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The top 3 things to know before applying for a home loan

Before applying for a home loan here are the top 3 things you should check on to give yourself the best chance at home loan approval.

September 08, 2019 • 2 min read

house with sold sign out front

You’ve worked your butt off to put away some money, paid off your credit cards, and have a spick rental history. You’ve got your eye on the prize: you’re ready to buy a house. Give yourself the best chance of securing a home loan by making sure you understand the top 3 reasons home loans are knocked back by lenders.

1. Not enough deposit

This is one of the top reasons customers aren’t able to get a home loan. Generally, you’ll need to have a minimum 20% deposit if you’re looking to purchase a property, or 20% equity in your property if you’re looking to refinance your existing home loan.

Some lenders (Tiimely Home included) will accept less than a 20% deposit by offering a low deposit home loan with Lenders' Mortgage Insurance (LMI). Because of the increased risk of having a higher loan to property value ratio (a bigger loan against your property), lenders need to pay insurance to protect them in case you can't repay your home loan. This cost is added onto your home loan amount, so you don't need to pay it upfront. Although there is an added cost, using LMI to get a low deposit home loan can allow you to buy a home sooner if you don't want to wait to save a bigger deposit.

Analysing your current spending, setting a budget and getting on top of your debts are some great steps to help you save towards your deposit.

2. Bad credit history

Unpaid debt of any kind will generally show up on your credit history (not paying your mobile phone bill can come back to haunt you!). Some lenders are more lenient when it comes to poor credit than others, but generally speaking, unpaid defaults are never good. It’s worse if you try and hide bad debt because it is going to get found and then you’ll definitely get knocked back. Learn more about credit scores and how they affect your home loan application.

There are some things you can do to improve your credit file if it’s caused you problems when applying for credit. You can ‘clean up’ your file, by updating any incorrect information, or adding a correction notice to explain any special circumstances.

You can check out what you look like on paper before you apply for a home loan by obtaining a copy of your credit report from places like and

3. Inability to comfortably make repayments

Lenders call this meeting serviceability requirements. Home loan customers need to be able to show that they can comfortably meet the loan repayments, especially in the event of an interest rate rise.

Interest rate buffers are applied to make sure you can meet the loan repayments at a higher rate, (not just the hot rate of 2.79%). If you can’t meet the repayments at the higher interest rate (as high as 7.5%), your loan will get knocked back because the lender needs to know you can still meet your repayments if circumstances change.

Lenders will also check whether you have employment continuity, and reliable and consistent income. Applying for a home loan when you have a non-standard employment type or work history, may require a little more work. But it’s doable if you're prepared!

Find out more about how to get a home loan if you’re self employed.

Legal information about our rates
Our home loans are subject to credit criteria and eligibility requirements. Home loan interest rates are for new customers only and can change. Our comparison rates are based on a $150,000 loan amount over a 25 year term. They factor in fees associated with applying for the loan; ongoing fees and fees associated with leaving the loan. Our fixed loans roll to a variable principal and interest rate at the end of the fixed term. If the interest only period is not specified, the comparison rate is calculated on a one year period.

WARNING: The comparison rates are true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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^Our turnaround times are up to 2x faster than the industry, based on a comparison of our average platform submit to approval time compared to industry submit to approval time, published here  (June 2023). Customer turnaround times are dependent on individual circumstances and may require an assessor to obtain more information.

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