Buying a home in Australia is one of the most significant financial milestones you will ever achieve. Whether you are a first-home buyer looking to break into the market, a home mover seeking more space, or a savvy investor looking to refinance, the path to ownership is paved with paperwork, jargon, and critical decisions.
A competitive property market is all about timing, and knowing how to navigate the ins and outs of a home loan application can mean the difference between getting your dream house and being denied.
Where are you on your journey?
- Browsing properties: You are researching suburbs and checking your general borrowing power.
- Shortlisting homes: You are attending open inspections and need to know exactly what you can afford.
- Looking for the best offer: You have found “the one” and need to secure formal finance immediately.
This comprehensive guide covers timing, essential documents, the three stages of approval, and the common mistakes that can derail your plans.
The Home Loan Process and Timeline
Navigating the process of getting home loan approval follows a specific linear flow. While every lender is different, here is a typical 2026 timeline.
Step 1: Preparation (1–3 Days)
Choose your path: will you go with a big bank, a mortgage broker, or an online lender? Confirm your budget and start your home loan application prep.
Step 2: Pre-Approval Application (2–10 Business Days)
Submit your core documents. The lender checks your income, liabilities, and credit score.
Step 3: Pre-Approval Outcome + Conditions (1–3 Days)
You receive your limit. If there are conditions (like “closing an old credit card”), address them now.
Step 4: Property Found + Offer Accepted (Variable)
Once your offer is accepted, you send the signed Contract of Sale to your lender or broker immediately.
Step 5: Formal Application (3–15 Business Days)
The lender moves your file from “pre-approved” to “full assessment.” They verify that nothing has changed in your employment or debt levels.
Step 6: Valuation + Final Checks (2–7 Business Days)
The lender sends a professional valuer to the property. This ensures the house is actually worth the loan amount. If the valuation is “short” (lower than the price), you may need a larger deposit.
Step 7: Unconditional Approval → Settlement (1–3 Weeks)
The loan is formally approved. You sign the mortgage documents (often digitally in 2026). Your solicitor coordinates with the lender for settlement, where the funds are transferred, and you get the keys.
Documents You’ll Need
To answer what do you need to get a home loan, think of it in four buckets. Use this as your home loan requirements checklist.
1. Identity
- Passport, Driver’s Licence, or Medicare Card.
- Why: To comply with Anti-Money Laundering (AML) laws.
2. Income
- Last 2–3 payslips.
- Most recent Group Certificate (PAYG Summary).
- If self-employed: Last 2 years of personal and business tax returns.
- Common Mistake: Submitting blurry photos. Use a proper scanning app.
3. Expenses and Debts
- 3–6 months of bank statements for all accounts.
- Latest statements for credit cards, car loans, and HECS.
- Why: To prove your “burn rate” (how much you spend vs save).
4. Deposit Source
- Proof of savings or a Gift Letter if parents are helping.
- Why: Lenders must verify that the funds aren’t from an illegal source or a hidden personal loan.
Document Submission Tips Box:
- Upload clear PDFs (avoid screenshots).
- Name files clearly: E.g., Smith_Payslip_Feb2026.pdf.
- Respond to “requests for further information” (RFIs) within 24 hours to keep your file at the top of the pile.
When Is the Right Time to Apply?
A common question for many Australians is: “How do I apply for a home loan without knowing which house I want yet?”
The rule of thumb is to apply for pre-approval as soon as you begin your serious property search. Waiting until you have found a house to figure out how to apply for a mortgage often leads to heartbreak. Early preparation reduces delays, gives you a clear budget, and makes you a much more attractive buyer to real estate agents.
Just Browsing (What to Do Now)
At this stage, you don’t need a formal application. Focus on:
- Budgeting: Use online calculators to estimate your borrowing power.
- Consistent Saving: Lenders love to see “genuine savings”, money accumulated over at least three months.
Attending Open Homes (What to Do This Week)
If you are walking through front doors, you need professional input.
- Speak with a broker or lender: Learn how to get a home loan tailored to your specific income and lifestyle.
- Gather initial documents: Start a digital folder with your latest payslips and ID.
Looking for the Best Offer (What to Do Today)
- Confirm pre-approval status: Ensure your pre-approval hasn’t expired (they usually last 90 days).
