Can You Salary Sacrifice Your Mortgage Repayments?

Salary sacrificing a mortgage means part of your pay goes towards your home loan repayments before tax, through your employer’s salary packaging arrangement. It comes up most often for nurses, paramedics, hospital staff and charity workers.

Whether it is possible depends first on your employer and the fringe benefits tax (FBT) rules that apply to them. If it is possible, the next question is how a lender treats the packaged amount and the repayments when you apply for a loan.

This guide explains both sides in plain terms. It is general information, not tax advice. Your employer’s payroll team, salary packaging provider or a registered tax agent can explain how the rules apply to you.

The lender information is based on lender policy wording we reviewed in October 2026.

Can you salary sacrifice your mortgage repayments?

Sometimes. Salary sacrificing mortgage repayments is mainly offered by employers that have an FBT exemption or rebate, such as public benevolent institutions, health promotion charities, public and not-for-profit hospitals and public ambulance services.

For most other employers, paying an employee’s private expenses, such as a home loan, through salary packaging can create a fringe benefit that attracts FBT. The ATO lists the FBT rate as 47%. That cost is why mortgage packaging is mostly discussed for employees of exempt or rebatable employers.

Whether your employer offers it, and how much you can package, is set by your employer and its packaging provider.

How does salary sacrificing a mortgage work?

In a typical arrangement:

1. You agree with your employer to give up part of your future pre-tax salary.
2. The packaging provider uses that amount to pay an approved expense, such as your home loan repayments.
3. Your taxable salary is lower because the packaged amount is paid before tax.
4. The packaged amount and any administration fees show on your payslip or packaging statement.

The packaged amount usually pays an approved account, such as your home loan account. It does not change the loan itself.

What are the FBT caps for exempt and rebatable employers?

The ATO’s FBT rates and thresholds for 2026 describe caps on how much can be packaged before FBT applies for exempt employers, or before a rebate stops applying for rebatable employers:

The ATO also describes a separate $5,000 cap for salary-packaged meal entertainment and entertainment facility leasing. The FBT year runs from 1 April to 31 March.

Because the caps are on the grossed-up taxable value, the cash amount you can package towards a mortgage is lower than the cap itself. Your packaging provider can explain the dollar amount for your situation.

What is a reportable fringe benefit?

If the total taxable value of certain fringe benefits you receive is more than $2,000 in an FBT year, the grossed-up amount is reported on your income statement as a reportable fringe benefit. It is not taxed as income, but it can be used for some government tests and by some lenders.

How do lender policies differ on salary sacrifice for mortgage repayments?

We reviewed policy summaries for 40 Australian lenders (a mix of banks and non-banks) from a third-party broker policy tool, as at October 2026. This is a research sample of 40 lenders, not the whole market.

Lenders treat a packaged mortgage in two parts: the packaged income, and the loan repayment it pays. Examples from lender wording:

• Auswide Bank says salary packaging for personal expenses or loan repayments can be treated as non-taxable income, net of administration fees, and if packaging is for a loan, the full loan commitment is to be noted as a financial liability.
• Bank of Us says, for borrowers employed by FBT exempt organisations, tax-free components confirmed as available as cash up to the capping threshold may be treated as tax-free income. It lists caps of $30,000 per year for public benevolent institutions and health promotion charities, and $17,000 for hospitals and ambulance services.
• ING says some occupations, such as clergy, health and charity workers, can have part of their income deducted before tax, and these payments can be allocated to mortgage payments and utility bills.
• Macquarie says salary sacrifice “tax free” arrangements apply to people employed in public health, social work or charity work, and any loan commitments must be included as an existing commitment for servicing.
• Firstmac says tax benefits associated with salary packaging are not relied on for serviceability, and loan commitments associated with the salary sacrifice must be shown as an ongoing liability.
• NAB says a deduction can be evidenced as a repayment declared in the application, such as car lease or home loan repayments, and refers to adding back tax-free amounts up to $970 per month for customers eligible for a fringe benefit exemption.
• Bankwest says the full amount of liabilities, such as a novated lease or home loan, must be included as a commitment in servicing where the customer is not willing or able to stop the deduction.

These are examples of how differently lenders approach the same situation. These examples are not recommendations, and policy must be confirmed before an application is lodged. Policies change often, so confirm the current position with a broker before you apply.

Policy summary as at October 2026, from a third-party broker policy tool (export dated 20 October 2026). The lender guides behind it are dated between June 2026 and October 2026 for the lenders named on this page. The sample counts on this page cover all 40 lenders, whose guides are dated between October 2025 and October 2026. For example, NAB's guide is dated 16 October 2026. Lender policies change often and may have changed since.

How do lenders count your income if you package your mortgage?

Lenders usually start with your gross salary and then decide how to treat the packaged part. Common approaches include:

• treating the packaged amount as tax-free income in the lender’s servicing, often net of administration fees
• adding the packaged amount back to your taxable income, then taxing it at your normal rate
• not relying on the tax benefit at all
• checking that the packaged amount can be converted to cash or stopped

The approach can change the result. A lender that counts the packaged amount as tax-free income may show higher net income than one that adds it back and taxes it.

