The short answer
- By law, lenders must check that a loan suits you and that you can afford it.
- They look at six things: income, expenses, debts, credit history, savings and the property.
- Your repayments are tested at a rate 3% higher than the one you'll actually pay.
- Small things, like unused credit card limits or a missed bill, can change the answer.
- Every lender has its own rules, so a no from one isn't a no from all.
Why lenders ask so many questions
Under Australia's responsible lending laws, lenders and brokers must make reasonable inquiries about your situation and goals, take reasonable steps to verify your finances, and assess whether the loan is "not unsuitable" for you. That's why you'll be asked for payslips, statements and a detailed budget. Source: ASIC
The six things lenders check
1. Your income
Lenders want income that's stable and likely to continue. Employees usually provide payslips and employment details. Self-employed borrowers usually provide tax returns, though some lenders accept other evidence (see our self-employed guide). Overtime, bonuses, commission and rental income may only be partly counted, and lenders treat casual work and probation periods differently.
2. Your living expenses
You'll be asked what you spend each month. Lenders compare that with a benchmark for households like yours, often the Household Expenditure Measure (HEM), and generally use the higher figure. They may check your bank statements to confirm.
3. Your debts
Every repayment you already have reduces what you can borrow. That includes car and personal loans, buy now pay later accounts and any HECS-HELP debt. Credit cards are assessed on the limit, not the balance, so a card you pay off in full each month still counts as if it were maxed out.
4. Your credit history
Lenders check your credit report. It shows up to two years of repayment history on loans and cards, and any defaults, which stay for five years. You can get your report free every three months from Equifax and Experian, and it's worth checking for errors before you apply. Source: Financial Rights Legal Centre
5. Your deposit and savings
Lenders look at where your deposit came from and how you manage your money. Regular savings, and accounts that aren't overdrawn or bouncing payments, make a good impression. Read more in how much deposit do I actually need?
6. The property
The lender lends against its own valuation, not the price you agreed to pay. If the valuation comes in low, you may need a bigger deposit. Some property types, such as very small apartments or rural land, have stricter rules or lower limits.
How lenders test whether you can afford it
Lenders work out your repayments at a rate at least 3% higher than the actual rate, a buffer set by APRA, then check what's left after your expenses and debts. If your loan rate is 6%, for example, it's tested at around 9%.
Since 1 February 2026, banks are also limited in how many new loans they can make to people whose total debt is six or more times their income. Loans to buy or build a new home are exempt. Source: APRA
Things that can slow an approval down
- Missed payments or defaults on your credit report.
- Overdrawn accounts or dishonoured payments in your recent bank statements.
- Lots of credit applications in a short time, which show on your credit report.
- A recent job change, especially if you're still on probation.
- Unexplained deposits into your accounts that the lender can't trace.
- Spending patterns lenders see as risky, such as regular gambling.
How to get approval-ready
- Check your credit report with Equifax and Experian, and get any errors fixed.
- Close credit cards you don't use, or lower the limits on the ones you keep.
- Keep your accounts tidy for a few months before you apply: no overdrawn balances, no missed payments.
- Hold off on new debt, like a car loan or a new phone plan on credit.
- Get your documents together: ID, payslips or tax returns, bank statements and statements for any debts.
- Talk to a broker before you apply. We can match you with a lender whose rules suit your situation, so you're not applying and getting declined.
Information is general and correct as at October 2026. Lender policies change often, so get advice on your own situation before you apply.