- Prepare for formal application: Ensure your deposit is accessible and ready for transfer.
Home Loan Approvals Explained (Pre, Conditional, Unconditional)
Understanding the vocabulary of home loan approval is vital. Not all “approvals” mean the money is ready to be sent.
What is Pre-approval?
This is a preliminary assessment by a lender indicating how much they might lend you. It is based on your income and credit history, but does not involve a specific property.
- When you need it: Before you start making offers.
- What could go wrong: Your financial situation changes, or the lender’s interest rates rise, reducing your capacity.
What is Conditional Approval?
Often used interchangeably with pre-approval, this means the lender is happy to lend to you, provided certain conditions are met.
- Conditions might include: Providing an updated payslip or, most commonly, a satisfactory valuation of the property you intend to buy.
What is Unconditional Approval?
This is the “gold standard.” It means the lender has everything they need: they’ve checked your finances and they’ve valued the property.
- When you need it: Before you allow a contract to become “binding” (after the cooling-off period).
What is the fastest way to secure home loan approval?
The secret to a quick application for a mortgage is “clean” data. Submit a complete application with all requested documents in high resolution on day one. Any back-and-forth regarding missing bank statements can add weeks to the timeline.
- Common Misunderstanding: Many buyers believe pre-approval is a guarantee. It isn’t. If the bank’s valuation of the home comes in lower than what you agreed to pay, they may lend you less than expected, requiring you to bridge the gap with more cash.
How Lenders Assess Your Borrowing Power
When you ask, “What do I need for a home loan?”, lenders look at more than just your salary. They use a “servicing” calculation to see if you can handle the debt.
- Income: Your base salary is key, but lenders may only count 80% of bonuses, overtime, or rental income.
- Expenses: They look at your actual spending (HEM – Household Expenditure Measure) to ensure you aren’t over-leveraged.
- Debts: Car loans, HECS/HELP debt, and credit card limits (even if the balance is $0) reduce how much you can borrow.
- Dependents: Every child or adult dependent in your care slightly reduces your borrowing capacity.
- Buffers: Lenders assess your ability to pay at a “floor rate”, usually 2-3% higher than the current interest rate, to protect against future hikes.
Mini Self-Check:
- If interest rates rose by 2%, would your repayments still be comfortable?
- After the mortgage is paid, do you still have enough to save for repairs or a rainy day?
Choosing the Right Home Loan Type
Understanding how to obtain a home loan also means choosing the right structure. In 2026, these are the primary options:
- Fixed Rate: Offers stability with locked-in repayments for 1–5 years. Great for budgeting.
- Variable Rate: Offers flexibility. If market rates drop, your repayments might too. Usually comes with more features.
- Offset Account: A savings account linked to your loan. Every dollar in the account reduces the interest you pay on the mortgage.
- Split Loans: A “best of both worlds” approach where a portion of your loan is fixed and the rest is variable.
Before You Apply: Get Loan-Ready
Knowing how to apply for a home loan successfully requires “financial grooming” for 3–6 months before you hit submit.
Deposit and Savings History
Lenders want to see genuine savings. This proves you have the discipline to meet mortgage repayments.
- Do: Save consistently into one account. Keep a small buffer of cash after the deposit is paid to show financial stability.
- Avoid: Large, unexplained cash deposits (e.g., “I sold my car for $10k cash”) without a receipt or paper trail.
Credit Health
Your credit score is your financial reputation.
- Do: Check your credit report via platforms like Equifax or Experian. Pay every utility and phone bill on time.
- Avoid: Applying for multiple credit cards or “interest-free” store finance in the six months before your home loan. Each “hard inquiry” can lower your score.
Expenses and Spending Cleanup
In 2026, lenders will use AI to categorise your bank statements.
- Do: Cancel unused gym memberships or streaming services.
- Avoid: Buy Now, Pay Later (BNPL) services like Afterpay or Zip. Lenders often view these as lines of credit that reduce your borrowing power.
Employment Stability
- Do: Stay in your current role if possible. Lenders prefer at least 6–12 months of continuous employment.
- Avoid: Resigning to go “freelance” or starting a new job on probation right before applying, as this adds significant risk in the eyes of the bank.
