How to get a mortgage if you’re a foster carer

Self-employed status: Foster carers are considered self-employed by HMRC, which means they are responsible for filing annual tax returns. This self-employed status can be a red flag for some lenders, who often view it as less stable than traditional employment, even though foster carers may have consistent income. 

Tax relief: Foster carers receive significant tax relief on their income, meaning much of what they earn is tax-free. This can reduce the taxable income figure they report, making it appear lower than their actual earnings. Lenders might mistakenly view this as a reduced ability to afford mortgage repayments. 

Inconsistent understanding among lenders: Not all lenders are familiar with how foster care income works, or how to properly account for the tax relief. This lack of understanding can lead to rejections or more difficult applications for foster carers, even though they may be financially capable of affording a mortgage. 

Find a specialist lender: Some lenders have tailored mortgage products for foster carers, recognising the tax reliefs and treating your income more accurately in affordability assessments. 

Provide detailed paperwork: You’ll likely need to supply more documentation than other applicants. This could include your last two years of income statements, bank statements, and a letter from your fostering service confirming your role. 

Work with a mortgage broker: A broker who has experience with foster carers can help guide you to the right lender. They’ll know who is most likely to approve your application and help you navigate the process. 

Check your credit score: As with any mortgage application, your credit score will be a factor. Make sure it's in good shape before you apply. 

Tax returns: At least six consecutive months of tax returns proving your income from fostering. 

Bank statements: Lenders may request bank statements for the last 6-12 months to see your regular income and outgoings. 

Letter from fostering agency: A letter confirming your status as a foster carer and providing evidence of regular payments. 

Proof of identity and address: Standard documentation such as a passport, driving licence, and utility bills. 

Credit report: Lenders may access your credit report to review your creditworthiness. 

Not disclosing fostering income properly: Make sure to provide all your income details accurately, including foster care payments. 

Applying to the wrong lenders: Some lenders don’t understand foster carers' income structure, so it's best to approach those who do, or use a specialist broker. 

Overestimating affordability: Be realistic about what you can afford in monthly payments. Foster care income can fluctuate, so be cautious when estimating future earnings. 

Skipping credit checks: Not checking your credit report before applying can lead to surprises. Correct any mistakes ahead of time to avoid issues.