A Buyer’s Guide to Home Loan Pre-Approval

Home loan pre-approval means you pre-qualify to borrow a certain amount of money from a lender based on information you provide about yourself and your financial situation. It’s sometimes called ‘conditional’ approval because it’s subject to conditions before the lender will give full loan approval.

Pre-approval is an initial thumbs up that you have provided sufficient documentation to meet the lender’s approval criteria. It gives you an idea of how much you can borrow to buy a property and what you can offer to potential sellers.

It's important to stick to your pre-approved amount when making offers. If you’re pre-approved to borrow a maximum of $600,000, your application may ultimately be declined if the property you find would require a larger loan.

When you finally make an offer on a home that ticks all the boxes and it’s accepted, the lender will decide whether to give you full approval (also known as unconditional approval).

When you get home loan pre-approval, the lender will inform you of:

Your lender may ask you to submit some supporting paperwork to verify your personal and financial information. This is an important step in the pre–approval process to get an accurate assessment of your borrowing capacity. Here’s a list of documents you may be asked to provide:

Identification documents

You’ll need to verify your identity with the lender before you can apply for any home loan product. If you’re already a customer, the lender may skip this step.

When you apply for pre-approval, you will be required to satisfy the 100 points of ID system. You’ll be asked to provide at least one primary document (e.g. passport, driver’s licence, citizenship certificate) and secondary documents like a Medicare card, bank statements and utility bills.

Proof of income

Your lender will need proof of income to assess your borrowing power, including:

If you’re self-employed:

If you rely on other income types for your application (like rental income from another property you own or dividend income if you own shares), you’ll need to provide evidence of this too.

Bank statements

Your lender may ask for three months of bank statements to validate your income, check your living expenses and that your deposit has been accrued over time if you’re a first-home buyer. Lenders want to see a genuine history of savings and responsible spending.

You need to be able to explain any inconsistencies in your earnings and expenditures to your lender. Whether it’s a recent holiday you’ve taken (like a honeymoon in the case of many first-home buyers) or a car purchase, it’s important to indicate this to a lender so it can accurately assess your regular spending habits.

Proof of your assets and liabilities

Your lender will also ask for a summary of what you owe (your debts) and what you own (your assets) and take this into account when considering your application:

Debts could include:

Assets could include:

Pre-approval is valid for 90 days with most lenders, according to Money’s analysis. Some lenders like Tic:Toc only offer pre-approval valid for 60 days. Lenders don’t typically offer pre-approvals longer than 90 days because your financial situation can change, and suburb valuations are only valid for that length of time.

Beyond Bank is one of the few lenders in Australia advertising four-month pre-approval (120 days) on some of its home loans.

If you haven’t found a property before your pre-approval expires, you will need to re-apply for it or your lender may renew it if you ask (and your financial situation hasn't changed).