The Home Loan Documents Checklist

Key takeaways

• Incomplete documents are the most common cause of delay, not credit problems.
• Verification requirements come from responsible lending obligations.
• Self-employed applicants need substantially more, and should start earlier.
• Three months of clean transaction statements matter more than most people expect.

What does every applicant need?

Where open banking is used, the transaction and liability documents may be supplied by data feed instead of PDFs, which is faster and reduces the chance of a missing page.

What do self-employed applicants need on top?

Substantially more, and it takes longer to assemble - which is why self-employed applications should start well before you want to buy.

• Two years of personal tax returns and notices of assessment.
• Two years of business financials - profit and loss and balance sheet, prepared by your accountant.
• Business tax returns for the entity, and for each entity if there are several.
• BAS statements, often the most recent four quarters.
• ATO portal or integrated client account to confirm no outstanding tax debt.
• An accountant's letter where add-backs or unusual items need explaining.

Where recent trading is materially different from the prior year, expect questions. Getting your accountant to explain the variance in writing at lodgement is far faster than answering it three weeks later.

How do you make the file move fast?

Five practical things, in rough order of impact.

1. Tidy three months before you apply. Statements are read. Gambling transactions, dishonoured payments and buy-now-pay-later activity all get noticed and all cost you.
2. Close unused credit cards. Assessment uses the limit, not the balance, so an unused $20,000 card reduces borrowing capacity even at zero.
3. Supply complete statements - every page, including the blank ones. A missing page 4 of 6 stops the file.
4. Name files clearly and send everything at once rather than in dribs.
5. Disclose everything. Comprehensive credit reporting means undisclosed liabilities are found, and being found is much worse than declaring.

Documents generally need to be recent - typically payslips within a month or so and statements covering the most recent period. A file that sits for weeks may need refreshed documents before it can settle, so momentum has its own value.

Frequently asked questions

How many payslips do I need for a home loan?

Commonly the two most recent, sometimes with a year-to-date figure or an income statement to confirm. Requirements vary by lender and by income type, and variable income usually requires a longer history.

Why does the lender want three months of bank statements?

To verify your living expenses and identify liabilities you may not have declared. Responsible lending obligations require lenders to take reasonable steps to verify your financial situation, and transaction data is the primary way that is done.

Do I need to close my credit cards before applying?

Not necessarily, but be aware that assessment uses the credit limit rather than the balance. An unused card with a high limit reduces borrowing capacity, so closing or reducing limits can help materially.

How long are documents valid for?

Generally payslips are expected to be recent - typically within about a month - and statements to cover the most recent period. If an application takes a long time, updated documents may be required before settlement.

Related reading

• Why Home Loan Applications Get Declined: The Top 12 Reasons
• Self-Employed Home Loans: How Lenders Assess Income
• Deposit Timeline: From $0 to 20%

Sources

• Credit licensing: Responsible lending conduct (RG 209) — ASIC
• Moneysmart - applying for a home loan — ASIC