Home Loans in Australia

Home loans are the most common credit product in Australia and the most regulated. Most people interact with the residential lending system two or three times in their lifetime, usually at the moments where the financial stakes are highest: buying the first home, refinancing the existing one, upgrading to the next, or building an investment portfolio.

The fundamentals of how home loans get assessed are consistent across lenders. The places they differ are in serviceability calculation, deposit and LVR thresholds, appetite for self-employed income, and product features like offset accounts and interest-only periods. Picking the right lender for your specific profile is most of the work, and it is the work we do for every client.

This page covers the four borrower profiles we work with most often, how lenders actually assess home loan applications, the key loan structure decisions, and what the process looks like end to end. It is written for first-home buyers, refinancers, upgraders, and investors. If you have a specific situation in mind, the fastest path is to start an enquiry and we will come back with indicative numbers and a recommended approach.

Borrower archetypes

Different borrower profiles get assessed against different criteria, and the right loan structure depends on which profile you sit in.

How lenders assess home loans

The credit fundamentals for home loans are consistent across lenders. Where they differ is in calibration of the calculation, treatment of edge cases, and appetite for non-standard income.

• Serviceability. Whether your income comfortably covers the proposed loan repayments after living expenses. Lenders apply the APRA serviceability buffer (3 per cent above the loan rate at the time of writing) when running this test. They also apply a minimum living expense figure called HEM (Household Expenditure Measure), which is a published benchmark used as a floor on declared expenses. If your actual expenses are higher than HEM, the lender uses your actual number. This is the single most important metric on most home loan applications.
• Deposit and loan-to-value ratio (LVR). How much you are putting in and how much you are borrowing against the property value. Crossing the 80 per cent LVR threshold typically triggers lenders mortgage insurance (LMI), a one-off insurance premium that protects the lender (not you) and is added to the loan. LMI can be material at higher LVRs and is one of the levers we work through with clients trying to optimise between deposit, LMI cost, and time-to-purchase.
• Credit history. Recent defaults, late payments, clean conduct on existing facilities, credit score, and the number of recent credit enquiries. Lenders pull your credit file and read it carefully. Older issues that have been resolved are treated differently from recent ones, and we work through what is on your file as part of the initial review.
• Employment stability and income profile. PAYG employees get the simplest assessment. Self-employed borrowers typically need two years of tax returns and financial statements. Contractor income, bonus income, and rental income each have their own lender-specific treatments, and getting matched to the right lender for an unusual income profile is often the difference between approval and decline.
• Property type and location. Apartment minimums (most lenders apply a 40 square metre floor for standard lending, with some flexibility above and below), off-the-plan timing risk, regional location restrictions, and dual occupancy or heritage flags. The property itself can trip a deal that the borrower profile would otherwise support.
• Borrower status. Australian citizen, permanent resident, and visa holder applications all have different paths. Visa holders face additional restrictions under the Foreign Investment Review Board (FIRB) regime for residential property purchases.

Where lenders differ

Three tiers fund residential home loans in Australia. Matching the borrower to the right tier is most of what we do.

Choosing the right loan structure

Once a lender is in view, the next decision is how the loan itself is structured. The main levers are rate type, repayment type, term, and product features.

Rate type: variable, fixed, or split. Variable rates move with the lender's reference rate (and the RBA cash rate through it). Fixed rates lock the rate for one to five years and pay break costs if the loan is repaid early. Split loans run a portion variable and a portion fixed, balancing flexibility against rate certainty. Most Australian borrowers run partially or fully variable for flexibility, with some fixed exposure where rate certainty matters more than offset capacity.

Repayment type: principal and interest, or interest-only. Owner-occupier loans typically default to principal and interest repayments (you pay down the loan over time). Interest-only periods are available but limited in length for owner-occupiers, usually capped at five years before reverting to P&I. Investor loans have longer interest-only options available, often up to 10 years across multiple terms, which can support cash-flow management and tax positioning on a rental property.

Offset accounts. A transaction account linked to the home loan where the balance offsets the loan principal for interest calculation. If you hold $50,000 in the offset against a $500,000 loan, the lender charges interest on $450,000. Offset accounts are the most powerful single feature of an Australian home loan and they are particularly valuable in a higher-rate environment. Most variable-rate loans include an offset. Most fixed-rate loans do not (or include a partial offset only).

