Home Loan FAQ Australia

Borrowing capacity depends on your income, existing debts, living expenses, deposit size, property type and the lender's serviceability assessment. APRA requires all lenders to apply a serviceability buffer of at least 3% above the loan rate when calculating capacity, meaning your repayments are stress-tested at a higher rate than you will actually pay. Most lenders also consider a debt-to-income ratio cap, with many applying conservative limits around six to eight times annual gross income. Your actual borrowing limit is determined by a full credit assessment and varies between lenders for the same income level.

Most Australian lenders require a minimum deposit of 20% of the purchase price to avoid lenders mortgage insurance. Deposits as low as 5% are accepted when LMI is paid, or without LMI under government guarantee schemes such as the First Home Guarantee. For a $700,000 property, a 20% deposit is $140,000 and a 5% deposit is $35,000. Genuine savings requirements, gift policies and deposit source rules vary by lender, and some lenders require a larger deposit on certain property types or in high-density postcodes.

Lenders mortgage insurance (LMI) is a one-off premium that protects the lender if a borrower defaults and the property sale does not recover the outstanding loan balance. LMI is typically required when the LVR exceeds 80%, meaning the deposit is less than 20%. Premiums vary by lender and LVR but commonly range from around $5,000 to $30,000 or more on larger loans. LMI protects the lender, not the borrower. ASIC MoneySmart's LMI guide explains how premiums are calculated and what the insurance actually covers.

There is no single minimum credit score that applies to all home loan applications in Australia, as each lender sets its own thresholds and credit policy. As a general guide, scores above 650 on the Equifax scale are considered acceptable by most mainstream lenders. Scores above 750 typically attract better pricing and a wider range of lender options. Negative credit listings such as defaults, judgments or recent missed repayments reduce approval prospects significantly regardless of the overall score, and some lenders will decline applications with any listing on file.

Yes, self-employed borrowers can get home loans in Australia, but the income documentation requirements are higher. Most lenders require the most recent two years of personal and business tax returns and notices of assessment. Income is typically assessed as an average of the two years, or the lower year if lender policy requires it. Low doc home loans are available for self-employed borrowers who cannot supply full financials, though pricing and LVR limits are more conservative under those products. Lender assessment of self-employed income varies significantly, making lender selection particularly important for this borrower type.

Standard home loan application documents include government-issued ID, the most recent two payslips, three months of bank statements, details of all existing debts and liabilities and a contract of sale for the property being purchased. Evidence of the deposit source is also required, and most lenders define genuine savings as funds held for at least three months. Self-employed borrowers also need two years of personal and business tax returns and notices of assessment. First home buyers applying under a government scheme may also need additional scheme-specific documents, such as the First Home Guarantee application form issued through a participating lender.

Conditional or pre-approval typically takes 2 to 5 business days for a straightforward owner-occupied application with complete documentation. Full approval after a signed contract commonly takes 5 to 15 business days, depending on lender workload, valuation turnaround and document quality. Settlement then occurs on a date agreed by all parties, typically 30 to 90 days after the contract is signed. Complex files involving self-employed income, non-standard properties or government scheme applications usually take longer.

Pre-approval, also called conditional approval or approval in principle, is a lender's preliminary assessment of your likely borrowing capacity before you find a property. It confirms a budget to search with confidence but is not a guarantee of final approval. Most Australian lenders issue pre-approvals valid for 90 days. If you have not found a property within that period, you may need to renew. Pre-approval lapses if your financial situation changes materially, the property fails valuation or lender policy changes during the period.

Common upfront home loan fees include an application or establishment fee ($0 to $600), a property valuation fee ($0 to $400) and a lender mortgage preparation fee ($100 to $300). State government charges include stamp duty on the mortgage instrument and loan registration fees, which vary by state. Ongoing fees can include an annual package fee ($0 to $400) and redraw or account fees depending on the loan product. LMI is a separate upfront cost that applies when the LVR exceeds 80% and can add several thousand dollars to the settlement amount depending on the loan size.

No. Property Finance Help is not a lender, broker, credit provider or financial adviser. We provide general information and referral support only and may connect you with a suitable finance contact where appropriate. Any credit decision is made by the lender or broker you are connected with, not by Property Finance Help.

The main federal schemes for first home buyers include the First Home Guarantee, the Regional First Home Buyer Guarantee and the Help to Buy scheme. The First Home Guarantee allows eligible buyers to purchase with a 5% deposit without paying lenders mortgage insurance. State and territory governments also offer stamp duty concessions and first home owner grants, with the amounts and thresholds varying by state. Income caps, property price limits and eligibility conditions apply to all federal schemes, and not all lenders participate in each scheme.

The First Home Guarantee is a federal government scheme that allows eligible first home buyers to purchase with a deposit as low as 5% without paying lenders mortgage insurance. The government guarantees up to 15% of the loan to bridge the standard 20% lender requirement. Income thresholds for 2025-26 are $125,000 for individuals and $200,000 for couples. Property price caps apply and vary by location. Places are limited and allocated each financial year. Housing Australia publishes the full eligibility criteria and participating lender list.

Stamp duty rules for first home buyers vary by state and territory. Most states offer a full or partial exemption for first home buyers purchasing below a set price threshold. In New South Wales, first home buyers pay no stamp duty on purchases up to $800,000 as at 2026, with a concession between $800,000 and $1,000,000. In Victoria the full exemption applies to purchases up to $600,000. Each state revenue office publishes current thresholds and conditions, which can change with state budgets.

The First Home Super Saver Scheme (FHSS) allows eligible Australians to make voluntary contributions to superannuation and later withdraw those funds for a first home deposit. Up to $50,000 in eligible contributions can be released under the scheme as of 2024-25. Withdrawals are taxed at the individual's marginal tax rate less a 30% tax offset, which typically produces a meaningful tax saving compared to saving in a standard bank account. Applications to release funds are processed through the ATO. The ATO's FHSS page covers contribution limits, eligibility conditions and how to apply for a release determination.

Yes, buying a home with a 5% deposit is possible in Australia through two main pathways. The first is paying lenders mortgage insurance, which is added to the loan balance and can add $5,000 to $30,000 or more depending on the loan size. The second is qualifying for a government guarantee scheme such as the First Home Guarantee, which avoids LMI but has income caps, property price limits and an approved lender panel. Lender credit assessment applies under both pathways, and not all lenders accept 5% deposits on all property types.