Foster Carer Mortgages

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Can You Use Fostering Income to Get a Mortgage?

Yes. Fostering income can be used towards a mortgage, and some lenders will accept 100% of it within their affordability calculation. The problem is that most high street banks either refuse to consider it or heavily discount it.

The reason comes down to how lenders classify foster carers. Most treat you as self-employed, even though your income comes from a local authority or fostering agency. That means they want tax returns, and because foster care allowances are largely tax-free (under the Qualifying Care Relief), your declared income on paper often looks far lower than what you actually receive. This creates an affordability gap that high street lenders struggle with.

Specialist lenders take a different approach. Instead of relying on your self-assessment tax return, some will assess your income using remittance slips and bank statements showing the payments coming in. This method reflects your actual earnings and can significantly increase how much you are able to borrow.

How Lenders Assess Fostering Income

There is no single standard. Each lender has its own policy, and the variation is significant:

100% of fostering income accepted by some specialist lenders. They use remittance slips and agency letters rather than tax returns, so your borrowing power reflects what you actually earn.
Net profit only is what some high street lenders use. Because most foster care income is tax-free, the “profit” on your tax return can be very low, meaning you may only qualify for a fraction of what you need.
Fostering fee vs fostering allowance. Your income typically has two components: the fee (payment for your care) and the allowance (to cover the child’s expenses). Some lenders count only the fee. Others accept the full amount.
Minimum fostering tenure. Most lenders want at least 12 months of continuous fostering. Some require 6 months, a few want 2 years. The longer your track record, the more options open up.
Secondary income. Some lenders require fostering income to be supported by a partner’s salary or part-time employment. Others will accept fostering as your sole income source.

The difference between the right lender and the wrong one can be tens of thousands of pounds in borrowing capacity. This is why a whole-of-market broker who understands fostering income is essential.

What Documentation Do You Need?

Documentation requirements depend on the lender, but you should have these ready:

Agency or local authority letter on official letterhead confirming: the children in your care, placement duration, expected continuation, and income per child. This is the single most important document.
Remittance slips or payslips for the last 6 months showing your fostering payments.
Bank statements (3 to 6 months) showing the payments being deposited.
Self-assessment tax return (SA302) for the last 2 to 3 years. Required by some lenders, though specialist lenders may not need this if they assess via remittance slips instead.
Proof of registration as an approved foster carer with your local authority or agency.

If you are a respite carer rather than a full-time foster carer, lenders will typically want a letter documenting your income over the current and previous 2 tax years to establish consistency.

How Much Deposit Do You Need?

The minimum deposit is 5% of the property value, the same as any residential mortgage. However, there are some important considerations:

5% deposit with 2+ years fostering. If you have a solid track record, the widest range of lenders and rates becomes available.
Higher deposit if under 2 years. Some lenders require 10% to 15% if your fostering history is shorter, to offset the perceived income risk.
Better rates with more deposit. As with any mortgage, a 10% or 15% deposit unlocks lower interest rates. Every percentage point matters over a 25 year term.

Challenges Foster Carers Face When Applying

Tax return mismatch. This is the biggest barrier. Qualifying Care Relief means most of your fostering income is tax-free, so your SA302 shows minimal profit. Lenders using tax returns to assess income will undervalue your earnings significantly. The solution: use a broker who knows which lenders assess via remittance slips instead.

Income perceived as temporary. Lenders worry placements could end at any time. A strong agency letter confirming ongoing placements and expected continuation addresses this directly.

Gaps between placements. If you have had periods without a child placed, some lenders will question income stability. Consistent placement history over 12+ months is the strongest position.

Property suitability. Some lenders will check that your property meets fostering requirements (bedroom sizes, safety standards). This is rare but worth being aware of.

Credit history. A poor credit score reduces your options regardless of your fostering status. If you have adverse credit, it is still possible to get a mortgage as a foster carer, but the pool of available lenders narrows further.

Foster Carers Buying Their First Home

If you are a foster carer and a first-time buyer, the same principles apply. You need a minimum 5% deposit, at least 12 months of fostering income on record, and a lender who accepts fostering income properly.

You may also qualify for first-time buyer stamp duty relief (no stamp duty on the first £425,000 of a property purchase), which applies regardless of your income source.

Remortgaging as a Foster Carer

If you started fostering after taking out your current mortgage, your existing lender may not accept fostering income when it is time to remortgage. This is a common problem: your circumstances have changed, but your lender’s criteria have not.

Rather than accepting a product transfer at whatever rate your current lender offers, a whole-of-market search can find lenders who properly assess fostering income and offer competitive rates.

Why Use a Whole-of-Market Broker?

Foster carer mortgages are a niche area. Most high street banks do not have a specific policy for fostering income, and their standard self-employed criteria will undervalue your earnings.

A whole-of-market broker who understands fostering income will:

Know which lenders accept 100% of fostering income via remittance slips
Match your income structure to the right lender first time, avoiding wasted credit searches
Prepare your application with the correct documentation for that specific lender
Handle the full process from initial assessment through to completion

At Knox Mortgages, we work with lenders who specialise in fostering income. We assess your full financial picture and find the lender that gives you the strongest borrowing position.

Book a Free Discovery Call

Your home may be repossessed if you don’t keep up repayments on your mortgage.

Knox Mortgages is a trading style of Fort Advice Bureau which is regulated and authorised by the FCA to conduct Mortgage and Protection business, FRN: 972730

Foster Carer Mortgages