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10 ways to boost your chances at home loan approval

June 23, 2023
Rosemary Parsons

10 ways to boost your chances at home loan approval

Are you a first home buyer wondering how to qualify for a home loan? Maybe you’re trying to make sense of home loan pre-approval requirements.

Here we'll take a close look at how lenders assess applications with ten ways to improve your chances of getting yours across the line.

From preparing the right documentation to knowing how much of a deposit is needed for a home loan application, these strategies may help you in meeting a lender’s criteria for home loan approval.

Is getting a home loan that difficult?

Applying for a home loan can be a complex process, so it’s vital to first gain a clear understanding of what’s required. Knowing what’s expected of you and satisfying all the necessary criteria can make for a much smoother experience.

It’s important to keep in mind that lenders are meticulous when assessing home loan applications. They’re obligated to lend money responsibly and require ample evidence that you’ll be able to make repayments based on your current financial situation. You may think it’s hard to get approved because of all the financial considerations involved, but understanding what lenders look for and why can give your application a better chance at ticking the right boxes.

While there’s no single answer for how to get approved for a home loan, preparation is, as always, one of the best keys to success. 

Here are ten things that can help put a home loan application on the right track.

1. Track and minimise your expenses

Lenders want a clear picture of how you manage finances on a day-to-day basis. With your home loan application, most will ask for up to three months worth of bank statements or even an itemised list of your expenses. They want to see that you can live within a budget and are capable of paying off a mortgage on top of regular bills and living costs.

It's a good idea to scrutinise your spending habits for at least six months before applying for a mortgage and slash any unnecessary expenses or credit card purchases. High expenditure on alcohol, gambling and online shopping are red flags to lenders, so try to limit these as well as the amount spent on discretionary items like takeaway and entertainment. Keeping your spending to a minimum shows lenders you’re responsible with money and can help boost your savings at the same time.

2. Reduce your credit card limit and pay off your debts

Your credit score is used by lenders to assess your trustworthiness as a borrower. It's calculated from a range of factors including previous credit or loan applications, repayment history and any overdue accounts. A high credit score gives lenders confidence you’re a responsible borrower while a low credit score suggests you may be a financial risk.

Credit scores fluctuate depending on financial activity. You can help increase yours by keeping payments up to date and limiting new credit applications in the months before applying for a mortgage. Having a high-limit credit card can damage your credit score, even if you’ve only used a small amount or have paid it off in full, as credit reports use the limit itself to measure debt. Higher limits mean higher debt and a potentially lower credit rating, so consider reducing your limit or ditching the card altogether. Paying off or reducing other outstanding debt such as car or personal loans as much as possible can also help your credit score.

3. Show you can service a mortgage

Servicing a mortgage means making repayments on time while also fulfilling your other financial obligations. Borrowers with a proven track record of repaying debts while keeping on top of day-to-day expenses make a better impression than borrowers who’ve missed payments or defaulted on loans in the past.

Providing specific examples of financial commitments or debts you’ve repaid in a timely manner can help demonstrate you’re capable of servicing a home loan.    

4. Boost your savings

A healthy savings account is very attractive to lenders. Evidence of regular deposits shows you’re capable of managing money and taking your finances seriously.

You’ll also need to build up savings for your deposit. Deposits are usually 20% of the total value of the home and, while some lenders accept smaller ones, they may require you to take out Lenders Mortgage Insurance (LMI) in case of default. LMI is an additional cost calculated as a percentage of the loan amount. 

It’s worth factoring in the hidden costs of buying a home such as legal fees when saving for your deposit. Overall, the bigger your deposit, the better you look to potential lenders as it means you’ll be borrowing less to buy your new home.

5. Maintain steady work

If you’re thinking of a new higher-paid job to help with your home loan application, you may want to reconsider. Lenders generally prefer you to have been with the same employer for at least six months, excluding probation periods, or in a similar role for more than two years if you’ve just commenced a new job.    

