Can I Get a Home Loan? — Eligibility Guide Australia (2026)

Most Australians can access a home loan — but eligibility depends on your income, credit history, deposit size, employment type, and the specific lender’s credit policies. Understanding how lenders assess applications gives you a significant advantage when applying.

How Australian Lenders Assess Home Loan Applications

Australian banks and lenders are subject to responsible lending obligations under the National Consumer Credit Protection Act 2009 and APRA’s prudential standards. They assess every application across five core dimensions:

1. Income and serviceability Can you afford the repayments? Under APRA’s serviceability buffer (introduced in 2021), lenders must assess whether borrowers can service the loan at the actual interest rate plus 3%. This means a borrower applying at a 6.5% rate is assessed at 9.5%. This buffer limits borrowing capacity relative to income.

2. Credit history Your credit file — held by Equifax, Experian, or illion — shows your repayment history on existing credit products (cards, loans, buy now pay later), any defaults, court judgements, or bankruptcies. Most lenders require a minimum credit score of around 550–600 (Equifax scale), though non-conforming lenders have lower thresholds at higher rates.

3. Deposit and LVR The loan-to-value ratio (LVR) is the loan amount divided by the property value. A 20% deposit means an 80% LVR. Lenders prefer LVRs of 80% or below — borrowers with higher LVRs generally need to pay lenders mortgage insurance (LMI), which can add $5,000–$25,000 to the loan cost.

4. Employment and income stability Lenders prefer PAYG employment with at least 3 months (often 6 months) tenure. Self-employed applicants typically need 2 years of tax returns. Casual workers and contractors face more scrutiny around income consistency.

5. Property type and location Not all properties are acceptable security. High-density apartments, properties in remote locations, studio apartments under 40sqm, and off-the-plan properties all face stricter criteria from many lenders. The property’s location and liquidity affect how much lenders will lend against it.

Non-Standard Situations

Bad credit: Borrowers with defaults, missed payments, or a history of financial difficulty can still access home loans through non-conforming lenders — at higher interest rates (typically 1–4% above standard rates) and with stricter LVR requirements. Defaults under a certain age and amount are treated differently by different lenders.

Casual or contract employment: Many lenders will consider casual income if you have been in the same role for 12 months or more and can demonstrate consistent earnings. The income used for serviceability is typically averaged over the period or discounted.

Self-employed borrowers: The standard requirement is 2 years of personal and business tax returns, plus notices of assessment. Low-doc loans exist for self-employed borrowers who cannot provide full documentation, but carry higher rates and lower LVR limits.

Older borrowers: Lenders consider the loan term in the context of your age — if you are 60 and applying for a 30-year loan, the lender will want to understand your exit strategy (how you will repay the loan). Retirement income, assets, and downsizing plans are all relevant.

No deposit: True no-deposit lending is rare in Australia. The closest options are the First Home Guarantee (5% deposit, no LMI, for eligible first home buyers) or guarantor loans, where a family member uses equity in their own property to secure your loan.

How to Improve Your Chances

• Check your credit file for free at equifax.com.au, experian.com.au, or illion.com.au before applying
• Reduce existing debts and credit limits — unused credit card limits reduce your assessed borrowing capacity
• Avoid applying for multiple loans simultaneously — each application creates a credit enquiry that is visible to lenders
• Demonstrate stable income — avoid changing jobs immediately before applying
• Save a larger deposit — above 20% LVR removes the LMI cost and signals financial discipline to lenders

Frequently Asked Questions

What credit score do I need for a home loan in Australia? Most mainstream lenders look for a credit score of around 550–600 or above (Equifax scale). However, credit scoring is not the only factor — your income, employment history, and deposit also matter significantly. Some non-conforming lenders will consider applicants with lower scores.

Can I get a home loan with casual employment? Yes, though it depends on your history. Most lenders want to see at least 12 months of consistent casual employment in the same role or industry. The income used for serviceability is usually the average of the past 12 months or a discounted amount.

How much deposit do I need for a home loan in Australia? A 20% deposit is the standard threshold to avoid LMI. However, many buyers purchase with less. The First Home Guarantee allows eligible first home buyers to buy with 5% deposit without paying LMI, subject to income and price caps.

Can I get a home loan with a HECS debt? Yes. HECS-HELP debt does not prevent you from getting a home loan, but the compulsory repayment amount (which is deducted from your salary) reduces your assessed serviceability. Lenders include HECS repayments in their assessment of your ongoing expenses.

This hub provides general information about home loan eligibility in Australia. Lending criteria vary by lender and change over time. Speak with a licensed mortgage broker for advice tailored to your situation. Find one through MoneySmart.