How Do I Get Pre-Approved for a Home Loan?

Buying a home is one of life’s biggest financial decisions, and for most Australians, securing finance is the first major step. Home loan pre-approval can provide clarity around your borrowing power, give you a competitive edge when making an offer, and help you move with confidence in a fast-paced property market. 

But while it’s often treated as a simple checkbox, the pre-approval process involves more than many buyers realise. Understanding what pre-approval actually means, how to qualify, and what documents you’ll need can make the experience faster, smoother, and far less stressful. 

What Is Home Loan Pre-Approval?

Home loan pre-approval is a conditional indication from a lender that they’re willing to lend you a certain amount of money based on your current financial situation. It’s not a guarantee, but it gives you a strong starting point in your property search. 

In practical terms, pre-approval tells you your budget range and gives sellers and real estate agents more confidence that your offer is genuine. Most pre-approvals are valid for three to six months and are subject to final approval once you’ve chosen a property. 

Looking to get pre-approved? Our team offers expert mortgage advice tailored to your financial situation. 

Why Is Pre-Approval Important When Buying Property?

Pre-approval isn’t just about peace of mind; it’s a strategic advantage. It gives you a clear budget, so you can focus your search on properties within reach. It also allows you to make competitive offers quickly, particularly in fast-moving markets, and helps uncover any issues with your loan eligibility before you become emotionally or financially committed to a property. Most importantly, it demonstrates to sellers that you’re a serious buyer, which can give you an edge in negotiations. 

Am I Eligible for Home Loan Pre-Approval?

Eligibility depends on your financial profile, but most Australian lenders look for a combination of steady income, low debt, and good credit history. You’ll typically need to be employed in a stable role, often with at least six months in your current position or two years of financials if self-employed. Your credit score should be in good standing, with no significant defaults or recent missed repayments. 

Lenders also look at your existing financial commitments and your ability to manage future loan repayments. Genuine savings or a deposit are required, usually between five and twenty per cent of the property value, and you’ll need to be an Australian citizen, permanent resident, or on an eligible visa. 

If you’re casually employed, self-employed, or relying on other income streams such as bonuses or rental returns, expect some additional scrutiny or document requests. 

What Documents Do I Need for Pre-Approval?

To apply for home loan pre-approval, you’ll need to provide documents that verify your identity, income, savings, and liabilities. These help lenders assess your financial situation and borrowing capacity accurately. 

Most lenders will ask for: 

• Proof of identity – passport, driver’s licence, or Medicare card 
• Proof of income – recent payslips, tax returns, or a letter from your employer 
• Bank statements – usually from the last 3 to 6 months 
• Details of existing debts – including credit cards, personal loans, or HECS/HELP debt 
• Evidence of deposit or savings history – showing regular savings or gifted funds 
• Employment details – such as a work contract or ABN/BAS for self-employed applicants 

Having all your documents ready and up to date will help avoid delays and improve the likelihood of a smooth pre-approval. 

Step-By-Step: How to Get Pre-Approved for a Home Loan

Getting pre-approved isn’t complicated, but it helps to follow a clear process. Here’s how it typically works: 

1. Assess your borrowing power

Use an online calculator or speak with a mortgage broker to estimate how much you may be eligible to borrow based on your income, expenses, and deposit. 

2. Choose a lender or a broker

Research lenders or work with a broker who can compare multiple loan options and find one that aligns with your goals and financial situation. 

3. Gather your documents

Prepare your identification, income evidence, bank statements, and any other required paperwork to support your application. 

4. Submit your pre-approval application

Apply directly through your chosen lender or let your broker manage the submission process for you. 

5. Wait for assessment

The lender will review your financial details, check your credit report, and evaluate your ability to service the loan. 

6. Receive conditional pre-approval

If successful, you’ll receive a formal letter outlining the approved loan amount, terms, and any conditions. This gives you the confidence to begin house hunting. 

What Happens After Pre-Approval?

Once you’re pre-approved, you’re in a strong position to start inspecting properties and making offers. However, it’s important to remember that pre-approval is based on your financial situation at the time of application. If you take out a new loan, switch jobs, or significantly reduce your savings, your pre-approval could become invalid. 

When you find the right property, the lender will need to conduct a valuation and reassess your financials before offering full approval. If everything stacks up, you’ll receive what’s called unconditional approval, the final go-ahead before settlement. 

Common Mistakes to Avoid During Pre-Approval

Several common missteps can derail the process, even after you’ve been pre-approved. Making large purchases, such as buying a car, can impact your debt-to-income ratio and lead to a reassessment of your loan eligibility. Changing jobs or moving from permanent to casual work may also raise concerns for lenders. 

One of the biggest misconceptions is that pre-approval guarantees the loan. It doesn’t, and relying on it without confirming final approval can put you at financial risk. It’s also worth keeping an eye on the expiry date of your pre-approval, as they typically last only a few months. 

Tips for a Smooth Pre-Approval Experience

Before you apply, it’s a good idea to check your credit report for any unexpected issues. If you’re unsure about the best lender for your needs, working with a mortgage broker can simplify the process and increase your chances of success. Throughout the process, aim to maintain stable employment and avoid any financial surprises. 

If your deposit is less than 20%, be aware of lenders’ mortgage insurance (LMI), which may apply. Understanding how LMI works, and whether it’s built into your loan or paid upfront, will help you budget more accurately. 

Final Thoughts

Getting pre-approved is more than just a checkbox, it’s a valuable tool that can give you confidence, clarity, and a competitive edge in your property search. By understanding the process, preparing the right documents, and avoiding common missteps, you’ll be in a stronger position to secure the right home loan when the time comes. 

Whether you’re just starting out or already browsing listings, taking the time to get pre-approved is a smart move that can save time and stress down the track. If you’d like guidance tailored to your situation, we are here to help. Get in touch today to start your pre-approval journey.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.