Borrowers with a career history of jumping between jobs can sound alarm bells for lenders. They’re looking for borrowers who can display long-term security and frequent job changes suggest the opposite. Borrowers with stable employment and a regular income are viewed as less of a lending risk.    

6. Get your documentation in order

Applying for a mortgage means a lot of paperwork. You’ll need to provide identification documents, bank statements and proof of income such as recent payslips or a tax return prepared by a tax agent. Assets listed in your application also require supporting documentation, including vehicle registration. Similarly, outstanding debts, such as credit cards or loans, must be supported by official statements.

Lenders may also ask you to provide a breakdown of your monthly budget. This should include all your monthly expenses including groceries, utilities, childcare, insurance and transport. Getting all the necessary paperwork together early can help make the home loan application much easier to complete.  

7. Limit how many lenders you approach

Submitting home loan applications to multiple lenders can adversely impact your credit score. Your credit history includes every credit application you’ve made, and lenders can view multiple open applications as a sign of risky behaviour or financial instability. If one of those applications is rejected, it may further reduce your credit score and future chances of being approved.  

It's a good idea to do your research, identify the lender and home loan that’s right for you, and focus on preparing one application thoroughly. If this seems daunting, a mortgage broker can help narrow down the best home loan options for your situation. Speaking to a mortgage broker won’t impact your credit score.

8. Thinking of applying with a partner? Weigh it up

A joint home loan application may increase your borrowing power as lenders generally only assess the income of the borrower making the application. As co-borrowers, both you and your partner’s income would be taken into consideration. On the other hand, you’d also be combining debt and if one partner has significantly more debt or a low credit score, this can potentially reduce your borrowing power as a couple.

Before applying, it’s worth assessing your individual credit scores to weigh up whether a joint home loan application works in your favour. A mortgage broker can run credit checks on you and your partner and make tailored recommendations based on the results.

9. Double check everything

It’s important to ensure your home loan application is complete and provides all the necessary documentation to the lender. An incomplete application or one with too little financial information can take longer to process. If any undisclosed information is uncovered, such as a credit card or debt, lenders might reject your application outright.

Double check the information you’re providing is accurate and gives a comprehensive overview of your financial situation to help make the application process as smooth as possible.

10. Speak to a mortgage broker

Mortgage brokers are experts at finding the right home loans to suit their clients. For first-time home buyers, they can be an invaluable source of unbiased advice to help you navigate the application process. Mortgage brokers have direct access to multiple lenders and can recommend home loan options based specifically on your financial situation. Working with a good mortgage broker can also help speed up your home loan application and set it up for the best chance of success.   

Wondering what your next steps should be? We're here to help. A Doorsteps Finance broker can give you free, honest advice and guide you through the home loan application process. Arrange an obligation-free chat to a broker.

Savings.com.au, '​​How to improve your chances of getting a home loan', 11 April 2022


Canstar, 'How to get a home loan: what do lenders look for?', 22 February 2022


Assured Home Loans, '7 Tips to Help Get Your Mortgage Approved'


Doorsteps Solutions Pty Ltd ACN 654 334 246, the holder of Australian Credit Licence 537369 (Doorsteps Solutions). Doorsteps Finance Pty Ltd ACN 648 541 879 (Doorsteps Finance) is a credit representative (no. 531036). Doorsteps Finance and Doorsteps Solutions are wholly owned subsidiaries of OpenAgent Pty Ltd ABN 93 161 595 679.  Any credit application made through Doorsteps Finance is subject to approval, terms and conditions, fees and charges.

This article is written expressly for education purposes and content is based on the opinions of the authors or as otherwise cited. The information we provide is general in nature and does not take into account your personal objectives or needs.   It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Doorsteps Finance and Doorsteps Solutions are not making any suggestion or recommendation about any particular product.

All information is current as at publication release and we take no responsibility for any factors that may change thereafter. Doorsteps Finance and Doorsteps Solutions do not accept any liability or responsibility whatsoever to any error or omission or any loss or damage of any kind sustained by a person or entity arising from the use of this information.

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