Salary sacrifice in general, including super and other items, is covered in our salary sacrifice guide.

Related research: Does Salary Sacrifice Affect Your Home Loan Application?

Do lenders count the mortgage repayment as a liability?

Yes. Packaging a mortgage does not remove the loan from your application. Lenders such as Auswide, Macquarie and Firstmac say the loan the packaged amount pays must still be included as a commitment, and Bankwest says the same in some cases.

That means the lender looks at both:

• the packaged income, under its salary packaging rules; and
• the full repayment on the loan being paid, as a liability

If you are refinancing the packaged loan, or the new loan replaces it, the lender assesses the new repayment instead. Your packaging provider may need updated loan details after settlement.

Does salary sacrificing a mortgage help your borrowing power?

It can, a little, if the lender counts the packaged amount as tax-free income, because net income is then higher than it would be on a fully taxed salary. It does not reduce the loan amount, the repayments or the lender’s expense checks.

The effect is usually modest, because the caps limit how much can be packaged. Lenders also differ, so the same payslip can produce different borrowing estimates at different lenders.

What about salary sacrificing a car or novated lease?

A novated lease is another common salary packaging item. Lenders treat the lease repayments as a commitment, similar to a packaged mortgage. Our novated lease guide covers this in detail.

Related research: Can You Get a Home Loan with a Novated Lease?

What documents do lenders ask for?

• recent payslips showing the packaged amounts and administration fees
• a packaging statement or letter from the employer or packaging provider
• your income statement, which may show reportable fringe benefits
• statements for the loan being paid by the packaging arrangement
• an employment letter, at some lenders, confirming the package can be taken as cash

What happens if you change jobs or stop packaging?

Salary packaging is tied to your employer. If you move to an employer without an FBT exemption or rebate, or leave the health or charity sector, the arrangement usually ends and your take-home pay changes. The home loan itself stays the same, and the repayments then come from your after-tax pay.

Lenders assess your income as it stands at the time of application. If you are changing jobs soon, a lender may ask about the new role and whether packaging will continue. Some lenders also ask for confirmation that the package can be converted to cash, because that shows the income is still available if the arrangement stops.

It also helps to check with the packaging provider how any unused packaging amount is handled at the end of the FBT year, or when you leave.

10 common mistakes with salary sacrificed mortgage repayments

1. Assuming every employer can offer mortgage packaging without FBT.
2. Confusing the grossed-up cap with the cash amount that can be packaged.
3. Leaving the packaged loan off the application.
4. Expecting every lender to count packaged income as tax-free.
5. Forgetting administration fees on the payslip.
6. Not updating the packaging provider after refinancing.
7. Not having payslips that clearly show the packaged amounts.
8. Assuming reportable fringe benefits count as extra income.
9. Treating packaging as a way to borrow more than the loan can support.
10. Relying on general information instead of checking the tax position with a registered tax agent.

How to improve your chances before applying

• Get a recent packaging statement showing exactly what is packaged.
• Check that payslips show the pre-tax deductions and fees clearly.
• List every packaged loan or lease as a liability.
• Check whether the package can be converted to cash if a lender asks.
• Ask your employer whether the arrangement will continue after a job change.
• Compare how different lenders treat packaged income before applying.

Is it worth waiting before applying?

Waiting can help if you have just started a new packaging arrangement and do not yet have payslips that show it clearly, or if you are about to change employers. Otherwise, waiting is unlikely to change how a lender treats the arrangement.

Example scenarios

Scenario 1: Public hospital nurse

A nurse at a public hospital packages part of her pay towards her home loan up to the hospital cap. Some lenders may count the packaged amount as tax-free income, and lenders still generally count the full home loan repayment as a liability. Nurses with shift income can also read our guide on agency and penalty rates.

Related research: Can Nurses Get a Home Loan Using Agency Income, Shift Penalties or Casual Shifts?

Scenario 2: Charity worker refinancing

A charity worker packages her mortgage and wants to refinance. The new lender assesses the new loan repayment and its own treatment of her packaged income. After settlement, she gives the packaging provider the new loan details.

Scenario 3: Private sector employee

An employee of a private company asks to package his mortgage. His employer says it would create a fringe benefit with FBT, so the employer does not offer it. His application is assessed on his normal salary.

Scenario 4: Paramedic with a novated lease and packaged mortgage

A paramedic packages both a car through a novated lease and part of his mortgage. Lenders count both the lease and the mortgage repayments as commitments, while treating the packaged income under their own rules.

So, can you salary sacrifice your mortgage repayments?

Sometimes, mostly if you work for an FBT-exempt or rebatable employer, such as a public hospital, ambulance service or charity, and within the caps that apply to them.

For a home loan application, what matters is how the lender treats the packaged income and that the full loan repayment is still counted. Lenders differ on both.

Need help with a home loan and salary packaging?

A Fundd mortgage broker can help you compare options and check whether current lender policies may suit your salary packaging arrangement. We can review your payslips and packaging statement with you before you apply.