Special Situations to Plan For
- Gifted Deposits: If a family member is giving you money, the lender will require a signed statutory declaration stating the money is a gift, not a loan that needs to be repaid.
- New Job/Probation: Some lenders will ignore probation if you are in the same industry, but many will make you wait until your probation period ends.
- First-Home Grants: In 2026, various state-based schemes exist. Ensure you check if you are eligible for the First Home Guarantee (which allows a 5% deposit without LMI).
How to Apply for a Home Loan and Choose the Right Path
When considering how to apply for a mortgage, you have three main avenues:
| Option | Best For | Pros | Watch-outs |
| Direct to Bank | Existing customers | Potential “loyalty” perks | Limited to one suite of products |
| Mortgage Broker | First-timers & Complex cases | They compare 30+ lenders for you | Not all brokers cover every niche lender |
| Online Lender | Tech-savvy, simple income | Often the lowest interest rates | No “face-to-face” support if things get tricky |
How to Apply for a Mortgage Loan Online
If you choose a digital lender, the process is streamlined. You’ll typically link your bank accounts via a secure portal (Open Banking), and an algorithm performs the initial credit check. It is fast, but make sure you have a human contact number in case the automated system flags an error.
Common Mistakes That Reduce Approval Chances
- Undisclosed Debts: Lenders will find that old $500 credit card. Be honest from the start.
- Recent Large Purchases: Buying a new car on finance weeks before a home loan is a leading cause of rejection.
- Gambling Activity: Frequent transactions to betting apps are a major red flag for credit assessors.
- Inconsistent Savings: Transferring money in and out of your savings account makes it hard to prove “genuine” growth.
Home Loan Costs to Budget For in 2026
Your deposit isn’t the only cost. Ensure you have a “buffer” for:
- Stamp Duty: This can be tens of thousands of dollars (though first-home buyer exemptions may apply).
- Lenders Mortgage Insurance (LMI): If your deposit is less than 20%, you usually have to pay this one-off insurance fee.
- Conveyancing: Fees for the legal transfer of the property ($1,500–$3,000).
- Building & Pest Inspections: Essential due diligence ($500–$1,000).
How to Speed Up Approval
- Next 24 Hours: Download your bank statements for the past 6 months and save them as PDFs.
- Next 2–4 Weeks: Avoid any “extraordinary” spending. Don’t buy new furniture or appliances yet!
- Until Settlement: Keep your job. Do not make any major career changes until the keys are in your hand.
FAQs
Is $40,000 enough for a house deposit?
It depends on the property price. For a $600,000 home, $40,000 is roughly 6.6%. This is enough if you qualify for a government guarantee or are willing to pay LMI, but you will also need extra for stamp duty and fees.
How much is a $600,000 mortgage monthly in Australia?
At a hypothetical 2026 interest rate of 6% over 30 years, the principal and interest repayment would be $3,597 per month.
Can I apply for a home loan before choosing a property?
Yes! This is called pre-approval. It gives you a specific budget so you can shop with confidence.
How long does home loan approval usually take in Australia?
Pre-approval takes 2–10 days. Full unconditional approval usually takes another 5–10 days once you’ve found a property.
Does applying for multiple home loans hurt my credit score?
Yes. Every time you submit a formal home loan application, an inquiry is recorded. Too many in a short period can make you look “credit hungry” and risky.
What is the minimum deposit required for first-home buyers in 2026?
Technically, some lenders accept a 5% deposit. However, with the First Home Guarantee scheme, you can buy with 5% and avoid LMI, provided you meet the eligibility criteria.
Need Help Applying for a Home Loan in Melbourne?
Purchasing an initial house or improving your lifestyle in the vibrant Melbourne market may be daunting. The regulations are altered, the interest rates fluctuate, and the documentation never appears to cease.
A mortgage broker can streamline this process by shopping around to dozens of lenders, demystifying the financial decisions of your home purchase, and handling the application process till completion.
How can we help:
- Free borrowing power check: Know exactly what the banks will lend you.
- Scheme navigation: We help you access first-home buyer grants and LMI waivers.
- End-to-end support: From the first “hello” to the day you move in.
If you’re ready to apply for a home loan in 2026, speak with the Capkon Melbourne team for personalised guidance and expert lender comparisons. Let’s get you home.