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Can I get a home loan if home insurance is really hard to get or very expensive?
Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 2 min read
The short answer
Yes. As a rule of thumb, the bank needs to see an adequate insurance policy that will cover the cost of rebuilding the house if anything happens to it. That's it. It doesn't matter if it's expensive and it doesn't matter if it's hard to get, it's whether you can get it or not.
Where it gets tough is somewhere like a known flood zone where no insurer will cover the property. If you can't insure it, you're going to have a hard time getting a home loan on it, because the bank won't lend against a house it can't be sure will still be there.
The 60 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.
Why the bank cares about your insurance
Your home is the bank's security for the loan. If the house floods or burns down and there's no insurance, the bank is left with a loan and no house behind it. The bank's out of money, which is exactly why it makes you get building insurance before it'll lend in the first place.
So the bank's question isn't whether the policy is cheap. It's whether there's a policy in place that covers the replacement cost of the building, usually with the lender noted on it, by the time the loan settles.
Expensive versus impossible
An expensive premium is your problem, not the bank's, at least as far as the security goes. If you can find an insurer and pay for cover, the loan can go ahead. On an investment property the premium does get counted with your other expenses when the bank works out what you can afford, so a very high premium can nibble at borrowing power, but it won't stop the loan on its own.
Impossible is different. If no insurer will touch the property, there's no way to satisfy the bank's settlement condition, and most lenders won't proceed. That's why it's worth getting an insurance quote early on anything in a flood, bushfire or cyclone-prone area, before you're locked into a contract.
Units and townhouses
If you're buying in a strata building, the building itself is usually covered by the body corporate's policy, not by you. The bank will want to see that the strata insurance is in place, and you'd normally take out your own contents cover.
Worth checking the strata records though. If the building's insurance has jumped or been hard to place, that can show up in your levies, and it tells you something about the building.
The honest bit: get the quote before you sign
Most people organise insurance in the last week before settlement. In an area where cover is hard to get, that's too late to find out there isn't any.
If you're looking somewhere with a flood, fire or storm history, ring an insurer or two before you make an offer. If you can get cover, the bank's happy. If you can't, you've just saved yourself a very stressful few weeks.
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