Proven tips to strengthen your loan application

Lenders assess your income and employment first because they determine whether you can repay the loan.

How much you earn, how you earn it, and how long you've been earning it all influence how much a lender will approve. Understanding what counts as acceptable income and what raises red flags can make the difference between a conditional approval and a decline.

What Lenders Count as Acceptable Income

Lenders treat income differently depending on how it's structured and how long you've been receiving it. Base salary for a permanent full-time employee is treated as the most stable form of income. Overtime, bonuses, and commissions can also be included, but lenders typically require evidence that you've received them consistently for at least six months, often 12. Some will average the amount over two years of tax returns.

Consider a buyer in Shoreham who works in hospitality management with a base salary of $75,000 and regular seasonal bonuses during summer. If those bonuses have appeared on payslips and tax returns for two consecutive years, most lenders will include a portion of that income when calculating borrowing capacity. If the bonuses only started this year, they won't count yet.

Self-employed income is assessed differently. Lenders usually require two full years of tax returns and either financials prepared by an accountant or a notice of assessment from the ATO. Some lenders offer low doc loans for self-employed borrowers who can't provide the standard documentation, though these typically come with higher rates or lower approval amounts.

How Employment Type Affects Your Application

Permanent employment gives you the strongest position. Lenders view it as stable and ongoing, which reduces their risk. Casual and contract workers face more scrutiny. Most lenders require casual employees to have been with the same employer for at least six months, sometimes 12, and will often only count 80% of the stated income to account for variability.

Contract workers in industries like IT or healthcare can still access home loan pre-approval if they can show a history of consistent contract renewal or multiple contracts across different employers in the same field. A software consultant on a 12-month contract with three prior contracts in the same sector would generally be viewed more favourably than someone on their first contract role.

Probationary employment creates a pause rather than a roadblock. Some lenders will approve your application while you're still on probation, but others require you to pass probation before proceeding to unconditional approval. If you're about to start a new role and want to apply for a loan, timing matters. Speak with a broker before resigning from a permanent role, particularly if you're moving to a contract or casual position.

The Role of Debt-to-Income Ratios in Shoreham

Your debt-to-income ratio compares your total debts to your gross annual income. While not yet a hard regulatory cap in Australia, lenders have become more conservative in how they apply serviceability buffers. If your total monthly debt commitments including the proposed home loan, credit cards, personal loans, and car finance represent more than six times your annual income, you may find fewer lender options available.

For borrowers in coastal areas like Shoreham where property values can vary significantly between beachfront homes and inland blocks, this calculation becomes especially relevant when deciding how much to borrow. A couple earning a combined $140,000 annually with no other debts could comfortably service a loan well within the borrowing limits, but the same couple with $30,000 in car loans and $15,000 in combined credit card limits may need to reduce debt before applying.

Documents You'll Need to Provide

Payslips for the most recent two to three months are mandatory for employed applicants. Lenders will check not just the income amount but also whether you're being paid through a compliant payroll system. If you're a director of your own company, they'll also want to see company tax returns and financials.

Two years of personal tax returns and notices of assessment are standard for self-employed applicants, and some lenders also request business activity statements. If your business structure involves a trust or partnership, expect to provide trust deeds and distribution statements.

Bank statements covering at least three months show lenders how you manage day-to-day expenses. They'll look for consistent savings behaviour, evidence that you can manage your current commitments, and the absence of unexplained deposits that could indicate undisclosed debts. Irregular cash deposits or frequent overdrafts will trigger questions.

Why Lenders Verify Employment Before Settlement

Lenders typically perform a final employment verification call within a few days of settlement. This is a standard risk control to confirm that your circumstances haven't changed between approval and funding. If you've resigned, been made redundant, or moved to a different employer, the lender may withdraw the approval or defer settlement until you can demonstrate ongoing income.

This happens more often than you'd expect. Buyers assume that once they're unconditionally approved, the loan is locked in. It's not. If you're planning to change jobs, take parental leave, or reduce your hours between signing a contract and settling, let your broker know immediately. Some lenders will accept a signed employment contract for a new role if it's comparable or higher income and in the same field. Others won't.

Structuring Your Application Around Income Timing

If you're about to finish probation, receive a pay rise, or move from casual to permanent employment, wait until that change is confirmed in writing before submitting your application. A higher income or more secure employment status could increase your borrowing capacity or open access to lenders with lower rates. Rushing in a week early with lower provable income can cost you thousands over the life of the loan.

For self-employed applicants who've just completed their second year of trading, lodging your tax return as early as possible gives you access to a much wider lending panel. Many lenders won't assess your application until the ATO has processed your return and issued a notice of assessment, which can take weeks during peak lodgement periods.

If your situation involves non-standard employment arrangements such as trust distributions, overseas income, or multiple income sources across different entities, working with a broker who understands how to structure and present your application becomes essential. Not all lenders assess complex income the same way, and submitting to the wrong one first can result in a decline that limits your options elsewhere.

Call one of our team or book an appointment at a time that works for you. We'll review your income structure, confirm what documentation you'll need, and help you apply to a lender who's likely to approve your situation without unnecessary delays.

Frequently Asked Questions