Being declined for a home loan is stressful, especially if you've already found a property. The good news is that a decline from one lender doesn't mean a decline from all. Lenders have very different policies.
Here are the most common reasons applications fail, and how to avoid them.
1. Serviceability
The lender's calculations show you can't comfortably afford the loan at its assessment rate, roughly 3% above the actual rate.
How to avoid it: - Reduce credit card limits and pay off small debts - Choose a lender whose calculator suits your income type - Borrow a little less or increase your deposit
2. Credit history
Defaults, late payments, court judgments or too many recent credit enquiries can lead to a decline.
How to avoid it: - Check your credit report before applying - Fix errors and pay overdue accounts - Avoid applying for other credit in the months before - Consider a specialist lender if you have past issues
3. Employment
Probation periods, casual work without a long history, recent career changes or a short time self-employed can all be issues for some lenders.
How to avoid it: - Find lenders that accept your employment type - Provide an employment contract or letter - Wait until probation ends if your lender requires it
4. Living expenses and spending
Bank statements showing gambling, overdrawn accounts, frequent BNPL use or spending well above what you declared can result in a decline.
How to avoid it: - Tidy up your spending for three months before applying - Declare expenses honestly - Explain any one-off costs
5. Property issues
The lender might decline or reduce the loan because of:
- A low valuation
- The property type (very small apartments, serviced apartments, unusual construction)
- Location (some postcodes have LVR limits)
- Zoning, title issues or significant defects
How to avoid it: - Check lender policy on the property before signing - Get a building inspection and strata report - Ask your broker to check the postcode
6. Deposit and genuine savings
Some lenders require part of your deposit to be genuine savings held for three months or more, especially above 90% LVR.
How to avoid it: - Keep savings in one account and show regular deposits - Get a gift letter for family contributions - Choose a lender with flexible genuine savings policy
7. Incomplete or inconsistent information
Discrepancies between what you declared and what documents show can stall or kill an application.
How to avoid it: - Be accurate and upfront - Provide complete documents the first time
What to do if you're declined
- Ask why. Your broker can usually find out.
- Don't immediately apply elsewhere yourself. Multiple applications add enquiries to your credit file.
- Fix what you can. Sometimes it's as simple as closing a credit card.
- Try a lender whose policy fits. A decline at one bank often means approval at another.
How a broker reduces decline risk
We assess your situation against lender policies before applying, so we only submit where you're likely to be approved. That protects your credit file and saves time.
Frequently asked questions
Does a decline go on my credit file?
The enquiry stays on your file, but not the outcome of the application.
How soon can I reapply?
You can apply with another lender straight away, but make sure you've addressed the reason first.
Can I find out exactly why I was declined?
Lenders don't always give detailed reasons, but if it's due to information in your credit report, they must tell you.
Been declined, or worried you might be? Call Finfident on 0424 545 654. We'll find the lender whose policy fits your situation.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.