Preparing financially

If your home loan application is declined

Common reasons for a decline, why you're entitled to ask for the specific reason, and why applying everywhere at once can make a second decline more likely.

Common reasons for a decline

Serviceability (income, once shaded and benchmarked, doesn't comfortably cover the loan under the buffer rate — see the serviceability guide); credit history (missed payments, defaults, or too many recent enquiries); a change in employment or income since pre-approval; existing debt levels (including credit limits you don't use — see the existing-debt guide); a property valuation that came in below the contract price (see the valuation guide); or the property itself — some lenders simply won't lend against certain property types or characteristics (very small floor size, non-standard construction, or certain locations), regardless of your finances or the contract price — are among the most common reasons.

Ask for the actual reason

You're entitled to ask why an application was declined. A specific reason (rather than a general "doesn't meet our criteria") lets you actually address the cause — paying down a specific debt, correcting a credit report error, or waiting for a probation period to end — rather than guessing.

Why applying everywhere at once can make it worse

Reapplying immediately with several other lenders after a decline adds a cluster of credit enquiries to your file in a short period, which can itself be a factor future lenders weigh (see the credit-reports guide) — potentially making a second decline more, not less, likely. Understanding and addressing the actual cause of the first decline, then applying once, is generally a stronger approach than applying broadly. A mortgage broker can typically assess your situation against multiple lenders' criteria using a preliminary "soft" credit check that doesn't add a hard enquiry to your file — this is what actually makes "understand the cause, then apply once" achievable while still comparing lenders.

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Practical checklist

After a declined application

• Ask the lender or broker for the specific reason for the decline
• Check your credit report for any errors that might have contributed
• Address the actual cause before reapplying, rather than applying elsewhere immediately
• Consider a mortgage broker for a preliminary soft-check assessment before applying again — see the mortgage brokers guide

Questions for a professional

• What was the specific reason my application was declined?
• What would need to change for a future application to succeed?

Official resources

• Moneysmart: home loans