Do you know what lenders need for your home loan?

Your application gets approved when the paperwork matches the lender's requirements.

Lenders assess risk by checking your income, expenses, assets and liabilities. The documents you provide prove each of those things. Missing a payslip or bank statement can delay approval by weeks or send you back to square one. Getting it right the first time means you can move forward with your purchase or refinance without unnecessary hold-ups.

What income documents do lenders actually check?

Lenders need proof that your income is consistent and likely to continue. If you earn a wage or salary, they typically want your two most recent payslips and your employer's contact details. Some lenders also ask for a letter from your employer confirming your position, salary and whether you're permanent, part-time or casual.

If you've been in your current role for less than six months, they may want to see employment details from your previous job. For anyone who's recently changed careers or returned to work after a break, that can mean gathering extra paperwork to show stability.

Self-employed applicants face a different process entirely. Lenders usually want two years of tax returns and Notices of Assessment from the ATO. If your income fluctuates from year to year, they might average it out or focus on the lower figure. Some lenders also ask for recent business activity statements or financial statements prepared by your accountant. This applies whether you operate as a sole trader, partnership, company or trust.

If you receive rental income from an investment property, lenders typically want a copy of the lease agreement and evidence that rent is being paid into your account. They usually assess 80% of the rental income to allow for vacancy and maintenance costs.

How much detail do lenders want on your spending?

Lenders review your bank statements to verify both income and expenses. Most lenders ask for three months of statements from all your everyday accounts, including savings, transaction accounts and any offset accounts linked to other loans.

They look at regular debts like credit card limits, personal loans, car loans and any existing home loans. Even if your credit card balance is zero, they assess the full limit as if you were using it. If you hold a card with a $10,000 limit, they factor in a monthly repayment based on that limit when calculating your borrowing capacity, not just what you currently owe.

They also review discretionary spending. Regular payments to gambling sites, buy-now-pay-later services or recurring subscriptions all affect how much you can borrow. Lenders don't judge the spending itself, but they do adjust your serviceability based on what you commit each month.

Consider someone applying for a home loan in Point Cook who has an unused credit card with a $15,000 limit and a monthly Afterpay commitment averaging $400. The lender assesses both when calculating how much can be borrowed. Paying down the Afterpay balance and closing or reducing the credit card limit before applying can improve the outcome without changing income at all.

What property documents are required before settlement?

Once your loan is conditionally approved, the lender needs documents specific to the property you're buying. For an established home, that includes a copy of the signed contract of sale and a valuation. The lender arranges the valuation, but you may be asked to provide access or property details if the valuer needs to inspect.

For vacant land or a construction loan, lenders want a copy of the building contract, council-approved plans, and a breakdown of costs. Some lenders release funds in stages as construction progresses, which means you'll need to provide progress certificates from a building inspector or quantity surveyor at each stage.

If you're buying an apartment or townhouse, the lender may ask for a copy of the owners corporation certificate, which shows whether the building has any outstanding debts, disputes or major works planned. Lenders can decline a loan if the building has structural issues or insufficient insurance.

Does your deposit need to be verified?

Lenders want to see that your deposit is genuine savings, not a recent cash injection from an undisclosed loan. They typically ask for three to six months of bank statements showing the deposit being accumulated over time. If you receive a gift from a family member, most lenders accept it as long as you provide a signed statutory declaration from the person giving the gift confirming it doesn't need to be repaid.

If you're using equity in another property as your deposit, the lender needs a recent valuation of that property and details of any loan secured against it. For applicants using the government schemes like the Australian Government 5% Deposit Scheme, which allows eligible first home buyers to purchase with as little as 5% deposit and avoid paying lenders mortgage insurance, the deposit requirements are lower, but the lender still verifies where the funds came from.

What happens if you can't provide a document?

If a required document is missing, your application goes on hold until it's provided. Some lenders have flexibility depending on your circumstances, but most won't proceed to final approval without the full set.

In some cases, an alternative document can be accepted. If you've lost a payslip, your employer may be able to provide a letter or payment summary. If you've recently closed a bank account, you can usually request statements directly from the bank going back several months.

If a document doesn't exist because your situation is unusual, it's worth discussing with your broker before applying. Lenders have different policies, and some are more accommodating than others for non-standard employment or income structures.

Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions