How to apply for a home loan, and actually get one

Applying for a home loan becomes fairly simple when you break it down into a few steps:

• Find a suitable home loan and lender.
• Collect your identification and income documents.
• Submit your application.

But typically, there are pre-steps and then there are steps within the steps. So let's break it down:

1. Before you apply

You won't be able to apply for a home loan without having a property to attach the loan to. That's because your lender needs to value the property you're buying first.

However, it's helpful to know how much you can borrow before you start looking at multi-million dollar mansions.

The quickest and easiest way to get an idea of how much you can borrow is to use our borrowing power calculator. It's an estimate based on your income and expenses, and although it isn't 100% accurate, it can be a helpful guide.

Obtaining pre-approval or conditional approval is probably more helpful though.

Finder survey: How do Australians prefer to apply for their home loan?

2. Finding the right home loan to apply for

Once you've found the property you want to buy and the vendor has accepted your offer or your bid, you will pay the deposit.

Now, you can apply for your home loan. Even if you have pre-approval, you need to complete a full application to be approved fully. This can be with a different lender to the one which offered you pre-approval.

You can find a home loan by:

• Comparing home loans online.
• Applying directly with a lender.
• Talking to your current bank.
• Speaking to a mortgage broker, who will help you find a loan.

Expert insight

"Applying for a home loan and actually getting approved comes down to a few basics: get your finances sorted, do your homework, and present yourself well to lenders. First, make sure you've got a clear budget and a strong savings record – it shows lenders you're serious and financially stable. Check your credit score; if there are any hiccups, address them first. Next, shop around and compare loans to find the one that suits your goals and repayment capacity. When you're ready to apply, have all your documents organised – income, expenses, assets, and debts – so you can move through the process smoothly. Remember, lenders want to see that you're a low-risk, reliable borrower, so show them that, and you'll be well on your way to securing that loan."

John Pidgeon

Editorial Review Board

3. Collect your home loan application documents

When applying for a home loan, you need to gather documents or other evidence of your income, debts and proof of identity.

(You may have already supplied some of these if you have pre-approval.)

• Identity documents. You need documents to establish your identity, including a birth certificate, passport or driver's licence.
• Proof of income. Your lender may be able to process this via your online banking platform, but if not, you will need to provide payslips as proof of your income. If you're self-employed, you won't have payslips and will need to provide a recent tax assessment or a business activity statement (BAS).
• Debts, assets, liabilities. Bank and credit card statements can be used to establish your savings and debts. Be sure to include statements from every debt, including personal loans and existing mortgages.
• Details about the property. You need the address of the property you're buying and a contract of sale signed by you and the seller. The lender may also require a certificate of currency, a document that proves you have an insurance policy covering the property.

Read more about the documents required for a home loan

The more complex your financial situation, the more supporting documents you will need. For example, if you're applying for a construction loan, you'll need a copy of the building contract. If you're a first home buyer with a guarantor, then the lender requires details about your guarantor's property.

4. Completing the mortgage application

Here we go, the moment we've been waiting for!

Now, every lender has its own application process so we can't be overly specific.

If you're using a mortgage broker, the broker will help with the application or even do it for you.

Most applications can be completed online, but some may require you to go into a branch (or you may even prefer to do it that way).

Fill everything out and make sure to put in all the correct details. You will need to provide things like:

• Your personal information.
• Your income.
• Your monthly expenses, typically broken down into categories such as health, food and groceries, education, transportation and entertainment.
• Any other debts.
• The details of the property you are buying.

Your lender will examine your spending and compare it to the information contained in your income documents and bank statements.

Verification and credit check

Once the lender has your application, it will check the documents and verify your identity. The lender will also perform a credit check.

A seamless application process

"I applied for my home loan through a mortgage broker who was recommended to me by my sister, which made the whole home loan process much simpler for me. I sent him all the relevant documents like payslips and bank statements, and we talked through what my budget might be. He arranged pre-approval on my behalf, which was great because it helped me know what houses I could realistically look at.

"Once I'd found my house and paid the deposit, my broker sent me a table of lenders to choose from. The application process from there was really simple, as all the information had been provided for my pre-approval already. To verify my identity I just had to go online to a bank portal. The only time I had to go into a branch was to open my offset account.

"The time between application and approval was only a week."

Harrison Khannah

Software Engineer

Tips for a stronger loan application

Now that you have a better understanding of the application process, let's explore the steps you can take to make your application stronger.

