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Guide · The bank said no

Why did the bank say no to my home loan?

Bayley Clarke · Mortgage broker on the road · Last checked 6 September 2026 · 8 min read

If your bank just said no and all you got was one line about their criteria, that line was never going to tell you anything. This is the guide underneath it. Five gates, the questions that live at each one, and what to do once you know which gate tripped.

They said I didn't meet their criteria. That's all I got.

Most lenders won't say which bit of their policy your file tripped. The bank truly doesn't have to tell you anything. It didn't meet their criteria. It is not that you are someone who gets declined.

Your file came up short on one page of one lender's rulebook, and the front desk can only ever show you that rulebook. The rest of that story, and how to get to the real reason, is on the loan rejection answer.

Gate one: income

I earn plenty. Why did they only count some of it?

The bank's going to go, okay, here's your pay, and then it starts crossing bits out. Anything it reads as unpredictable gets shaded, and every lender shades differently. Your payslip number and the number the bank uses are two different numbers.

• Casual hours. Most lenders count casual pay in full once you've had around six months in the same role. The hidden lever is how many weeks a year they multiply it across. The best use all 52. Plenty use 48. Several use 46, and a few drop to 40 for casual teachers. Nobody calls it shading. That's what it is.
• On probation, or just switched jobs. Most lenders are fine with probation, especially with a year or so in the same industry behind you. A few want it finished. Four weeks or less between employers and you're generally still fine. Switching casual jobs is the one to be careful with.
• Your bonus. Most lenders count around 80% of it. The bigger lever is whether they average your last two years or use the most recent one, and on a rising bonus that changes the answer a lot.
• Shift penalties, allowances and overtime. A handful of lenders take the lot at 100%. Many take penalties at 100% and shade overtime to 80%. Most shade both to 80% unless your occupation sits on that lender's essential services list. Same payslips, three different answers.
• Working for the family business. Payslip, plus that wage showing on a lodged tax return, before the bank will rely on it. It's a second check because plenty of families put kids on the books who aren't really there.
• Centrelink. Unemployment benefits, no. Family Tax Benefit, child support that's been coming in for a while, and some pensions, yes at a lot of lenders, with caveats on how old the kids are and when a payment stops.
• Self-employed. Two years of returns is the rule of thumb, but a lot of lenders now use your latest year on its own. The two-year lenders take the lower year or the average. If your accountant has written the profit down to nothing, the bank reads that figure, not your bank balance. That whole conversation has its own guide: self-employed home loans.

Same payslips, different desk, different answer. The full map of how each income type gets read is in what income counts for a home loan. The individual questions:

Gate two: debts

I don't even use that card. Why does it matter?

The bank doesn't count what you spend. It counts what you could spend tomorrow.

• Credit card limits. For every thousand dollars of limit, not balance, limit, times it by five. That's roughly what comes off your borrowing capacity, and a card you clear every month is treated the same as one that's maxed out. Cutting the limit only helps if you don't run it back up.
• Afterpay and buy now pay later. A lot of lenders treat the limit like a card limit. One account won't stop you. Four of them stack.
• The car loan. A fixed repayment counted in full, and roughly four dollars of borrowing power gone for every dollar you still owe. If you're going to worry about one debt before a home loan, worry about this one.
• HECS. It's assessed as a percentage of what you earn, not what you owe, so paying it down early almost never buys back what it costs. A handful of lenders leave it out of their debt ratio altogether, and at least one ignores it once it's inside a year of being cleared.
• Living at home, paying no rent, buying a place you won't live in? Most lenders add a rent line anyway, around $150 a week at most of them, nothing at a small number. They're assuming you won't be at mum and dad's forever.

If the answer was a number rather than a no, the debts are usually why. That page is why is my borrowing power so low. The individual questions:

Gate three: credit file

My credit score is bad, so I assumed that was it.

It's less about the score and more about what your credit file actually shows. An outstanding default, or missed repayments on a car loan, tells the bank you don't pay on time. A low number on a clean file is usually not the barrier. I've helped people with a score in the 400s who had simply made too many enquiries in one month.

The enquiry pile is about type, not count. Mortgage enquiries are secured credit and most lenders shrug at them. Car loans, personal loans and payday lenders every few weeks is what reads as risk, and reapplying blind after a decline adds another one each time.

Defaults come down to three things: is it still on the file, is it paid, and how big was it. A small paid telco or utility default with an explanation gets through at a lot of banks. An unpaid default is a decline at most of them. Bigger or unpaid ones push you to a specialist lender, and that lender charges for the privilege. Most lenders also read your last 24 months of repayment history line by line, so a clean two years matters more than an old scar.

Pull your own file first. Clean, and the no came from somewhere else on this page. Not clean, and it's the file that has to change, not the lender. The individual questions:

Gate four: deposit

I've got the deposit. It just wasn't in the account long enough.

The last thing a bank wants to see is 30 grand in savings from one day to the next. A lot of lenders want around 5% of the price built up over roughly three months, and gifted money fails that test at most of them. Money sitting in your parents' account is the same problem with a different name.

No deposit at all? Without family willing to put their property up as extra security, you can't really buy with a $0 deposit. Pick your hard. Normally it's the three months, or the guarantor. And if the deposit is fine but the decline came with a word like "insurance" in it, the lender's mortgage insurer said no, not the lender. That one changes at the next desk more often than any other.

Gate five: the property

It's a great little place. Why won't they lend on it?

• Tiny homes. On a trailer, with a rego, every lender sees a vehicle, not a dwelling. It becomes a home once it's fixed to land you own with water, sewer and power connected. Until then it's a personal loan or a two-step: personal loan to get it on site and plumbed in, then refinance it into a home loan. And if you're project-managing the build yourself, you're an owner builder, and that is the number one trap in this whole category.
• Vacant land. It earns nothing and houses nobody, so a lot of lenders won't go above 80% and want 20% plus costs.
• A loan above 80% of the value. Mortgage insurance usually gets added and pricing is often higher. The reduced-buffer refinance tests a lot of lenders now run stop at 80% at almost all of them. The professional waivers that skip the insurance are real, but the lists don't match: the same nurse is excluded at one lender and gets 90% at another.

The property tripped the gate, not you. Refinancing is its own version of this gate, because the new bank runs your whole file again with a buffer on top of the rate. Equity doesn't count as borrowing power either. Just because it's there doesn't mean you can use it. Pulling it out is a new loan, and the bank still has to see income that repays the bigger number. The refinancing side lives in refinancing with a broker.

After the no

So what do I do now? Apply somewhere else?

Not blind. You don't want to keep spamming applications to a bank. That's not going to do you any favours. Every one lands as an enquiry on your file, and three declines in a month become a reason on their own.

Find your gate above. Then it's one application, to a lender whose policy lines up with what your financial world actually looks like. Not three to find out why. How soon you can go again comes down to the reason for the first one. A policy no can be re-run next week at the right lender. A file no needs the file to change first.

Going direct to another bank means the front desk shows you one rulebook again. This is the bit I do: I know which lender's rulebook your file fits before anything gets lodged. The questions people ask at this point:

What to bring to the call

The decline letter, even if it's one line. Your last few payslips, or your last two returns if you're self-employed. Every debt and every limit, including the card you never use and the buy now pay later accounts. Where the deposit came from and how long it's been there. The property address, if there is one. Your own credit report if you've pulled it. Five minutes of gathering, and the gate is usually obvious inside the first ten minutes of the call.