. A new scheme may replace it in the future. 

Do non-British citizens qualify for a mortgage while doing a PhD?

Yes.

If you are an EU citizen with pre-settled or settled status, then you can be treated just like a British citizen or anyone else with permanent right to work and live in the UK.

If you don’t have permanent right to live in the UK (pre-settled and settled status can be classed as permanent with some lenders) there are additional rules around minimum deposit size. This can be 25%.

If just one person on the application has permanent right to live in the UK, including pre-settled status, the deposit restrictions can be ignored with the best stipend lenders.

Read more about non-British borrowers and PhD student mortgages. If you have pre-settled status and need a mortgage, or need a mortgage while on a spouse visa, click the links to find out more. 

Buy to let mortgages when receiving a stipend

Buy to let mortgages are possible if you are receiving a stipend.

When it comes to buy to let mortgages the lender is more interested in the potential rent of the property instead of your income. That being said, many lenders have a minimum income limit of £25,000 to be considered for a buy to let mortgage and won’t consider stipend even if you did have a £25k stipend.

Thankfully some lenders don’t have a minimum income requirement for a buy to let mortgage though, so it can still be done. 

Some lenders also require you to already own a property that you live in to qualify for a buy to let. However, a first time buyer who’s only income is a stipend can still qualify for a buy to let mortgage with a couple of lenders.

It’s likely you’ll need to speak with a specialist on stipends or buy to lets to get a mortgage in this situation. 

What if I go on maternity during my PhD?

It’s not impossible to get a stipend mortgage even if you are on, or about to go on, maternity leave from your research. Some institutions will continue to pay your stipend in line with their employed staff’s maternity benefit.

Ultimately the mortgage lenders who accept stipend will determine how much they can lend to you based on what your income will be when you return from maternity. You don’t have to wait until your return to get the mortgage though. It’s important to consider your post maternity pay as many new parents chose to complete the rest of their research part time and receive a corresponding fraction to their funding. This would be confirmed by a letter from your funder. The lender will use your post maternity funding to assess your income and therefore how much you can borrow.

An additional factor to consider is that childcare costs may reduce the amount you can borrow. A lender will ask how many dependents you have and at lower incomes a single child dependent can reduce the maximum mortgage amount. At higher incomes it has a smaller effect. However, a childcare commitment will be treated the same as a loan payment or car payment when calculating your affordability. Therefore, somebody who has no childcare costs may be able to borrow more than somebody who manages to avoid paid for childcare. These should be declared even if they haven’t started yet.

 

What will happen to my mortgage at the end of my PhD?

Most PhD candidates fix their mortgage for 2, 3 or 5 years. This means that at the end of the fixed period you are able to remortgage to another lender without penalty, sell the property and repay the mortgage without penalty, or buy a new home without being tied to the stipend mortgage lender as others may now be available to you.

Most of the PhD candidates that I help try to have the fixed period end close to the end of their PhD. We know that your circumstances are going to change at this point so it makes sense to build in the flexibility. It’s important to have this flexibility at this point as your income is likely to increase and become more ‘conventional’ meaning you could qualify for a lower cost mortgage as you aren’t limited to the stipend mortgage lenders. Most people’s incomes increase drastically at the end of their PhD, and this may allow you to increase your monthly payment which will reduce the term of your mortgage or buy a larger home. You may even need the flexibility to relocate to another university town or city if the right opportunity comes along.

I will contact you to review your mortgage at the end of the fixed period to review the best option for you at that time (unless I’ve won the lottery in the meantime).

 

Can I rent out my home after I finish my PhD?

Yes, that’s usually possible. If you are in a fixed period, you can ask the lender for consent to let. The terms of the mortgage typically stay the same in this situation though the lender allows you to have a tenant who pays rent.

If you are at the end of the fixed period, or even during the period if it makes sense to pay the penalty, you can often remortgage to a buy to let mortgage. The advantages of this are that you will likely be able to transfer to an interest only mortgage meaning there is more margin between the mortgage payment and rent you receive each month. Of course, you won’t increase the equity held in the property unless it increases in value as you are only paying the interest on the money borrowed. You could even borrow more money against the property to fund a deposit for a new home for yourself.

You typically need to have 25% equity to be considered for a buy to let mortgage. This is unlikely to be the case unless you placed down a large deposit when buying the property or the value has increases substantially.

 

Is buying a home a good idea while receiving a stipend?

 

That very much depends on you as an individual. I ask people three questions to get them thinking if buying is a good idea for them (PhD candidate or not).

