How to get mortgage ready in 2026

Get pre-approved fast before the 2026 property rush. Complete guide to borrowing capacity, deposit options, document checklist, and avoiding approval mistakes. Expert Attain broker support.

The property market heats up every January and February. Buyers who’ve been thinking about purchasing over summer suddenly start looking seriously once the holidays end, and by March and April, competition is fierce. If you’re planning to buy in 2026, waiting until you find your dream home to organize finance is a costly mistake.

Getting pre-approved before you start searching gives you a clear budget, positions you as a serious buyer, and lets you move fast when the right property appears. But getting approved isn’t instant. Lenders need to verify your income, assess your expenses, check your credit history, and review your deposit. If your documents aren’t ready or your finances need work, you could be looking at weeks of delays.

What is home loan pre-approval and why does it matter?

Pre-approval (also called conditional approval) is written confirmation from a lender that they’ll lend you up to a specific amount, subject to finding a suitable property and meeting final conditions. It’s not a guarantee. You still need formal approval once you’ve found a property, but it’s a strong commitment based on your current financial position.

Think of it this way: pre-approval tells you the lender has assessed your finances and is willing to back you, pending property-specific checks. Formal approval happens after they’ve valued the property, reviewed building reports, and completed final credit checks. At that point, the loan is locked in (assuming your circumstances haven’t changed).

Why getting pre-approved matters before you start looking

You know your real budget, not a guess.
Online borrowing calculators give rough estimates. Pre-approval tells you exactly what you can borrow based on your actual income, expenses, debts, and credit history. This stops you wasting time viewing properties you can’t afford, or worse, making an offer and discovering you can’t get finance.

Sellers and agents take you seriously.
When you make an offer with pre-approval in hand, you’re demonstrating you’ve done your homework and can actually settle. This matters especially at auctions, where you need to bid with confidence and settle quickly. Sellers know pre-approved buyers won’t waste their time with finance falling through.

You move faster in competitive markets.
Properties don’t wait around. If you’re scrambling to organize finance after finding something you love, you’ll lose out to pre-approved buyers who can exchange contracts within days. In hot markets, speed wins.

You discover problems before you’re emotionally invested.
Pre-approval identifies issues like credit problems, insufficient deposit, or income concerns while they’re still fixable. Better to know now that you need to reduce your credit card limit or save another $10,000 than to have your heart set on a home you can’t finance.

How long does pre-approval last?

Most lenders issue pre-approval valid for 90 days (three months). Some offer up to six months. You can usually request an extension if you haven’t found the right property, provided your financial situation hasn’t changed.

When should you apply? Apply when you’re 1-3 months away from serious house hunting. Too early and your approval expires before you find something. Too late and you’re rushing to get documents together while competing for properties.

Understanding your borrowing capacity: What lenders assess

Before approaching a lender, work out realistically what you can afford to borrow. This isn’t about what you’d like to borrow. It’s what lenders will actually provide based on their assessment criteria.

Income: What counts and what doesn’t

Employees (permanent full-time or part-time):
Lenders use your gross base salary plus guaranteed bonuses or allowances you’ve received consistently for 6-12 months. Overtime and commissions typically count at 80% of their value because they’re variable. You’ll need current payslips and tax returns to verify.

Employees (casual or contract):
You’ll need at least 6-12 months of consistent casual work or contract history. Lenders want evidence of ongoing employment, not just your current contract. If you’re between contracts when applying, this becomes difficult.

Self-employed borrowers:
You need minimum two years of tax returns showing consistent or growing income. Lenders average your income across both years, so one strong year and one weak year won’t get you the strong year’s borrowing capacity. They’ll also want business financials, ABN details, and often an accountant’s letter.

Rental income from investment properties:
If you already own rentals, lenders assess approximately 80% of rental income (accounting for vacancies and maintenance). You’ll need lease agreements and rental statements.

Expenses: Why lenders scrutinize your spending

Many borrowers underestimate how closely lenders examine expenses. They don’t just accept what you declare. They review 3-6 months of bank statements and compare your spending against benchmarks like the Household Expenditure Measure (HEM).

The common trap: Declaring unrealistically low living expenses to boost borrowing capacity. When lenders review your bank statements and see you actually spend $2,000/month on groceries and dining but declared $800, they question your credibility.