Redraw facility. Extra repayments you can pull back out if needed. Redraw is often confused with an offset account but works differently for tax purposes. Money in an offset account is yours and stays clean. Money pushed into the loan and pulled back via redraw is borrowed funds at the moment of redraw, which has implications if the loan is later converted to investment purpose.

Loan term. Standard residential terms run to 30 years, though shorter terms are available. Longer terms reduce monthly repayments but increase total interest paid. Shorter terms do the opposite. Most borrowers take 30 years for flexibility and pay it down faster through offset balances and extra repayments.

The right structure depends on the borrower, the property, the rate environment, and what the loan needs to do over the next three to five years. We work through the trade-offs in the initial review and recommend a structure before approaching any lender.

Our process

We run residential transactions with the same structuring discipline as the commercial side of the brokerage. Four steps from initial conversation to settlement.

Frequently Asked Questions

How much deposit do I need to buy a home in Australia?

Most lenders look for a minimum five per cent deposit, with twenty per cent being the threshold that avoids lenders mortgage insurance (LMI). The First Home Guarantee scheme allows eligible first-home buyers to purchase with five per cent deposit and no LMI. The right deposit for your specific situation depends on the lender, the property, the cost of LMI versus the cost of waiting to save more, and what other priorities sit alongside the purchase.

What is the First Home Guarantee (FHBG)?

The First Home Guarantee is a federal government scheme that allows eligible first-home buyers to purchase a property with as little as five per cent deposit and no LMI, with the federal government guaranteeing the difference. Eligibility is income-tested, property-price-capped (with caps varying by location), and place-limited each financial year. We check eligibility as part of the initial deal review and apply through participating lenders where it makes sense.

Can I avoid lenders mortgage insurance (LMI)?

Yes, in three ways. Save a deposit of twenty per cent or more (avoiding the LMI threshold entirely). Qualify for a government scheme like the First Home Guarantee. Or have a family member act as a guarantor against a portion of the loan, which most lenders accept with conditions. Each path has trade-offs. The right one depends on your specific position and how quickly you need to act.

Should I fix my home loan rate or stay variable?

There is no single right answer. Fixed rates give you certainty over a set term but typically restrict offset capacity, limit extra repayments, and charge break costs if you exit early. Variable rates move with the market but usually include an offset, allow unlimited extra repayments, and have no break costs. Most clients run partially or fully variable. We work through your cash-flow position, your rate view, and your flexibility needs in the initial review.

How does an offset account work?

An offset account is a transaction account linked to your home loan. The balance in the offset is subtracted from your loan balance for the purpose of calculating interest. If your loan is $500,000 and you hold $50,000 in the offset, the lender charges you interest on $450,000. You still owe the full $500,000, but you are only paying interest on the net position. Offsets are the single most powerful feature of an Australian home loan, especially in a higher-rate environment.

Can I refinance my home loan to a lower rate?

Yes, refinancing is one of the most common reasons clients come to us. The process is faster than a purchase since no property contract is involved, but the lender still runs a serviceability assessment with the APRA buffer rate applied. Refinancing can also be used to release equity for a renovation, fund another purchase, or consolidate higher-interest debt into the home loan. We run a comparison across the lenders most likely to offer competitive terms and make a clear recommendation.

What about home loans for investment properties?

Investor home loans are assessed differently from owner-occupier loans. Lenders typically apply lower LVR ceilings, count only part of the rental income for serviceability (most shade it by 20 to 30 per cent), and apply tighter scrutiny to overall portfolio exposure. Interest-only periods are typically longer for investor loans (up to 10 years across multiple terms). The 1 July 2027 changes to negative gearing and the CGT discount on established residential property will affect investor maths from that date. We cover the detail on the budget deep-dive page.

How long does a home loan take?

From initial application to settlement, expect around four to eight weeks on a standard purchase, longer for complex situations or off-the-plan transactions. Refinances often move faster, sometimes settling in three to four weeks. Bank-led applications with property valuations on unusual assets can run longer. We provide a specific timing read at the conditional approval stage.