- Lenders want to see disciplined financial habits, so cleaning up expenses, managing credit responsibly, and proving repayment ability are crucial for approval.
- Building savings, reducing debt, maintaining job stability, and being honest about your financial history will greatly improve your chances of securing a home loan.
If you're in the market for a home loan, you’ll know there are many boxes to tick before you’ll be approved for one. But that doesn't mean it's impossible. After all, banks and lenders are in the business of providing home loans.
Ultimately, a lender will look at how much money you bring in, how much you spend, your assets and investments, and your regular saving habits. So, if you're someone who likes to deal in cash only or can't prove your ins and outs, you might face some scrutiny when it comes time to apply for a home loan.
Like it or not, the reality is if you want to minimise the chances of your loan application being knocked back or delayed, you should consider how you spend and save in the weeks and months leading up to your application. Fortunately, there are plenty of baby steps a would-be borrower can take to clean up their finances prior to seeking a home loan.
What banks really want
Banks aren't evil - they look for very simple things.
They want to see a borrower present themselves as having good saving habits, good credit and good repayment history, having been on time with their rent, simple things like that.
What are the key tips for getting your home loan approved?
1. Spring clean your expenses
If you want to be approved for a loan, you might want to rein in your spending. A lender probably won't want to see your budgeting spreadsheet, but they will definitely want a peek at your current living expenses and financial commitments.
They'll also want to see that you have good spending habits. Two lattes a day might get you through your working week, but too much discretionary spending could impact your chances of being approved for a loan. Additionally, any financial behaviour that seems dodgy (even if it's not) will likely raise a red flag.
"If they see large, chunky ATM withdrawals, especially on a regular basis, banks are going to ask us for an explanation, because that's something that can't be itemised straightaway," Icon Money managing director Jasjeet Makkar told Savings.com.au.
You may need to reconsider your Buy Now Pay Later (BNPL) activity, too. As of June 2025, BNPL is considered a new category of ‘low-cost credit’ under the National Consumer Credit Act. In short, it means BNPL providers are now required to practice responsible lending, just like other lenders.
It also means they’re required to perform what’s called a ‘hard’ credit score check, meaning it will be recorded on your credit report when you apply to a new provider or to increase your credit limit.
See also: BNPL regulation officially takes effect
"[BNPL accounts] are now treated as a credit card, basically," Mr Makkar said. "If you have too many of them - if you've got three or four different BNPL facilities - you're really impacting your borrowing capacity. Even if they have small limits, even $500, and even if they're dormant and not being used, we still have to declare them as a liability."
Other expenses might also put an unexpected dent in your application - even bills like private school fees can raise a lender's eyebrows. So, now could also be a good time to start catching public transport instead of taking Ubers, turn to Aldi for your groceries, and begin to curb any mindless online shopping.
2. Prove your ability to repay through your credit history
Proving you can repay your home loan is the most important requirement you must meet to get one. You want to show a lender that you have a clean and stable financial history.
That means a series of late or missed payments on another loan or multiple high-interest debts could be a sure-fire way of ensuring your loan lands squarely on the reject pile. Conversely, a track record of consistently meeting debt repayments could demonstrate that you’re a low-risk borrower.
Banks and lenders will look at your credit history to ensure you have a track record of making repayments on time. If you're worried about your credit history, or even just curious, you can access it through a credit reporting agency.
"Credit history is probably the most important thing," Mr Makkar said. "I tell every client to sign up to a credit reporting company.
"This can do two things: they can keep track of their credit score. Even if something's gone on by mistake, which can happen, at least they're on top of it and don't spring up as a surprise after they submit their loan application.
"And if they do see something that they're worried about, the best thing they can do is start changing those habits. We can always explain mistakes, as long as we can show they've now been mitigated."
3. Be wary of credit card limits
Another thing to be wary of is your credit card limit. When lenders assess your borrowing power, they take into account your credit card limit, not the amount you currently have outstanding. So, if you have a credit card with a $5,000 limit, the lender will assume that's how much debt you currently owe, even if you don't use the card or have no outstanding debt on it.
Thus, the higher your credit card limit is, the less money a lender can responsibly lend to you. With that in mind, it might be worth reducing your credit card limit or closing down little-used cards altogether if you're applying for a home loan. If you plan to do so, consider cancelling them before you apply for a mortgage, as closing credit accounts can also impact your credit score.
See also: Will credit card debt affect my mortgage application?
4. Hold off on any career changes
Unsurprisingly, lenders want to see that you can hold down a job. Unless you have a pile of gold tucked away in your spare room, it’s generally assumed your income will be used to make loan repayments.
Generally, most lenders are more comfortable if you’ve been with the same employer for at least six months beyond your probation period. But there's no need to panic if you've just started a new job during your house hunting journey. In such cases, lenders might look at what you were doing immediately before your current role. It can also be enough that you've been in a similar role in the same industry for at least a couple of years.
On the other hand, if you're a casual job hopper, the news isn't so great. Many lenders will see you as a wildcard and you might struggle to get approved for a competitive home loan.
5. Get saving
Lenders will love you if you can show you have a solid history of saving and you’ve built up a strong deposit over time. On top of that, if you're borrowing more than 80% of a property's purchase price, you’ll likely have to prove your savings are ‘genuine’, which means that you saved them yourself over time.
Additionally, if you borrow more than 80% of the value of your home, you'll likely also be asked to pay lenders mortgage insurance (LMI). As the name suggests, LMI is an insurance premium that protects the lender if you can’t meet your mortgage repayments - even though you pay the bill for it.
In simple terms, the bigger your deposit, the less you’ll need to borrow, the less LMI you’ll have to pay, and the lower the risk you are to the lender. In other words, if you have a hefty deposit, you'll be considered a far better borrower.