Credit score and history

Your credit score (0-1,200 in Australia) affects both approval chances and interest rates offered:

• Excellent (833-1200): Best rates, highest approval likelihood
• Very Good (726-832): Competitive rates, strong approval chances
• Average (622-725): Moderate rates, may face conditions
• Below Average (510-621): Higher rates, limited lender options
• Poor (0-509): Specialist lenders needed, significantly higher rates

Check your credit score free through Equifax, Experian, or illion before applying. If there are errors, dispute them immediately. If there are genuine issues like missed payments, defaults, or court judgments, work with a broker who knows which lenders are more forgiving.

Debt-to-income: How much is too much?

While Australia doesn’t have official debt-to-income limits, lenders become cautious when your total debt repayments (including the proposed mortgage) would exceed 30-40% of your gross income.

Example: You earn $100,000 gross ($8,333 monthly). Your proposed mortgage would be $3,000/month plus $500/month car loan = $3,500/month total debt servicing. That’s 42% of gross income. Some lenders would approve this, others would see it as high-risk and decline or offer reduced amounts.

Demonstrating you can afford repayments

Lenders don’t just want to see you can afford today’s repayments. They need evidence you’d manage if interest rates rose or your circumstances changed.

Serviceability buffers: The affordability test

When calculating if you can afford a loan, lenders don’t use the actual interest rate. They add a buffer, typically 3 percentage points, to ensure you could still make repayments if rates increased.

Example: You’re applying for a loan at 6.5% interest. The lender assesses your capacity to repay at 9.5% (6.5% + 3% buffer). If you couldn’t afford repayments at 9.5%, you won’t get approved even though you’d never actually pay that rate under current conditions.

This buffer protects both parties. Even if rates rise 2-3 percentage points over your loan term, you should still manage repayments without defaulting.

Showing consistent savings patterns

Lenders want to see genuine savings history. Money you’ve accumulated progressively over months, not funds that suddenly appeared.

What builds confidence:

• Regular deposits into savings over 3-6 months
• Growing balances from your own contributions
• Savings maintained despite paying rent and living costs

What raises questions:

• Large lump sums appearing suddenly
• Cash deposits without clear source
• Money from gifts or loans rather than your earnings

Tidy up your spending before applying

If your bank statements show daily food delivery, multiple unused subscriptions, frequent ATM withdrawals, or excessive discretionary spending, lenders question whether you’re disciplined enough for mortgage repayments.

Before applying:

• Cancel unused subscriptions (streaming services, gym memberships you don’t use)
• Reduce discretionary spending for at least 2-3 months
• Minimize cash withdrawals (which look like hidden spending)
• Show controlled, responsible spending habits

You don’t need to live frugally forever. Just demonstrate financial discipline during the assessment period.

Don’t appear financially stretched

If your account hits zero every pay cycle, you’re regularly using your overdraft, or you’re juggling credit cards, lenders see risk. Even if you’re technically managing, it suggests no buffer for unexpected expenses, and therefore you wouldn’t cope if mortgage repayments increased.

Maintain at least 1-2 months of expenses as a savings buffer. This demonstrates financial stability.

Understanding your deposit: How much you need and where it comes from

Your deposit size directly impacts loan approval, interest rates, Lenders Mortgage Insurance costs, and which lenders will consider you.

Deposit requirements by LVR

20% deposit (80% LVR):

• No LMI required (saves $15,000-$40,000)
• Access to widest range of lenders and best interest rates
• Lowest risk assessment from lenders
• Example: $800,000 property = $160,000 deposit needed

10% deposit (90% LVR):

• LMI applies, typically $15,000-$30,000 depending on loan size
• Most lenders will consider with strong credit and stable employment
• Rates slightly higher than 80% LVR
• Example: $800,000 property = $80,000 deposit + LMI

5% deposit (95% LVR):

• Significant LMI costs, often $30,000-$50,000+
• Fewer lenders willing to approve
• May require government guarantee schemes (First Home Guarantee)
• Stricter income and credit requirements
• Example: $800,000 property = $40,000 deposit + LMI

Genuine savings vs other deposit sources

Most lenders require at least some “genuine savings”. Money you’ve saved progressively over time (minimum 3 months). This proves financial discipline.

