Mortgages for foster carers shouldn't be hard to arrange, but they often are. You might bring in £30,000 or £40,000 a year from fostering, paid like clockwork by the local authority or your agency, and still get turned down online. That happens because most foster carers are self employed for tax, and thanks to qualifying care relief the profit on your tax return is often close to nil. A computer that only reads that figure thinks you earn nothing.
That's where we come in. Some UK mortgage lenders will use all of your fostering income, allowance and fee together. Some will only count the fee or reward part. Some want two years of tax calculations, others will work from a letter and a few months of bank statements. Picking the right lender first time is most of the job, and a wrong pick leaves a declined application on your record for nothing.
Most of our advice is fee free. On over 90% of cases the lender pays us when your mortgage completes, so you get whole of market advice and one person handling everything. Mortgages under £100,000 carry a £299 fee, and complex or adverse cases can carry a fee of up to £995. We'll always tell you before you commit to anything.
Fill in the form and we'll call you back, or read on for how lenders look at fostering income, what you could borrow and what to have ready. We help foster carers right across the UK, not just here in Hampshire.
Fostering income doesn't fit neatly into a lender's boxes. It isn't a salary, it isn't quite a business, and the tax rules make it look smaller than it is. Here's what actually happens when an underwriter picks up your file.
Why foster carers count as self employed
HMRC treats most foster carers as self employed, so you register for Self Assessment and file a tax return each year, even if there's no tax to pay. Lenders follow the same logic. That means the rules for self employed applicants kick in: a track record of usually one to two years, SA302s or tax calculations, and tax year overviews. It doesn't matter that you have no business bank account or limited company. On paper you're a sole trader whose customer happens to be the council or an agency.
Qualifying care relief and the tiny SA302
Qualifying care relief lets you receive a set amount from fostering before any tax is due. For the 2026 to 2027 tax year it's a fixed amount of £20,440 per household, plus £435 a week for each child under 11 and £515 a week for each child aged 11 or over. Most carers' payments fall under that limit, so the taxable profit on the SA302 is often nil or a few hundred pounds. Great for your tax bill. Not so great when a lender only reads the net profit line.
Allowances versus fees
Many carers get two parts. The fostering allowance is meant to cover the cost of looking after the child: food, clothes, travel, pocket money. The fee or reward element pays you for your time and skill. Local authorities and agencies split it differently, and some don't pay a fee at all. A lender that sees the foster care allowance as money for the child rather than for you may only count the fee, which can cut your borrowing capacity in half or more.
Lenders that use all of your fostering income
Some lenders will use 100% of your fostering payments in affordability, as long as they're likely to carry on. For example, at the time of writing Accord Mortgages says 100% of foster care income can be used, backed by bank statements and a letter from the agency or local authority confirming each child's placement and allowance. Gen H weights fostering income at 100% where it's likely to continue for at least five years. Criteria change often, so we check before every case.
Lenders that only count your profit, or won't count it at all
Other lenders stick to the self employed figure on your tax return. With qualifying care relief that can be close to zero, so fostering adds little or nothing to what you can borrow. A 2024 industry count put roughly 57 lenders as accepting foster care income and 22 as not accepting it. Halifax, for instance, started accepting it in 2024, entered as self employed income with two years of figures. Even lenders that say yes don't all count it the same way, which is exactly why the choice of lender matters so much.
Fostered children as dependants
Most lenders count the children you foster as dependants, and that reduces affordability because they build in the cost of raising them. Virgin Money, for instance, asks for foster children to be included as dependants. It can feel unfair when the allowance covers those costs, but it's the rule. A lender that counts the allowance as income usually balances it out. A lender that ignores the allowance and still counts the children is the worst of both worlds.
Your bank has one set of rules, and if fostering income doesn't fit them the answer is no. As a broker we can match you to the lender whose rules fit how you're paid. Here's what that looks like in practice.
We know which lenders count fostering properly. Some count the allowance and fee, some only the fee, some only your SA302 profit. We know which is which and keep up when it changes, so your application goes to a lender that will see your real income.
Mostly fee free. On over 90% of cases we're paid by the lender. Mortgages under £100,000 carry a £299 fee, and complex or adverse cases can carry a fee of up to £995. We'll tell you before you commit.
We present your income the way underwriters want it. A clear explanation, the right letter from your fostering service, matching bank statements and remittance slips. Underwriters like a file that answers their questions before they ask them.
We plan around placement changes. A child moving on, a gap before the next placement or a move from one agency to another can all affect timing. We'll tell you when it's a good point to apply and when it's worth waiting a few weeks.
We look at the whole household. Most foster carers apply with a partner, and often one of you is employed. We'll work out the best structure, whether that's joint names, a partner's basic salary plus fostering, or family members helping.
Mortgage and protection together. If the household leans on fostering income, think about what happens if you can't care for a while. We can talk you through income protectionso the mortgage payments are covered.
Most declines we see have nothing to do with whether the household can afford the mortgage. They come down to the wrong lender, the wrong paperwork or the wrong timing. These are the ones that come up again and again.
