Why banks reject home loans
- Credit report issues: defaults, judgements, late payments or a low score below the bank's cut-off.
- Income they won't accept: new ABN, casual or gig work, or overdue tax returns.
- Serviceability: debts, credit card limits and living costs leave too little room.
- Too many applications: several enquiries in a short time is a warning sign to lenders.
- Deposit or property: not enough deposit, or a property type the lender avoids.
- Bank statements: gambling, payday loans, dishonoured payments or constant overdrawn days.
What not to do next
Rejected after pre-approval?
Pre-approval is conditional. Final approval can fail if your circumstances changed, the property didn't meet the lender's requirements, or something new appeared in your credit check or statements. Ask the lender which condition wasn't met. If you've signed a contract, speak to your conveyancer about your finance clause immediately.
Where to go next
- 1
Ask why
Lenders don't always give detail, but a broker can often read between the lines.
- 2
Get your credit reports
See what the lender saw. Fix any errors.
- 3
Tidy your finances
Close unused cards, pay off small debts, clean up statements.
- 4
Enquire with us
Our specialist home loan team works with lenders whose rules differ from the banks'.
Start with the non-conforming home loans hub to find the page for your situation.
Reading between the lines of a decline
| What you were told | What it often means |
|---|---|
| Doesn't meet credit policy | Credit report issue or income type outside the lender's rules |
| Serviceability | Debts, card limits or living expenses leave too little room |
| Unable to verify income | Documents didn't match, or income type not accepted |
| Security not acceptable | The property type, location or size is outside policy |
Each of these has a different fix, and a different set of lenders who might say yes.
A worked example
A self-employed builder was declined by his bank because his latest tax return showed a loss year after a big equipment purchase. His BAS and bank statements for the last 12 months show strong trading. An alt doc lender assesses his current income and approves him.
What you’ll need
- The decline letter or reason
- Credit reports
- Income evidence
- Bank statements
Who it usually suits
- Anyone recently declined for a home loan
