Home Loan Eligibility

Are you eligible for a home loan? Find out what it takes to secure a home loan here.

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, updated on August 7th, 2023       

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If you’re looking to purchase a home, you will almost certainly need a home loan, but are you eligible for one?

Your home loan eligibility is based off your ability to pay back your loan amount, with added interest, within a certain period of time.

Each lender will have different lending criteria when it comes to home loans, however there are some general rules that run across the entire industry.

How can I be eligible for a home loan?

There are many different criteria you will need to meet to be eligible for a home loan. These criteria can be split into three different sections.

Your employment 

The borrower is the applicant of the home loan, or in other words, you. Lenders will enquire about your past to help them gain a better understanding of whether or not you will be able to make repayments on your home loan.

Here are the criteria that lenders will use to assess you as a borrower, as well as some top tips to help you be successful:

  • You are over the age of 18. 
  • You are a citizen or permanent resident of Australia. 
  • You have a history of stable employment. 

Your finances

Related to your employment history, you must also give evidence of your finances and that you will be able to make repayments on your loan given. A lender works out whether you will be able to service a loan through: 

  • Adding up all your sources of income together. 
  • Then subtracting from this figure; your living expenses, monthly mortgage repayments and any other debts that you may have (including credit cards, car loans and more). 

After assessing your finances and deciphering whether or not you are in a position to make repayments on your loan, lenders will dig deeper. The criteria they use as well as some tips to improve your position are as follows:

  • Your credit history and credit score – High credit shows that you are a disciplined borrower and can be trusted to make repayments on time.
  • You will need to have at least 5% of your chosen property’s value in genuine savings. 


Different lenders will have different property lending criteria. This could mean that lenders will not give out loans for the purchase of a home in a certain postcode or a home of a certain nature. The following shows factors that may cause some issues with property lending criteria as well as some tips with dealing with this: 

  • If the property is in a high-density area, some lenders may have leaner requirements and restrictions than others. 
  • If you are looking to buy in a bushfire or flood prone area, there are different levels of danger classification for each property. 
  • If the property is in a rural area that is not a major regional centre, it may be more suited to rural home loans.

What would applying for a home loan with another person mean for eligibility?

Applying for a home loan with another person (a co-applicant) can affect your eligibility in either a good, or bad way.

It can affect your application in a good way if you both meet the requirements in sections one and two easily.

They can also help if you are struggling to meet the requirements. This is only true if your co-applicant is easily meeting the criteria in sections one and two.

It can negatively affect your application in the opposite situation where your co-applicant is struggling to meet the requirements presented in sections one and two.

What if I’m not applying for a regular home loan?

If you are ineligible for a regular home loan or looking for something more niche, you may be eligible for a wide range of other home loan products offered by lenders. These include but are not limited to:

Can I be eligible if I have limited to no financial documentation?

Some examples of people who will have limited to no financial documentation (and will still be able to make repayments on a home loan and afford a deposit) are those who are self-employed or contractors.

Because of the nature of their work, these people will usually not have access to documentation such as a payslip, so it makes applying for a home loan difficult. Luckily there are such things as no documentation and low documentation home loans.

These home loans allow those with limited to no documentation to receive a home loan.

Your home loan eligibility questions answered

What if I'm not a citizen or permanent resident of Australia?

If you are not a citizen or permanent resident of Australia, you may encounter some issues in applying for a home loan. It is best to speak to a mortgage broker about your situation and see if they can present you with any options.

If my partner is unemployed, do they have to be a co-applicant on my home loan application?

No, they can be listed as your dependant on your application. This may heighten your risk with lenders.

What if I have no deposit but own another property, can that help me secure a home loan?

You may be able to use the equity you have on your current home to help you purchase this next home. Speak with a mortgage broker about this to get a better understanding about the situation.

Will having a guarantor help my eligibility?

A guarantor can help you secure a home loan, especially if you are struggling to accumulate the funds for a deposit.

If I have bad credit can I still be eligible for a home loan?

If you have bad credit, it does not rule you out of home loan eligibility. Bad credit home loans allow applicants with bad credit to secure a home loan and still have access to many of the home loans features that those with better credit scores can receive.

If you have bad credit, you will likely need to pay a higher interest rate. This can decrease over the life of your loan as your credit score improves.

What is the minimum credit score I need to secure a regular home loan?

Lenders never publicly release this knowledge, so it is difficult to give an exact answer to this. However, if you have a good credit score (between 622-725) you will likely be successful in securing a home loan.

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