Genuine savings include:

• Regular deposits into savings account over 3+ months
• Term deposits held 3+ months
• Shares or managed funds owned 3+ months

Acceptable but not “genuine” savings:

• Gifts from family (need statutory declaration it’s a gift, not a loan)
• Inheritance
• First Home Super Saver Scheme withdrawal (up to $50,000)
• Sale of assets (car, recently sold shares)
• Tax refund

Typically lenders want at least 5% genuine savings, with remaining deposit from other acceptable sources.

Government schemes reducing deposit barriers

First Home Guarantee (expanded October 2025): Purchase with 5% deposit, no LMI. Government guarantees up to 15% of property value. From October 2025: unlimited places, no income caps. Must be first-home buyer or not owned property in last 10 years.

Help to Buy: Government contributes 30-40% of purchase price as equity partner. Buy with just 2% deposit. Limited 10,000 places annually. Income caps: $100k individuals, $160k couples. Shared ownership until you buy government out.

What about deposit bonds?

Deposit bonds are insurance products guaranteeing you’ll pay the deposit at settlement. They’re useful if your deposit is tied up (selling another property, awaiting inheritance). Cost is typically 1-1.2% of bond amount. Not all sellers accept them, particularly at auctions.

Pre-approval document checklist: Get organized before applying

Having complete documentation before approaching lenders speeds up pre-approval dramatically. Missing paperwork is the main reason applications stall for weeks.

Documents for employees

Income verification:

• Last 3 months payslips (6 months if income includes commissions/bonuses)
• Last 2 years tax returns and ATO assessment notices
• Employment contract or letter stating role, salary, employment type
• Letter from employer if on probation confirming permanency

Financial position:

• Last 3-6 months bank statements (all accounts: savings, transaction, offset)
• Current statements for credit cards (even if balance is zero)
• Current statements for any loans (car, personal, student)
• Investment portfolio statements if applicable
• Rental statements if you own investment properties

Identification:

• Driver’s license or passport
• Medicare card
• Recent rates notice or utility bill (proof of current address)

If you’ve found a property:

• Contract of sale
• Building and pest inspection reports
• Strata report (for apartments/townhouses)

Additional documents for self-employed

Self-employed applicants need everything above plus:

Business verification:

• Last 2 years business tax returns (not just personal)
• Business financial statements (profit & loss, balance sheet)
• ABN registration certificate
• Business Activity Statements (BAS)
• Accountant’s letter verifying income
• Company tax returns (if operating as company)

Ongoing business proof:

• Recent invoices or contracts showing current work
• Business bank statements (last 3-6 months)
• Evidence of consistent income flow

Most lenders require minimum 2 years trading history, though some accept 12 months for established business owners changing structure.

Documents for investment property purchases

If buying an investment property:

• Rental appraisal for proposed property
• Evidence of rental income from existing properties
• Lease agreements for current investment properties
• Property manager statements
• Details of property expenses (strata, insurance, rates)

Complete asset and liability summary

Create a comprehensive list:

Assets:

• All bank account balances
• Superannuation balance
• Investment portfolio values
• Property values (current market estimate)
• Vehicles
• Other significant assets

Liabilities:

• Mortgage balances and details
• Personal loan balances
• Car loan details
• Credit card limits (not just balances. Lenders assess full limits)
• HECS/HELP debt
• Buy now, pay later accounts
• Any guarantees provided for others’ loans

Critical: Declare credit card limits even if you pay them off monthly. Lenders assess you as if using the full limit because you could max them out anytime.

The pre-approval process: Step-by-step

Understanding each stage helps you prepare and know what to expect.

Step 1: Application submission

You or your broker submit your application with all documentation. The lender’s credit team begins reviewing your financial position, employment situation, credit history, and calculating borrowing capacity using their specific criteria.

Step 2: Credit check and verification

The lender performs a credit check (appears on your credit file) and may:

• Contact your employer to verify employment and income
• Call you to clarify expenses or financial details
• Request additional documentation for anything unclear
• Review your bank statements in detail

Step 3: Assessment and decision

A credit assessor reviews everything and decides. Processing times vary:

Best case (2-3 business days): Permanent employee, straightforward finances, excellent credit, strong savings, complete documentation.

Typical case (5-7 business days): Most applicants with complete documents, standard employment, decent credit.

Complex cases (1-3 weeks): Self-employed, multiple income sources, credit issues requiring explanation, complex property structures, peak application periods.

