Before you apply, it’s worth knowing how lenders actually assess you behind the scenes 💵
It’s not just a quick look at your salary. They dig a lot deeper.
Here’s what they focus on:
1. Income
Yes, your wage matters. They’ll look at your payslips, employment type (full-time, part-time, casual) and how stable your job is.
Overtime, allowances and bonuses can be included, but not always at 100%.
For example:
• Emergency services (police, paramedics etc) – overtime and allowances are often accepted at full rate.
• Retail or hospitality – lenders usually reduce that extra income by around 20% to allow for inconsistency.
2. Current debts
Credit cards, car loans, personal loans and HECS/HELP all reduce borrowing capacity.
Important: credit cards are assessed at their full limit, not the balance owing. Even if you owe $0 on a $10,000 card, the bank assumes you could use it tomorrow.
Simple rule: generally speaking, the lower your debts, the higher your borrowing power.
3. Genuine savings
Most lenders want to see at least 3 months of consistent savings, especially if you’re buying with a 2% or 5% deposit under a guarantee scheme.
The $30,000 First Home Owner Grant is fantastic, but you still need to show you can save.
Some lenders will use your rental history as genuine savings, which helps if you’re receiving a family gift or using the FHOG as part of your contribution.
4. Credit history
This is huge.
Your credit file goes back 5 years. Every enquiry for a credit card, car loan or personal loan is recorded, even if you didn’t proceed.
Buy Now Pay Later services like Afterpay and Zip can also lower your credit score. If you’re not relying on them, it can be worth clearing them out before applying.
5. Living expenses
Lenders don’t just accept a rough estimate. They may review your bank statements and compare your spending to their internal benchmarks.
Food delivery, takeaway, gym, streaming, personal spending, it’s all visible.
You don’t have to live on two-minute noodles, but consistency and control matter.
At the end of the day, pre-approval isn’t about impressing the bank with your income.
It’s about showing you can comfortably manage the loan now and if interest rates rise in the future. (And yes, the bank absolutely wants to know they’ll get their money back )
If you’re unsure how you’d look on paper right now, better to check before you start making offers.
Happy to help with general questions.
