BUYING a home is a major milestone – and for most people, it starts with applying for a home loan.
Understanding the process and what lenders require can help you prepare and improve your chances of approval.
Where to apply
Home loans are offered by a range of lending institutions, including:
- Banks (e.g. Commonwealth Bank, NAB, Westpac)
- Credit Unions (e.g. Australian Mutual Bank, Qudos Bank)
- Non-bank lenders (e.g. Pepper Money, Liberty Financial)
- Mortgage brokers, who compare loans across multiple lenders to find the best fit
Each lender has its own criteria, but most follow similar guidelines.
What lenders require To apply, you’ll need to provide:
- Proof of income (payslips, tax returns, bank statements)
- Employment details (length and stability of job)
- Credit history (your credit score and any existing debts)
- Living expenses (monthly spending on essentials)
- Identification documents (passport, driver’s licence)
Lenders assess your ability to repay the loan based on your income, expenses, and financial commitments.
Deposit requirements Most lenders require a minimum deposit of 5-20 per cent of the property’s value. A larger deposit can reduce your loan-to-value ratio (LVR), improve your chances of approval, and help you avoid Lenders Mortgage Insurance (LMI) – a fee charged when your deposit is under 20 per cent
Guarantors
If you’re struggling to meet deposit requirements or have a limited credit history, a guarantor –usually a parent or close relative – can help.
They agree to cover the loan if you default, which reduces the lender’s risk.
However, it’s a serious commitment and should be considered carefully.
Other factors considered
Lenders also look at:
- Savings history (shows financial discipline)
- Existing debts (credit cards, personal loans)
- Property type and location (some properties are harder to finance)
- Loan purpose (owner-occupied vs investment)
With preparation and the right advice, securing a home loan can be a smooth step towards owning your dream home.