Step 4: Conditional approval issued

If approved, you receive a certificate stating:

• Maximum loan amount approved
• Validity period (typically 90 days)
• Conditions to be met (suitable property, satisfactory valuation, final credit check)
• Interest rate indication (may change by settlement)

Step 5: Property-specific checks (after finding property)

Once you’ve found a property and made an offer, the lender:

• Conducts property valuation (ensures value matches purchase price)
• Reviews building/pest reports and strata documents
• Performs final credit check
• Confirms your circumstances haven’t changed

Step 6: Formal approval

If everything checks out, you receive formal approval and loan documents to sign. You then work toward settlement with your solicitor/conveyancer.

Timeline from pre-approval to settlement: Typically 8-12 weeks total (assuming you find property within your pre-approval validity period).

What can void your pre-approval?

Your conditional approval can be revoked if:

• You change jobs or employment status
• You take on new debt (credit cards, loans, BNPL)
• Your credit file shows new issues (missed payments, defaults)
• You make unexplained large cash deposits
• The property doesn’t meet lender’s criteria
• Valuation comes in below purchase price
• You’ve misrepresented your financial situation

Maintain complete financial stability from pre-approval through settlement.

Common pre-approval mistakes that cost buyers

Changing jobs at the wrong time

Employment stability matters enormously. If you’ve just started a new job:

• Permanent employees: lenders want 3-6 months payslips and probation completed
• Casual/contract: need evidence of ongoing work, not just current contract
• Career change: may need 12 months in new field

Worse timing: Changing jobs after pre-approval but before settlement can void your approval entirely.

Plan around it: Time job changes well before applying (6+ months) or after settlement completes.

Taking on new debt

Getting pre-approved for $600,000, then financing a $40,000 car before finding a property can drop your approval to $540,000. Suddenly your target properties become unaffordable.

What hurts you:

• Car loans or personal loans
• New credit cards (even unused, the limit counts against you)
• Increasing existing credit card limits
• Multiple active buy now, pay later accounts

From deciding to buy until settlement: take on zero new debt unless absolutely unavoidable.

Large unexplained cash deposits

Depositing $20,000 cash raises immediate questions:

• Where did this come from?
• Is it a loan you haven’t declared as a liability?
• Is it undeclared income?
• Are you involved in cash-based business?

Better approach: Family gifts should be transferred electronically with clear description. Savings kept at home should be deposited 3+ months before applying, with documentation explaining the source.

Not disclosing all debts

“Forgetting” to mention that rarely-used credit card, small personal loan, or HECS debt will backfire. These appear on your credit file when the lender checks. Undisclosed debts destroy your credibility.

The credit card trap: A $15,000 limit card you pay off monthly still counts as if you owe $15,000. Lenders assess the full limit because you could max it out tomorrow. Close unused cards or reduce limits before applying.

Applying to multiple lenders yourself

Each application creates a credit inquiry on your file. Multiple inquiries in short succession can:

• Lower your credit score 10-30 points
• Make you appear desperate
• Suggest financial instability

Smarter approach: Mortgage brokers assess your situation and apply strategically to one suitable lender, avoiding credit file damage from scattered applications.

What if you’re rejected or approved for less than expected?

If pre-approval is declined

Don’t panic. Declined pre-approval doesn’t mean you’ll never get approved. It means this particular lender using their specific criteria has declined you now.

Common rejection reasons:

• Insufficient income for requested loan amount
• Too much existing debt
• Poor credit history
• Insufficient genuine savings
• Employment type or stability concerns
• Property type restrictions (some lenders won’t finance certain properties)

What to do next:

1. Request written explanation from the lender explaining specifically why you were declined
2. Address the issues: Reduce debts, improve credit, save more, increase income
3. Try a different lender: Different lenders have different criteria. One decline doesn’t mean universal rejection
4. Work with a specialist broker: They know which lenders suit different circumstances

If you’re approved for less than expected

You wanted $650,000, got approved for $550,000. Now what?

Options:

• Adjust your property search to lower price range
• Increase your deposit to reduce loan amount needed
• Reduce existing debts to free up borrowing capacity
• Add a co-borrower (partner, family member) to increase household income
• Try a different lender who may assess your serviceability differently
• Wait and improve your position (pay down debts, increase income)

Don’t: Make offers on properties you can’t afford hoping the lender will change their mind. They won’t.

