Can I Get a Home Loan With Bad Credit in Australia? (2026)
Yes — it is possible to get a home loan with bad credit in Australia, but your options are more limited, interest rates are typically higher, and the deposit requirement is usually larger. The specific impact depends on the nature, severity, and age of the credit issue.
What “Bad Credit” Means for Lenders
Credit history in Australia is managed through the comprehensive credit reporting (CCR) system. Lenders check your credit file with the three main credit bureaus: Equifax, Illion, and Experian.
Types of credit issues lenders see:
| Credit issue | Severity | Typical time on file |
|---|---|---|
| Late payments (30, 60, 90 days) | Low–moderate | 2 years |
| Credit enquiries (multiple applications) | Low | 5 years |
| Payment defaults | High | 5 years |
| Court judgements | High | 5 years |
| Bankruptcy | Very high | 5–7 years |
| Part IX debt agreement | Very high | 5 years |
How Credit History Affects Mortgage Eligibility
Major bank (Tier 1 lenders): Most major banks and credit unions have strict credit policies. They typically decline applications with:
- Any unsatisfied default over $500
- Court judgements or writs
- Bankruptcy within the past 7 years
- Multiple recent credit enquiries suggesting financial stress
Specialist/non-conforming lenders: Some lenders specifically serve borrowers with imperfect credit history (non-conforming or adverse credit lenders). They may approve applications with:
- Defaults (sometimes only if satisfied — paid off)
- Older adverse history
- Discharged bankruptcy (typically 2 years after discharge)
Trade-offs with specialist lenders:
- Higher interest rates (rate loading: 1–3% above standard variable rates)
- Lower LVR maximums (often 80% or less; sometimes 70%)
- Higher fees
- Stricter conditions
Factors That Improve Your Chances
Age of the issue: A default from 4 years ago is viewed differently from one from 6 months ago. Time genuinely helps.
Satisfying defaults: A satisfied (paid) default is viewed more favourably than an unpaid outstanding default.
Stability since the issue: 12–24 months of clean repayment history across all existing credit accounts demonstrates recovery.
Deposit size: A larger deposit (20%+ or 30%+) reduces lender risk and opens more options.
Income and serviceability: Strong, demonstrable income partly offsets credit risk in some lenders’ assessments.
Low debt levels: Paying down other debts reduces risk signals.
What to Do Before Applying
Get your credit report: Obtain a free credit report from Equifax, Illion, or Experian (free annually under Australian law). Check for errors — incorrect defaults do occur and can be disputed.
Dispute any errors: Contact the credit bureau and the creditor if you find a default or enquiry that is inaccurate. The bureau must investigate.
Pay off any outstanding defaults: Satisfying unpaid defaults before applying significantly improves your position.
Build repayment history: 12 months of clean payment across all bills, cards, and loans signals recovery.
Speak to a mortgage broker: Brokers who specialise in adverse credit understand which lenders are most likely to approve your application — and can help you avoid additional unnecessary credit enquiries (each enquiry shows on your file).
Frequently Asked Questions
How long does a default stay on my credit file in Australia?
Defaults remain on your credit file for 5 years from the date of listing. After 5 years, they are automatically removed.
I had a bankruptcy 3 years ago. Can I get a home loan?
Some non-conforming lenders will consider applications 2 years after discharge of bankruptcy. Major banks typically require 7 years from the bankruptcy date. The LVR limit and interest rate will reflect the higher risk. You will likely need a deposit of at least 20–30%.
Will applying to multiple lenders make my credit worse?
Yes — each hard credit enquiry from a lender application shows on your file. Multiple enquiries in a short period can signal financial stress. Work with a mortgage broker who can identify the most suitable lender and submit a single application rather than making multiple approaches.
Related Guides
- Can I Get a Home Loan With a Credit Default?
- Can I Get a Home Loan After Bankruptcy?
- Credit Score and Home Loans — How Your Credit File Is Assessed
- Can I Get a Home Loan? — Eligibility Hub
This article provides general information about obtaining a home loan with adverse credit history in Australia. Lending policies vary significantly. Speak with a licensed mortgage broker who specialises in your situation. Find one through MoneySmart.