In short: To improve your chances of home loan approval, keep your spending steady for the three months before you apply, pay every bill on time, avoid new credit applications, stay in your job and save a genuine deposit. Lenders also test your repayments at a rate at least 3% higher than the loan rate, so the less debt you carry, the more you can borrow.

Getting a home loan approved is hard work, and lenders are thorough.

A home loan application is filled with many hurdles you need to jump. One of the biggest mistakes applicants make is failing to understand all the criteria lenders use to assess your credibility as a borrower. These include your credit history, income, deposit, living expenses and your debt-to-income ratio.

Luckily, there are simple things that anyone can do to dramatically improve their chances of achieving home loan approval. We wanted to share five of these and get you one step closer to financing your next property purchase.

1. Find cheaper alternatives and be smart with your spending

Lenders usually read your last three months of bank statements line by line.

Now might be as good a time as ever to review your current spending and identify potential areas where savings can be made. This doesn’t have to mean cutting items out of your budget entirely. Instead, you may be able to find cheaper alternatives to help you limit your weekly expenses.

For example, avoid dining out in favour of cooking at home and look for cheaper brands instead of high-end ones.

When applying for a loan, lenders will look closely at your spending and use it to determine your overall capacity to service a loan. A disciplined savings record is looked upon favourably and may boost your borrowing credibility in the eyes of the lender.

Additionally, even small changes to your budget will add up over time and help you save for a deposit faster. Use our budget planning calculator to map out your monthly costs and repayments.

2. Check and improve your credit score

When applying for a loan, one of the first things a lender will do is check your credit score.

Your credit score is built from your credit file: the accounts you hold, your repayment history over the last two years and every credit application you make. Here’s what most people miss: every application for a credit card, car loan or buy now pay later account leaves an enquiry on your file, so avoid new credit in the months before you apply.

Late repayments and overdue bills hurt your score. Building a strong credit history of timely debt repayments will go a long way towards bolstering your loan application.

To improve it, pay every bill on time, close credit cards you do not use (lenders count the full limit, not the balance) and check your credit report for errors.

You can get a free copy of your credit report every three months from each of the three credit reporting bodies: Equifax, Experian and illion. Moneysmart explains how.

3. Have a consistent savings strategy

When you decide to buy a home, having a savings strategy to help reach your goal deposit should be at the top of your priorities. Not only can a healthy deposit save you from needing to pay Lender’s Mortgage Insurance (LMI), but it can also increase the amount you are able to borrow.

Lenders want to be confident they won’t lose money on a loan, which is why they favour applicants with a healthy deposit. If your loan-to-value ratio is below 80 per cent, lenders will feel confident they can recover their losses even if the property is sold for less than it was bought for.

You can borrow more than 80 per cent, but LMI can cost thousands. Eligible first home buyers can avoid it with a 5% deposit under the federal 5% Deposit Scheme.

Having a consistent savings strategy in place can go a long way towards securing your home loan. Additionally, breaking down your budget into weekly or monthly instalments will also help you plan a timeline for when your deposit will be ready.

Remember to budget for the other costs of buying too, such as stamp duty, conveyancing and inspections.

4. Avoid a sudden career change

The stability of your employment is a key factor that lenders look at when assessing your home loan application.

Lenders want assurance that you have a reliable source of income to service your mortgage. Sudden changes to your employment before applying for a home loan may add uncertainty for lenders and hurt your chances of approval.

Whilst changing jobs may be necessary for your career or lifestyle, try to resist the urge before your mortgage application. This is particularly relevant if you’re switching to a less stable source of income, such as starting a small business or self-employment work.

As a general rule, the longer you have been in your job, the stronger your application looks. Many lenders want to see you have finished any probation period.

5. Use a guarantor

Before approving your home loan application, a lender needs a guarantee that they will be able to recover the loan amount if a borrower defaults on the loan.

If a deposit worth at least 20 per cent of the loan value cannot be reached, borrowers are generally left with two solutions. The first is to take out Lender’s Mortgage Insurance (LMI), which can be costly. The second is to have a guarantor secure your loan.

A guarantor is when someone, usually a parent, provides a guarantee for the repayment of a loan. This means the guarantor is legally responsible for paying back any losses if the borrower cannot repay the loan. This ‘guarantee’ curtails the risk of a lender losing money and will boost your chances of home loan approval.

Using a guarantor is a great way to get into the property market sooner without facing hefty LMI costs.

However, before asking a close family member to be your guarantor, be mindful of the potential risks involved. Guarantors must offer up their own equity as collateral to guarantee the repayment of the loan. This means that if you default on the loan, the guarantor will have to use that equity to bail you out, which may add significant strain to your relationship.

Want a sense of your numbers first? Try our borrowing power calculator. If you’d like me to look over your application before it goes in, book a chat with Gav.

Frequently asked questions

What do lenders look at for home loan approval?

Your income and job stability, living expenses, existing debts and credit limits, credit history, deposit and genuine savings. They also test repayments at a rate at least 3% above the loan rate.

Does checking my own credit score hurt it?

No. Checking your own credit report does not affect your score. Applying for new credit does leave an enquiry on your file.

How long should I be in my job before applying for a home loan?

It varies by lender. Many want you past probation, and a longer stable history helps. Some lenders accept a recent job change in the same industry.

Last updated: 2 November 2026.

General information only. This article does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and seek personal advice before acting. Elephant Financial Pty Ltd trading as Elephant Advisory is an authorised credit representative (ACR 487962) of Yellow Brick Road Aggregation Pty Ltd (formerly Vow Financial Pty Ltd) (ABN 66 138 789 161), Australian Credit Licence 390261.