Pre-approval for different buyer situations

First-time buyers

Key advantages:

• Access to First Home Guarantee (5% deposit, no LMI, unlimited places)
• May qualify for First Home Owner Grant in some states
• Can use First Home Super Saver Scheme ($50,000 max)

Common challenges:

• Limited savings history
• Smaller deposit accumulated
• Less familiarity with process
• May be younger with lower incomes

Broker value: High. First-timers benefit significantly from education, lender matching, and application support.

Upgraders selling and buying

Key advantage:

• Equity from existing property forms large deposit
• Established credit and employment history
• Experience with property process

Common challenges:

• Bridging finance if settlement dates don’t align
• Managing two properties temporarily
• Selling price uncertainty

Critical timing: Get pre-approved before listing your current property, not after. Knowing your borrowing capacity helps set your budget for the upgrade.

Investors purchasing additional properties

Different assessment:

• Lenders assess rental income at approximately 80% (vacancy factor)
• Existing investment loans reduce borrowing capacity
• Some lenders limit number of investment properties
• Interest rates often higher for investment vs owner-occupied

Documentation needs:

• Current lease agreements
• Rental appraisal for new property
• Property management statements
• Depreciation schedules

Buying at auction

Auction purchases require:

• Unconditional contract signed on auction day
• Typically 10% deposit paid immediately
• Settlement usually 30 days (sometimes shorter)

Why pre-approval is critical: You can’t make an auction contract “subject to finance.” You need to know your limit before bidding. If you can’t secure finance after winning, you lose your deposit and potentially face legal action from the vendor.

Get pre-approved for your absolute maximum. You’ll bid within your budget, but knowing your ceiling prevents buying something you ultimately can’t finance.

How Attain Loans and Mortgages gets you approved faster

Most applicants going direct to banks face 2-3 week processing times, confusion about which lender to approach, and document requests they weren’t prepared for. Attain’s approach is different.

We match you to lenders who want your business

Not all lenders assess applications the same way. Some lenders:

• Love self-employed borrowers, others avoid them
• Assess rental income generously, others conservatively
• Accept 95% LVR easily, others stop at 90%
• Have flexible credit policies, others are strict

We assess your complete position and approach lenders most likely to approve you at competitive rates, not lenders likely to decline or offer unfavorable terms.

What this prevents: Declined applications damaging your credit file. Multiple inquiries lowering your score. Wasted time with unsuitable lenders.

We prepare applications that get approved first time

We review your complete financial position before submitting:

• Identify potential issues before lenders see them
• Structure your application to highlight strengths
• Provide context for anything unusual (income gaps, credit issues, employment changes)
• Include all documentation lenders need upfront

Example: Client with 12-month employment gap (caring for sick parent) would likely get declined if applying without explanation. We provided supporting documentation and context upfront. Approved within 3 days.

We handle the entire process so you don’t chase lenders

From application to approval:

• We liaise directly with lender credit teams
• Respond immediately to additional information requests
• Keep you updated on progress (you’re never wondering what’s happening)
• Push for timely processing through established relationships
• Handle any questions or clarifications needed

You focus on finding the right property. We handle getting you approved.

We continue supporting you after pre-approval

Our service extends beyond the approval certificate:

• Property-specific approval coordination once you find something
• Valuation management
• Final approval condition completion
• Liaison with your solicitor/conveyancer for settlement
• Rate negotiation closer to settlement
• Problem-solving if issues arise

Recent example: Client’s pre-approval was for $700k. Found perfect property at $720k. We approached the lender with updated employment letter showing income increase, got approval increased to $730k within 48 hours. Direct applicants don’t have that kind of lender access.

2026 timing matters: Act now before the rush

January-March is peak pre-approval season. Lenders get swamped, processing times blow out from 5 days to 3+ weeks, and credit teams become backlogged.

Get ahead: Apply for pre-approval in January, have it ready before February’s rush, and you’re positioned to move when the right property appears.

Book your free consultation: We’ll review your complete financial position, calculate your realistic borrowing capacity across multiple lenders, identify any issues to address, and get you pre-approved before the market heats up. Contact Attain Loans and Mortgages today. Let’s get you mortgage-ready for 2026.

Further questions

This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.