Australian home loan requirements come down to four tests every application must pass: identity and age, deposit or equity, serviceable income against existing liabilities and acceptable security. Lenders apply their own versions of each test, so the broker’s job is knowing which lender’s version fits which client before anything is lodged.
This article walks through the baseline criteria, the deposit hurdle and where government schemes change it, the assessment numbers that decide marginal files, and the documentation that keeps applications moving.
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The baseline eligibility tests
- Identity and residency: Australian citizens, permanent residents and, under some policies, certain visa holders can apply.
- Age and term: borrowers must be 18 or over, and the loan generally needs to end before an age ceiling set by each policy.
- Serviceability: income tested against living-expense benchmarks, liabilities and a buffered assessment rate.
The applicant’s credit history sits across every test: adverse listings can sink an application even when debt levels are modest, and a weak bureau credit score narrows the panel just as quickly. Review the file before promising outcomes.
Deposits under twenty percent attract insurance
A minimum deposit usually starts around five to ten percent plus purchase costs, but below twenty percent most standard loans carry Mortgage Insurance. The LMI premium rises with both loan size and deposit shortfall, is typically capitalised onto the loan, and can be waived for certain occupations under specific policies. Price it into every comparison rather than treating it as an afterthought.
Government schemes change who clears the hurdle
Commonwealth schemes such as the First Home Guarantee let eligible buyers purchase with a smaller deposit without paying lenders mortgage insurance, because the government guarantees part of the loan. These run inside the standard application process, with the scheme attached to an eligible lender’s loan. Income caps, property price caps, first-home status and limited annual places all apply, so confirm the current rules each financial year. State concessions on stamp duty add relief for qualifying buyers, and dedicated supports exist beyond the flagship scheme for regional purchases and single parents.
Check category definitions carefully too: what counts as a First Home Buyer for one scheme differs from another, and previous property ownership anywhere in the world can disqualify.
What assessment actually looks at
Beyond deposit, assessment weighs income type and stability, with casual and self-employed earnings shaded differently by each policy; existing liabilities loaded at assessment values; household expenses measured against published benchmarks; and the proposed security itself. The chosen loan terms feed serviceability maths, while location, property type and estimated value determine the LVR, which drives both pricing and insurance costs.
Match the product to the borrower
Different loan types suit different situations: basic variable products for flexibility, fixed terms for budget certainty, offset-linked loans for clients holding savings. Clients planning to move or restructure within a few years should weigh exit costs, since refinancing out of a fixed term carries break-cost risk. Headline interest rates matter, but comparison rates, fees and features decide real cost over time.
For clients still assembling their position, a pre-approval sets a realistic price band early. Running a proper borrowing capacity calculation through two or three likely lenders beats any public calculator, and pairing it with simple budgeting evidence helps genuine-savings stories.
Mortgage brokers bring these threads together: testing eligibility across several lenders, pricing insurance honestly, attaching the right scheme where one exists, and assembling documents before lodgement. For your next appointment, run the four baseline tests verbally, note which need evidence and leave the client with one written checklist covering exactly those items.
