Getting a home loan in Australia involves six key stages: checking your borrowing power, comparing loan types, gathering your documents, submitting a formal application through a lender or broker, receiving approval, and settling on your property. Most buyers complete this process in four to twelve weeks, depending on their financial situation and how prepared they are before they start.
A home loan is a secured credit product where a lender advances funds to purchase property, and the borrower repays that amount, plus interest, over an agreed term, typically 25 to 30 years.
Here is the end-to-end process, in order.
The standard deposit target is 20% of the purchase price. At 20%, you avoid Lenders Mortgage Insurance (LMI), a one-off premium that protects the lender, not you, if you default.
That said, most lenders will accept deposits as low as 5 to 10%, with LMI added to your loan. For eligible first home buyers, the federal government's First Home Guarantee allows a 5% deposit with no LMI. The government guarantees the remaining 15%.
Here is a quick deposit guide based on a $750,000 purchase:
| Deposit % | Deposit Amount | LMI Applies? | Notes |
|---|---|---|---|
| 5% | $37,500 | Yes (unless scheme applies) | First Home Guarantee eligible buyers may avoid LMI |
| 10% | $75,000 | Yes | LMI cost typically $10,000 to $20,000+ depending on lender and loan size |
| 20% | $150,000 | No | Standard threshold to avoid LMI entirely |
| 20%+ | $150,000+ | No | Better rates often available above 20% LVR |
Note: LMI costs vary significantly between lenders and insurers. These are indicative ranges only. Ask your broker for a lender-specific figure.
Choosing the right loan structure is as important as choosing the right rate.
Your interest rate is locked for a set period, typically one to five years. Repayments are predictable, which suits buyers who want budget certainty. The trade-off is less flexibility: extra repayments are often capped and breaking the fixed term early can trigger significant break costs.
The interest rate moves with the lender's pricing decisions, which generally track the Reserve Bank of Australia (RBA) cash rate. Variable loans typically offer more features: unlimited extra repayments, offset accounts, and free redraws. They tend to be cheaper over the long run when rates fall.
Part of your loan is fixed and part is variable. You get some rate certainty while retaining flexibility on the variable portion. This is a popular middle-ground for buyers who want the best of both structures.
Every repayment covers both the interest charged and a portion of the loan principal. Your debt reduces from day one. This is the standard structure for owner-occupiers and is required by most lenders after a fixed or interest-only period ends.
Repayments cover only the interest. The principal does not reduce during the IO period, which is typically one to five years. IO loans are common for property investors managing cash flow. IO rates are generally higher than P and I rates.
| Loan Type | Rate Certainty | Flexibility | Best For |
|---|---|---|---|
| Fixed | High | Low | Buyers who need budget certainty |
| Variable | Low | High | Buyers expecting rates to fall, or wanting features |
| Split | Medium | Medium | Buyers wanting a balance of both |
| P and I | N/A | N/A | Owner-occupiers; builds equity fastest |
| Interest Only | N/A | N/A | Investors managing cash flow short-term |
Lenders assess how much you can borrow based on several factors:
Borrowing capacity is not a fixed number. Changing lenders, restructuring existing debts, or adjusting your application can make a significant difference. For a personalised figure, use Gateway Finance's borrowing power calculator or book a free discovery call.
A mortgage broker acts as your agent in the lending market. They compare products from multiple lenders simultaneously. At Gateway Finance, that is 28+ lenders. They handle the paperwork, lender negotiations, and application management on your behalf.
The key advantages of using a broker over going direct to a single bank:
Going direct to a bank gives you access to one lender's range only. You may get a good deal, but you have no way of knowing whether a better one exists elsewhere.
Lenders need to verify your identity, income, assets, and liabilities. At a minimum, expect to provide:
Self-employed applicants typically need more documentation. Some lenders offer low-doc loan options for applicants who can verify income through alternative means, such as an accountant's declaration or BAS statements.
Pre-approval (also called conditional approval or approval in principle) is a lender's written commitment to lend you up to a specific amount, subject to a satisfactory property valuation and no material changes to your financial position.
Pre-approval is not mandatory, but it is strongly recommended for three reasons:
Pre-approvals typically last 60 to 90 days and can be extended if you have not yet found a property. Your credit file may record a single enquiry when pre-approval is processed.
Settlement is the legal transfer of property ownership from vendor to buyer. Your conveyancer or solicitor coordinates with the lender to ensure the loan funds are released on the agreed settlement date.
On settlement day:
Settlement in NSW, Queensland, and most other states now takes place electronically via the PEXA platform, which reduces delays compared to paper-based settlement.
If you are buying your first home, several federal and state government schemes may reduce your upfront costs significantly. See our dedicated first home buyer loans page for full details.
Eligibility criteria and thresholds change regularly. Confirm current figures with a broker before relying on any scheme.
| Stage | Typical Timeframe |
|---|---|
| Pre-approval | 1 to 5 business days |
| Property search | Weeks to months (your pace) |
| Formal application to unconditional approval | 3 to 10 business days |
| Loan document signing | 1 to 3 business days |
| Settlement | 30 to 90 days from exchange (by negotiation with vendor) |
These are general ranges. Complex applications, such as self-employed income, trust structures, or construction loans, can take longer. A broker pre-checks your application for common delays before lodging.
Most major lenders prefer a credit score above 600 (on a 0 to 1,200 scale). Some specialist lenders consider applicants with lower scores, though rates and conditions differ. Your broker can identify which lenders are most likely to approve your profile without triggering multiple credit enquiries.
Yes. Self-employed applicants typically need two years of tax returns showing consistent or growing income. Low-doc options exist for those who cannot fully document income in the traditional way. A broker familiar with self-employed lending, like the team at Gateway Finance, can match you to the most suitable lender.
Pre-approval is conditional: it is an in-principle commitment subject to property valuation and verification of your financial position. Unconditional approval (formal approval) is issued after the lender has assessed the property, confirmed your documents, and made a final credit decision. Only unconditional approval means the funds are committed.
Yes, and many borrowers do so within two to three years as their equity grows and their financial position improves. Refinancing can unlock a lower rate, access equity for renovation or investment, or consolidate debts.
A 30-year term means lower monthly repayments but more interest paid overall. A 25-year term costs more each month but saves significantly in total interest. The right choice depends on your cash flow and long-term financial goals. Your broker can model both scenarios for you.
APRA requires all lenders to assess your ability to repay at your actual interest rate plus 3%. This buffer is designed to protect borrowers from rate rises. In practical terms, it reduces the maximum loan amount compared to what the headline rate alone might suggest. Your broker factors this in before recommending a loan size.
Getting a home loan does not have to be complicated. At Gateway Finance, we compare 28+ lenders, handle your application from start to settlement, and provide ongoing support long after you collect the keys, all at no cost to you.
General information only. This article does not constitute financial advice. Your personal circumstances will determine which loan products are suitable for you. Australian Credit License 518395.
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