Commonwealth Bank (CBA) will now allow first-home buyers to rent out a room and use the rental income to help service their home loan. A mortgage broker said the move would be a “game changer” for first-home buyers and boost their income and borrowing power.

CBA confirmed to Yahoo Finance that it had expanded its rental income policy to allow the use of boarder income in home loan serviceability. Customers can count up to $150 per week in servicing, with one renter allowed under the bank's policy change.

"At Commonwealth Bank, we are constantly reviewing and monitoring our home loan policies and processes to see how we can best meet our customers’ home buying needs while maintaining our prudent lending standards," a CBA spokesperson said.

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The major bank said the home loan must be for personal use. For example, owner occupiers or refinancers, not investors.

Eligible customers include those with guarantors, those claiming First Homeowner Grants, or taking part in a Home Guarantee scheme.

Queensland recently changed its rules to allow buyers to rent out a room and still be eligible for first-home owner grants and stamp duty concessions.

Huge move for first-home buyers

Madd Loans founder George Samios said the move was already “generating a massive response” and could be a “game changer” for first-home buyers.

“This move will mean that many people can rent a room to a family member or friend and purchase a home, when before they may not have met eligibility criteria,” he said.

Samios said others would be able to borrow around $50,000 more due to the extra rental income, which could mean the difference between getting the home they wanted and missing out.

“Think about this – in some cases you now can pay zero stamp duty, access the first home buyer grant, and access up to $650 per month income towards your mortgage,” he said.

Samios said he expects other banks will follow CBA’s move given the current competitive home loan market.

Fellow major bank NAB already offers a similar policy for first-home buyers.

"NAB has been allowing customers to count rental income from spare rooms in their homes since 2021," NAB executive for home lending Denton Pugh told Yahoo Finance.

"It's just another way we're helping Australians realise their property dreams."