Changes for Ministry Workers
When I started my ministry journey in 2005, getting a home loan was tough. The only option miistry workers had was low-documentation loans with high-interest rates, which only decreased if you had a good payment history over time.
Since founding my brokerage firm in 2015, I’ve worked with lenders to improve home loan policies for ministry workers, including senior pastors, assistants, children and youth workers, church planters, and more.
I’m thrilled to announce that what was considered an exception in home loan lending five years ago is now standard policy with several lenders.
Maximising Ministry Worker Borrowing
MDBA, MEA, or Salary Sacrifice
Your denomination or church employer may allocate a percentage of your taxable stipend or salary towards ministry expenses, home costs, utilities, phone/internet, and other household and personal expenses.
For instance, in the Sydney Anglican Church, 40% of the taxable stipend is designated for an MDBA expense account.
Other Benefits/Allowances
Accommodation and travel allowances are additional non-taxable benefits that form part of your non-taxable income.
Choosing the Right Lender
Not all lenders assess your income in the same way. Some fail to differentiate between taxable and non-taxable income, which results in a higher tax component, reduces your net income, and negatively impacts your borrowing capacity. Others cap your non-taxable income at a small percentage of your total income, which also reduces your borrowing amount.
Free Accommodation
Significant progress has been made in how lenders assess free accommodation. Previously, ministry workers were penalized with a notional rent cost of $650-$1300 per month, which reduced borrowing capacity by $50K-$80K. Now, several lenders exclude this from servicing, leading to fairer outcomes.
Preparing for a Loan Application
Ministry workers applying for loans must prepare the following essentials:
- Letter of Employment: Provide details such as your start date, role, salary or stipend amount, and a breakdown of components/conditions around the MDBA/MEA or ministry expense amounts. Also include other benefits/allowances like travel and accommodation. Make it clear that these amounts are non-taxable and state that the percentage of the stipend used for ministry is non-taxable.
- Accommodation Details: Specify in the letter if your package includes accommodation. Include estimated weekly rental cost savings.
- Latest Payslips: Submit the most recent two pay cycle statements.
- MDBA/MEA/Salary Sacrifice Ledger: Show six months of history where allowances were deposited into a dedicated ministry account and expensed from there. If the full amount is deposited into your personal bank account, provide 6 months evidence and the ministry account ledger.
- Credit Cards/Personal Loans: Submit six months of history for personal/car loans and provide the latest statement for credit cards.
- Gift Letters or Statutory Declaration: Depending on the lender, provide one of these if parents are gifting money to ministry workers.
- Verification of ID: This will be done by your broker or lender.
- Savings History: Show evidence of savings history for three months. If the Loan-to-Value Ratio (LVR) exceeds 80%, at least 5% in genuine savings must be demonstrated. For LVR below 80%, this is generally not needed.
- Assets: Provide evidence of ownership of motor vehicles, contents, shares, or other assets.
Other helpful resources: Sydney Anglican Church Ministry Remuneration Guidelines : https://sds.asn.au/sites/default/files/Remuneration%20Guidelines%20for%20Parish%20Ministry%20Staff%20for%202025%20(18%20Nov%202024).pdf