1. Fill out the application precisely and completely: If you start estimating or making guesses and the lender picks up on it, the process will take much longer while they come back to you for clarification.

2. Trim your spending: Lenders will scrutinise your bank statements and if you're spending too much money they'll see you as a risk. Consider if you can cut out any regular purchases, big or small, particularly in the 6 months before you apply. You should even watch out for things like eating out and subscription services.

3. Pay off other debts: If you've got a car loan and/or a credit card, you might want to consider paying it off. Multiple debts raises a red flag to lenders.

4. Offer a higher deposit: Not an option for everyone, but the more deposit you can offer the better chance of approval. This could mean saving up more money, or opting for a cheaper home.

5. Check your credit score: Lenders will check your credit score to make sure you're a trustworthy borrower. Knowing your credit score will not only help by warning you if you're unlikely to be approved, but you can read your credit report to find out exactly if there's anything you need to fix. You can check your credit score for free through Finder.

6. Pick the right property: Some lenders have criteria on properties they're willing to lend for. That might be down to the property size, property type or the location of the property. This is because the property acts as security, meaning the lender can sell it and recoup its loss if you can't repay your loan, and it wants to know it will be easy to do that.

More home loan application tips and help

If you think the whole process of finding and applying for a home loan is simply too much effort, or even if you're still a bit confused and need some help, talk to a mortgage broker. A mortgage broker is a qualified professional who can not only help you find a home loan but also help you through the entire home loan application process to the approval stage.

• How lenders calculate your living expenses
• Tips to increase how much you can borrow
• How much should you borrow for your loan?

The home buying process step by step

More questions about applying for a home loan

• How long is the average home loan approval time?

  Home loan processing and approval varies depending on the lender, the property and your particular circumstances. If you're purchasing a house (not a unit) with a 20% deposit and a stable income, your approval could take a few days. More complex applications, with smaller deposits or unusual properties (small units or rural properties, for example) can take longer.

  Your lender may be currently very busy processing many applications, which can slow things down. Other lenders offer fast online approvals. This is a good option if your application is straightforward but you're in a rush.

  A mortgage broker can also help you find a lender who can process your loan fast. Brokers have contacts at multiple lenders and are well-placed to find one that can handle your application faster.

• When is the best time to apply for a home loan?

  You can get pre-approval or begin the application process before sealing the deal on a property, but you can't actually get a home loan until you have signed the contract of sale.

  It's entirely possible to find and apply for a home loan after you've found a property to buy. The biggest downside is you might have to rush to get everything organised before settlement. And if you can't find a lender because your borrowing capacity is too low or you don't meet the lender's criteria, the sale could fall through.

  But the more organised you are in advance, the easier everything gets. Even if you don't get official pre-approval from a lender, you can start researching loans, find a conveyancer and gather your mortgage paperwork.

• Can I apply for a home loan completely online?

  You can. There are many online lenders in the market who only offer online service and don't have physical branches. Keep in mind that some parts of the home buying process, such as dealing with a conveyancer, or getting your identity verified, may require a face-to-face meeting. Although these days some lenders and conveyancers may be able to facilitate every part of the process online.

• What do I do if my application gets rejected?

  This does happen. The trick is not to panic. Instead, you need to work out where you went wrong and take the necessary steps to have a solid application next time.

  When you apply for a home loan your lender will look closely at your spending habits: that includes money spent on gambling. The impact on a mortgage application varies depending on your circumstances and how much you gamble.

  Regular examples of gambling could hurt your borrowing power or result in a rejected application. This is because you could:
  End up missing repayments
  Have lower savings
  Have more debt
  Have increased ongoing expenses

  For help with gambling visit the Gambling Help website.

• Does having a car loan affect your mortgage application?

  When you apply for a home loan you'll need to provide information on your other debts and expenses, including if you have a car loan. This is so they can assess how much income you have left to service your repayments.

  Having a car loan usually won't be enough to reject your home loan application, but it may reduce your borrowing power.

Written by

Richard Whitten

Senior Money Editor

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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 754 Finder guides across topics including:

• Home loans
• Credit cards
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Co-written by

Rebecca Pike

Editor, Money

Rebecca Pike is Finder’s money editor, with over 7 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise and 7News, Today and 9News, as well as Sky News, Channel 10 and across radio and print. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines. See full bio

Rebecca's expertise

Rebecca has written 253 Finder guides across topics including:

• Home loans
• Personal Loans
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