• Is your income stable?
• Can you commit to one location for a known period of time
• If you are buying with somebody, can you commit to them for a long period of time

The likelihood is that you’ll be in one location for the next few years to conduct your research. If you can spend those years paying your own mortgage, instead of somebody else’ via rent, why wouldn’t you?

Read more on is now a good time to buy.

Where can I get a PhD stipend mortgage?

As you’re a specialist borrower your best course of action would be to contact a Mortgage Broker that specialises in getting PhD stipend mortgages. Most mortgage brokers will tell you it can’t be done, but a stipend specialist, like say, me, will show that it can.

What does a Mortgage Broker do?

 

Can’t I just ask my own bank, they see my stipend payment every month?

As most banks don’t offer mortgages to people on a stipend it’s unlikely that going directly to your bank will help. That’s annoying. Especially if you’ve been banking with them for a long time, and they can see your regular stipend income.

Lending decisions are very black and white and for most lenders stipend income is simply unacceptable.

Why use a Stipend Mortgage Specialist?

Most Mortgage Brokers will probably tell you a mortgage with a stipend can’t be done. I don’t blame them, I’d have told you that too once.

Using a stipend specialist will save you time as I already know the answers and have experience submitting cases with stipend income to mortgage lenders. I don’t claim to be an expert in all types of mortgages, but when it comes to stipends, I’m the man. If you came asking if a salary paid in Hong Kong Dollars can be used I could probably sort it in time, but you’d be better off searching for somebody who specialises in that as they’ll know the answer right away and know how to present it to the lender.

 

Why do I specialise in PhD Mortgages?

It happened by accident really. A friend of mine asked if she could use her stipend to get a mortgage. I asked her what a stipend is, she explained it, and I said no, no chance. It’s not taxable so it won’t be treated as an income.

I then came across a lender that happened to accept it as income. I did a little more digging and found a few more.

It turned out I really enjoyed helping people in this situation, especially when they’ve been told it can’t be done by their bank or another broker. My clients are solo buyers wanting to avoid four years of rent, and many are couples where one already earns a good salary. Helping these people buy (usually) their first house was really rewarding so I set out to try and help more.

It also helps that people doing PhDs are usually quite interesting. Before talking about mortgages, I love finding out a bit about your work. I’ve got clients curing cancer, working on ways to grow human skin so we can stop testing on animals, hydro-engineers, arts, you name it.

Ultimately, I want to do a good enough job so that you’ll also come back to me in a few years time when you’re a doctor in your field and I’ll help you buy your next house too. It should be a lot simpler by then so I typically don’t charge returning clients.

Do You Qualify for a Stipend Mortgage?

 

How much does stipend mortgage advice cost?

For stipend mortgage advice I charge a £390 fee.  This is paid after our initial meeting and prior to research commencing. I then receive commission from the lender as would any other mortgage broker and any case, stipend or not.

If I can’t get you a mortgage offer then the fee will be returned in full.

Read more about my fees and how I set them.

 

Stipend Mortgage FAQs

Can you get a mortgage with a stipend?

Yes. You can get a mortgage with your stipend with a few lenders. It’s best to speak to somebody who specialises in stipend mortgages as it is a very niche area.

Is a stipend considered income for a mortgage?

Yes. Stipend can be counted as income for a mortgage but only with a very small number of lenders. The chances are you own bank won’t accept it but a specialist broker will know which banks do.

 

Can you get a mortgage when doing a PhD?

Yes. Some banks will give you a mortgage while doing a PhD even if stipend is your only income. Not many banks will consider it though and you have more options if you are applying with somebody with ‘normal’ income too.

 

What is a stipend mortgage?

A stipend mortgage is any mortgage where the lender accepts stipend as a form of acceptable income. It’s rare for banks to offer stipend mortgages but it is possible.

 

Is stipend income UK?

Yes. Stipend is classed as a form of income though it is usually tax free. It may affect what other benefits you qualify for but not all institutions class it as acceptable income.

Learn more about PhD stipends and how they differ from a doctoral loan.

Stipends are not usually taxable according to the HMRC Employment Manual.

 

Can PhD students get mortgages?

Absolutely. A few lenders will consider stipend as an acceptable form of income, but not many. A specialist stipend mortgage broker will be able to help you.

 

Can you buy a house on a PhD stipend?

Yes. Even if your only income is from stipend, it can be used to buy a house with a mortgage. Not many lenders will accept it in the UK, but it is possible with some banks.

Please be aware that by clicking onto the above link you are leaving the Jamie Thompson Mortgages website. Please note that neither Jamie Thompson Mortgages nor PRIMIS are responsible for the accuracy of the information contained within the linked site accessible from this page

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