Applying to a lender that only reads the SA302
This is the bit that trips people up. You apply online, the system pulls your net profit from the tax return, sees £0 or close to it, and declines. Nothing wrong with you, just the wrong lender for how you're paid. Going to a lender that uses your fostering payments instead can change the answer completely.
A fostering letter that doesn't say enough
A letter that just says you're an approved foster carer isn't much use to an underwriter. They usually want the start date of your approval, the children currently placed, how long each placement is expected to last and what you're paid for each child. We'll tell you exactly what the lender needs so your supervising social worker or agency only has to write it once.
Bank statements that don't match
Lenders check that the payments on your statements line up with the letter and the tax figures. If payments go into an account the lender hasn't seen, or the amounts jump around without an explanation, it slows everything down. Three tidy months of statements with the payments easy to spot is worth a lot.
Applying in the middle of a change
A child moving on, a new placement starting, a switch from the council to an agency: all normal, but a lender assessing your future income wants to see where things are heading. Sometimes the right move is to wait a few weeks until the new arrangement is confirmed in writing.
Too many dependants for the income counted
If a lender counts every child in the home as a dependant but only counts part of the fostering income, the numbers can fall apart quickly. This is where lender choice makes the biggest difference, particularly for larger households or sibling groups.
Credit problems you didn't know about
An old default, a missed phone bill or not being on the electoral roll can all knock a credit score. Lenders are often more relaxed than people expect about small, settled issues, but only if they're explained upfront. Check your credit file before you apply so there are no surprises.
Lenders don't agree on fostering income, so this calculator shows three versions of you side by side: a lender using all your fostering payments, one using only the fee element, and one using the taxable profit on your SA302. Add a partner's income if you're applying jointly.
For illustration only. This is not financial advice or a mortgage offer. Real lenders also look at your outgoings, credit history, dependants and their own criteria, so what you could borrow may be higher or lower.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Here's a simplified example, based on the kind of case we see a lot. The figures are illustrative, not a quote.
The family: Sarah fosters two children through an independent fostering agency and receives £36,000 a year, of which £14,000 is the fee element. Her partner Mark is employed on a basic salary of £32,000. They own a three bed semi worth £300,000 with £150,000 left to pay, and want a £400,000 four bed so they can take a sibling group.
A cautious lender: Sarah's SA302 shows nil taxable profit because of qualifying care relief, so the lender uses Mark's salary only. At 4.5 times income that's about £144,000, nowhere near the £250,000 they need.
A lender using the fee only: £14,000 plus £32,000 gives £46,000. At 4.5 times that's roughly £207,000. Closer, still short.
A fostering friendly lender: Counting all £36,000 plus Mark's £32,000 gives £68,000. At 4.5 times income that's around £306,000, comfortably covering the £250,000 they need, subject to affordability once the children in the house are counted as dependants.
The result: With £150,000 of equity from the existing property as their deposit, they'd be borrowing at 62.5% loan to value. Same couple, same income, three very different answers depending on the lender.
The catch: The lender wanted an agency letter confirming both placements were expected to continue, two years of tax calculations and three months of bank statements showing the payments. A gap between placements just before applying would have needed an explanation. Try your own figures in the calculator above, or get in touchand we'll do it properly.
Not every foster carer applies with a partner. Here's how the same rules play out for someone buying on their own. Again, the numbers are only an illustration.
The carer: Joanne has fostered with her local authority for three years and currently has one teenager on a long term placement. She receives £22,000 a year in allowance and skills fee, works part time on a basic salary of £14,000, and has saved a £15,000 deposit from her own funds.
What she wants: A £185,000 two bed house so the young person she cares for has a settled room. With a £15,000 deposit she needs £170,000, a loan to value of about 92%.
The numbers: A lender using her salary and fostering income works from £36,000, and at 4.5 times income that's £162,000. Close, but not quite there. A lender willing to lend 4.75 times income on her profile would reach £171,000, subject to affordability and her credit file.
What made it work: Three years of tax calculations, a letter from the council confirming the placement was expected to continue, and a slightly longer mortgage term to keep the payments comfortable. A longer term means paying more interest overall, so we'd always weigh that up with you.
There's no single foster carer mortgage product. There's the normal range of mortgages, and the job is finding a lender within it that treats fostering income fairly. These are the situations we help with most.
First time buyers who foster
Plenty of foster carers rent, particularly early on. You can buy with a 5% deposit with some lenders, as long as they'll use your fostering income. Have a look at our first time buyer guideand our page on 5% deposit mortgages, and use the stamp duty calculatorto see what you'd pay on the purchase.
Moving home for an extra bedroom
Most fostering services expect you to have a spare bedroom for a foster child, so a bigger home can mean taking another placement or a sibling group. That's one of the most common reasons foster carers move. Our moving home mortgagespage covers porting and the costs, and we'll check the new lender is happy with your fostering income before you agree a sale.