It’s also important to remember the other costs that come with buying a home. Expect to fork out for things like stamp duty and legal fees as well.
See also: Costs of buying a home in Australia
Savings.com.au’s two cents
If you're hoping to be approved to hold a home loan, it’s important that a bank or lender can see you're financially fit to do so. If you can prove that you're consistently paying your bills on time, saving on a regular basis, and keeping discretionary spending to a bare minimum, you’ll maximise your chances of obtaining loan approval.
While that might sound simple, in reality, it might mean you have to consider every single dollar you spend for weeks or months prior to submitting your application. So now might be the best time to get on top of your debts, ensure your credit history is squeaky clean, and put a good savings plan in place. That might set you squarely on the path to seeing your home loan application approved.
6. Wrangle your debt
Unsurprisingly, a would-be borrower wracked with debt will send most lenders running for the hills. Before you even think about applying for a home loan, get on top of any outstanding debt you may have.
While not all BNPL transactions appear on your credit report (some providers don’t report to credit bureaus), they're still on your bank statements, and you will be asked to declare your accounts. And if you miss a payment, it could be viewed as a default - something to be mindful of.
If you're juggling a number of outstanding high-interest debts, it might be worth considering consolidating them into a single loan . Otherwise, it's generally a good idea to try to pay off debts one at a time, starting with the one with the highest interest rate.
7. Have a buffer
Having a safety net in place is always a good idea. Maintaining an emergency fund that you can fall back on if your income stream falters is not only attractive to lenders, but it can also provide valuable peace of mind and keep you upright until you find your financial feet again should an unforeseen expense set you back.
8. Don’t apply with too many lenders at once
Don’t put all your eggs in one basket, right? Wrong.
While it's important to compare lenders, submitting multiple applications to multiple lenders will leave a black mark on your credit report. Such blemishes on your credit score generally don't look very good. You don't want to appear desperate, so just play it cool when it comes to submitting a home loan application.
It’s a much better idea to compare all your options beforehand and then apply for the one that best suits your needs. If that sounds like hard work, there are professionals who are there to help you. Mortgage brokers can be extremely useful in doing the legwork on your behalf and matching you to the best loan for your circumstances.
9. Honesty is the best policy
If you have outstanding debts or a pockmarked credit history, it’s always best to own up to them right at the start. You can be sure that the lender will uncover all that information anyway, and when they do, you might not be given the chance to explain. Your loan application could even be declined due to non-disclosure.
After all, finding unexpected debts or a history of missed repayments could leave a bank or lender questioning whether there are more monsters they didn't uncover in your closet.
Bonus tip: Visit your bank's loan expert!
Get to know who the home loan specialist is in your local bank! Actually go into a local branch and request to set up an appointment with the home loan specialist, and have a face-to-face chat.
Home loan options
If you're looking for a home loan, the table below features some of the most competitive interest rates on the market.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
Frequently Asked Questions
To compare loan deals effectively, it's important to look beyond the headline offers and focus on the total cost of borrowing, including the advertised and comparison rate, fees and charges, loan features, special offers, and of course, the total repayment.
The time it takes to receive home loan approval can vary. As a general rule, if a buyer has prepared all the required documentation, they can expect their application to take anywhere between three and five business days though more complex situations could take longer.
There could be many reasons why your loan application is taking longer than expected. Some lenders simply take more time to approve applications than others, or they might be facing a long backlog of applications.
But a sluggish approval might also suggest a lender has found discrepancies in your application or that the property you're buying is harder to value (say if it's in a rural location). Commonly, a person's application can be held up because a lender simply doesn't have enough information. For faster approval, consider providing plentiful details about yourself and your finances. Also, having a deposit of more than 20% could help speed up the process.
Getting approved for a home loan can be expected to take a few days. Some lenders on the market boast of their speedy approval times - some measured in hours, not days. To speed up any approval process, you’ll need to have all your ducks in order. That means having all the correct documentation on hand and supplying all the information requested when it’s required. Fast approval times can set some borrowers up to make an offer on a home that same day, knowing that they've got pre-approval for finance.
As pre-approval applications will appear on your credit file as a loan enquiry, having too many in a short space of time and with multiple lenders could lead them to believe you're less financially stable than you are. That's why it's generally a good idea to wait until you're seriously considering purchasing a property, rather than when you're simply entertaining the idea, to seek pre-approval.
Pre-approval typically lasts for between three and six months. That reflects the fact that a borrower's financial situation and the property market can change over the course of a few months. But many lenders will allow you to extend your pre-approval if you end up needing a bit more time.
Every individual's financial situation is different. For that reason, there's no hard and fast rule as to the best time to apply for a home loan. However, as a general rule, you should only apply for a mortgage after you've checked your credit history, consolidated any high-interest debts, organised your finances and paperwork, thoroughly compared home loans, and spoken to a professional. By doing all the above, you'll probably give yourself the best chance of being approved for a good value home loan.
It might be welcome news that you don't need to have a rental history to buy a house. Not having a rental history is extremely unlikely to have an effect on your home loan application.
No matter whether you have a bad rental history or not, having a sizeable deposit (ideally 20% or more), minimal debt, and proof of having a stable income can stand you in good stead when applying for a loan to buy a house. Having a guarantor could also help you seal the deal.
If you own an investment property, as a general rule, most lenders will only consider 80% of your rental income as income. This is because they assume the remaining 20% will be used to cover expenses such as council rates, strata levies, repairs, expenses to cover vacancies, and agent's fees, to name a few. However, lenders' policies often differ so it's worthwhile checking with your preferred provider.