Coming Home and Buying a House? What Aussie Expats Need to Know About Borrowing (and the Tax Bit We Actually Handle)

Thinking about heading home and buying a place? Welcome back. The flat whites really are as good as you remember, and yes, everything costs more than when you left.

Here’s a surprise that catches a lot of returning expats and overseas-based Australians flat-footed: getting a home loan in Australia while you earn your income overseas is harder than it was for the version of you who lived here. Not impossible, not even close, but harder, with bigger deposits and more hoops. Let’s walk through why, what to expect, and where the tax side (which is the bit we actually deal with) fits into your planning.

Why expats get the tougher treatment from lenders

It comes down to risk, as seen through a bank’s famously cautious eyes. Australia’s banks operate under rules set by APRA, the Australian Prudential Regulation Authority, whose whole job is making sure banks don’t do anything reckless enough to wobble the financial system. (The original version of this article called it the “Australian Prudential Lending Authority”, which doesn’t exist. Easy mistake, but we like getting the details right.)

When you’re earning in dirhams, pounds or Singapore dollars, a lender sees extra risk that a local borrower doesn’t carry: currency swings, harder-to-verify foreign payslips, and the simple fact that you’re a long way away. They manage that risk in two main ways, and it pays to understand both.

The two levers lenders pull: deposits and “shading”

First, the deposit. Where a local owner-occupier might borrow up to 80% of a property’s value (a 20% deposit), and sometimes more with mortgage insurance, expats are often asked for more skin in the game. Many lenders cap Australian expats around that same 80%, but plenty are more conservative, and the picture worsens for foreign nationals who aren’t Australian citizens, who can face deposits of 30% to 40%. Crucially, none of these numbers are fixed law: lender policies on expat lending are unpublished, vary enormously from bank to bank, and change regularly. One lender’s decline is another’s approval.

Second, and less well known, is income “shading”. Lenders routinely discount your foreign income before calculating how much you can borrow, often by 20% to 40%, to cushion against currency movements. So even with a healthy salary, your assessed borrowing power can come in lower than you’d expect. The currency you’re paid in genuinely matters here; major currencies tend to be shaded more gently than obscure ones.

One more wrinkle worth knowing: a lender’s idea of “non-resident” is not the ATO’s. You can be an Australian tax resident and still be treated as a non-resident borrower because you earn overseas, or vice versa. They’re two completely separate definitions doing two completely different jobs, which trips up almost everyone.

Your existing Australian property can be a powerful friend

Here’s the upside, and it’s a real one. Loads of expats hang onto their Australian home when they leave, or buy an investment property, and rent it out. Over time, two good things happen: the loan gets paid down, and (historically, at least) the property’s value climbs. Both build equity.

That equity can become useful leverage when you come to buy your next place, because lenders may let you use it as additional security. As a general rule, the more equity you can offer, the smaller the cash deposit a lender needs from you. Exactly how that plays out depends on your properties, your income, and the individual lender’s appetite, so this is firmly a conversation for a good mortgage broker who specialises in expat lending, not something to bank on from an article. We’re tax specialists, not credit licensees, so we’ll always point you to a licensed broker for the loan itself.

Where the tax side comes in (this is our patch)

Lending is only half the picture, and the half we don’t advise on. The tax half, though, is squarely ours, and it’s where returning expats most often leave money on the table or walk into nasty surprises.

If you’ve been renting out an Australian property as a non-resident, several tax threads need pulling together as you plan your return and your next purchase:

Negative gearing on that rental has long let many expats offset rental losses, but the 2026-27 Federal Budget restricted negative gearing to new builds from 1 July 2027, with existing properties grandfathered if you owned them before 7:30pm AEST on 12 May 2026. If you’re holding a grandfathered rental, that’s valuable, and worth factoring into whether you keep it or sell. We’ve covered all of this in our Australian Expat Tax Changes – 2026 Budget Guide for Expats.

The timing of your return matters enormously for capital gains tax. If you sell a former main residence while still a non-resident, you generally lose the main residence exemption entirely, but selling after you’ve resumed Australian residency can change the outcome by a six-figure sum. The date you become a resident again also resets the cost base on your foreign assets. None of this is intuitive, and all of it rewards planning before you book the flight.

And if you’re keeping the rental as an investment while buying a new home to live in, the deductibility of your borrowing depends on which loan is against which property and what each is used for, not which property the bank holds as security. Getting the loan structure right at the outset is far cheaper than untangling it later.

The bottom line

Borrowing as an expat is tougher but very doable: expect a bigger deposit, expect your foreign income to be shaded, and expect lender policies to vary wildly, so use a broker who knows the expat game. Meanwhile, the tax side of coming home, your rental, the negative gearing changes, the CGT timing, the loan structure, is where a wrong move gets expensive and where we can genuinely help.

Tread your own path. Just get the tax map drawn up before you start signing loan documents.

Planning your return? Let’s get the tax side sorted early.

The biggest, most expensive mistakes returning expats make aren’t at the bank. They’re in the tax decisions made around the move: when to sell, when to return, how to structure the loans, what to do with that grandfathered rental. Get those right and the savings dwarf any fee.

Our specialist expatriate tax team handles exactly this, and we work alongside your mortgage broker so the tax and the lending pull in the same direction. We offer a dedicated “Returning Home” consultation for precisely this situation.

Book a “Returning Home” consultation with our expat tax specialists today, ideally well before you list a property or sign a loan. Your future self (and your hip pocket) will thank you.

General information only. This article doesn’t consider your personal circumstances and isn’t tax, financial or credit advice, and we are not credit licensees. Speak to a licensed mortgage broker about lending, and to our specialist expatriate tax team today, or another registered tax agent, about tax, before acting.

References

1. Australian Prudential Regulation Authority, “Who we are” (APRA’s role in overseeing the stability of Australian banks and other financial institutions): apra.gov.au
2. Australian Government, Budget 2026-27, “Negative Gearing and Capital Gains Tax Reform” fact sheet (negative gearing restricted to new builds from 1 July 2027 and the 12 May 2026 grandfathering cut-off): budget.gov.au
3. Australian Taxation Office, “Main residence exemption for foreign residents” (loss of the exemption when selling as a foreign resident): ato.gov.au
4. Australian Taxation Office, “Rental property expenses” (deductibility of interest and holding costs for rental properties): ato.gov.au