Switching your deal or borrowing to extend
When your fixed rate ends, a product transfer with your current lender usually needs no income check. Borrowing more to build an extension or convert a loft for another bedroom is different, because the lender will reassess your income. See our guide to switching your mortgage, and if the extension is the plan, our page on borrowing for home improvements.
Joint applications with an employed partner
This is the most common set up we see: one partner fosters full time, the other is employed. Lenders add the two incomes together, using payslips for the employed partner and the fostering evidence for the carer. If only one of you will own the home, a joint borrower sole proprietor mortgagelets a family member's income help without them going on the deeds.
Local authority and agency foster carers
Local authority carers usually get the allowance plus any skills fee set by the council, paid directly. Independent fostering agency carers often receive a higher overall payment, with a fee or reward element built in. Lenders accept both. What matters is a letter from the local authority confirming, or the agency confirming, your approval, current placements and what you're paid.
Specialist and therapeutic fostering
Specialist, therapeutic, parent and child and emergency placements often pay higher fees, and some are short term by design. Short placements can make income look patchy, so lenders that average your last two years or rely on tax figures tend to suit these cases better than ones that want a single current letter.
Kinship carers and staying put
Family and friends who are approved as kinship foster carers are generally treated like any other foster carer, and qualifying care relief can apply to staying put arrangements too. Special guardianship and adoption allowance payments are a different thing, and lender views on those vary much more, so talk to us first.
Gaps between placements and credit history
Gaps happen. Some agencies pay a retainer between placements, many don't. A short gap with a clear history either side is usually fine with a lender that averages your income. Missed payments or defaults on your file are a separate question, and plenty of the foster carers we help have one or two. Check your file first with our Check My File guide.
Getting your documents together early is the easiest way to avoid delays. Exactly what's needed depends on the lender, but this is the usual list.
Everyone: Photo ID, proof of address, three months of bank statements showing your fostering payments and outgoings, and proof of your deposit. If family are helping, a gifted deposit letter. If the deposit comes from your own funds, statements showing where it's been saved.
Your fostering income: SA302s or tax calculations plus tax year overviews for the last one or two years, and a letter from the local authority or agency confirming your approval, how long each placement is expected to last and the allowance and fee for each child. Remittance slips or annual statements help too.
Newer foster carers: If you've fostered for less than two years, some lenders will consider 12 months or even six months of history, usually with a supportive letter and bank statements. Expect a slightly smaller choice of lenders and possibly a bigger deposit.
An employed partner: Their latest three months of payslips and a P60. Overtime and bonuses are often counted in part, with a history of regular payments.
Pension or benefit income: If part of your total income comes from a pension, your latest annual pension statement. For benefit income, your latest award letter. Not every lender counts every benefit, so tell us early.
Other self employed income: If you also run a business, sole trader or limited company accounts from a qualified accountant, business bank statements and the latest year's net profit. Lenders usually take the most recent year's figure or average the last two. Our self employed mortgagespage has more on this.
A proper conversation
We talk through your fostering, who you foster with, how long your placements are expected to last, your partner's income and what you want to buy. Fifteen minutes on the phone usually tells us which lenders are realistic.
Agreement in principle
We pick the lender whose criteria fit and get an agreement in principle, so you know where you stand before you make an offer or talk to your agency about a bigger home.
Paperwork, done once
We tell you exactly what to send, including the wording the lender wants in your fostering letter. That saves the back and forth that causes most delays.
Application and underwriting
We submit the application, explain your fostering income to the underwriter and answer their questions so you don't have to chase.
Mortgage offer
Typically two to four weeks from a full application, depending on the lender, the valuation and how quickly your agency or council confirms details.
Completion and beyond
Your solicitor exchanges and completes. We'll be in touch before your deal ends so you're never left on the lender's standard variable rate.
Is fostering income taxable?
It can be, but most foster carers pay little or none because of qualifying care relief. For 2026 to 2027 you can receive £20,440 per household plus £435 a week per child under 11 and £515 a week per child 11 or over before tax applies. HMRC's HS236 helpsheet has the detail.
Will my interest rate be higher because I foster?
Not because of fostering itself. Mainstream lenders that accept fostering income offer their normal deals. Your rate depends on your deposit, credit history and the lender, not the fact that you foster. We can't promise a particular rate until we've seen your full situation.
When should I get an agreement in principle?
Before you start viewing, and before you ask your agency about a bigger home. It tells you what a fostering friendly lender may lend. Our mortgage in principlepage explains how it works and how long it lasts.
Why use a mortgage broker instead of my bank?
Your bank can only offer its own products and its own rules on fostering income. A broker can compare lenders that count your allowance, your fee or your profit, and go straight to the one that fits. That usually means a better chance of approval and fewer wasted applications.
For independent support on fostering, allowances and finances, The Fostering Networkis the UK's leading fostering charity. You can also read HMRC's guidance on qualifying care relief.
Speak to one of our advisers today. We'll work out what you could borrow with your fostering income, explain your choices and help you move forward. Most of our advice is fee free, and we'll tell you about any fee before you commit.
