top of page

Home loan pre-approval: what lenders check and how to prepare

Christian Tucker
Oct 25
6 min read

Insights from AGFB · Checked 2 October 2026 · About 6 minutes

In brief

  • Pre-approval is a lender's conditional indication of how much it may lend. It isn't a guarantee: final approval depends on the property, a valuation and final checks.

  • It typically lasts around three to six months, and the period varies by lender.

  • Each credit application is recorded on your credit report, so it usually makes sense to choose a lender before you apply.

  • Queensland auction contracts have no cooling-off period and are usually unconditional, so your finance should be as firm as possible before you bid.

What pre-approval is, and what it isn't

Pre-approval, also called conditional approval or approval in principle, is a lender's indication that it may lend you up to a set amount. It gives you a realistic price range and shows sellers you are serious.

It is not a loan offer, and it doesn't commit you to that lender. Final approval still depends on the property, a satisfactory valuation, your circumstances staying the same and any conditions in the letter.

How long does pre-approval last?

Typically around three to six months, depending on the lender. If it runs out before you buy, you can usually renew it with updated payslips and statements, and the lender may check your credit report again.

What do lenders check?

Lenders must make reasonable inquiries about your financial situation and take reasonable steps to verify it. For pre-approval, that usually covers four areas.

Income

Lenders check how much you earn and how stable it is, using payslips or, if you are self-employed, tax returns. Lenders often treat overtime, bonuses, casual and contract income differently from a base salary.

Living expenses and debts

Your bank statements show what you spend, and every existing debt counts, including credit cards, buy now pay later and study debt. The lender also tests whether the loan would stay affordable if rates rose, which our article on borrowing power covers.

Your credit report

They review your repayment history, any defaults and recent applications for credit. Moneysmart lists late or missed repayments, unpaid debts, defaults and many recent applications among common reasons for a refusal.

Deposit and genuine savings

They also check where your deposit comes from, and whether you will have enough left for stamp duty and other costs. Many lenders also want genuine savings built up over time, especially with a small deposit. A family gift usually needs a signed letter confirming it isn't a loan.

Will applying affect your credit score?

When you apply for pre-approval, the lender usually requests your credit report. The OAIC explains that this is recorded as a credit enquiry, with the type and amount of credit you applied for, and enquiries stay on your report for five years.

One home loan application is an ordinary part of buying, and only one of the things a lender weighs up. Moneysmart notes that too many applications in a short time can lower your score, so applying to several lenders to see who says yes can work against you.

Comparing lender policies before anything is lodged is part of a broker's role, as our home loans page explains. You can also get a free credit report from each credit reporting body every three months, so check yours for errors first.

Why a quick approval can differ from a fully assessed one

Some pre-approvals are produced by a lender's system within minutes or hours, based largely on what you declare and a credit check. A fully assessed pre-approval goes further: a credit assessor reviews your documents before it is issued.

A system approval is a useful guide, but it may not have tested details such as how your overtime is treated or a repayment in your statements. If those surface later, the amount can change or the loan can be declined. Before an auction or a short finance period, ask whether yours is fully assessed.

What can undo a pre-approval?

Pre-approval assumes nothing material changes before the loan is finalised. Watch for these changes.

A change of job or income

A new job, a switch to casual or contract work, or fewer hours can change how a lender views your income, and some lenders want probation finished. If a change is coming, raise it before you sign a contract.

New debts

A new car loan, credit card, interest-free furniture deal or buy now pay later account adds a commitment the lender didn't assess. It is safer to hold off on new credit until settlement.

The property itself

Lenders often have tighter rules for some property types, such as very small apartments, large rural blocks or homes needing major work. Check any property conditions in your pre-approval before you commit.

A low valuation

Once you have a contract, the lender orders a valuation and usually bases your loan-to-value ratio on the lower of the valuation and the price. A low valuation may mean a larger deposit, or lenders mortgage insurance if you borrow more than 80% of the value.

Using pre-approval at auction and by private treaty

At auction

In Queensland, there is no cooling-off period when you buy at auction, and the terms of sale usually require you to bid unconditionally. That means you can't make your bid subject to finance, so if it wins, you must settle even if the loan isn't approved.

Pre-approval alone doesn't make your finance firm. Before auction day, ask whether your lender can value the property in advance, and get the contract reviewed and inspections done. Moneysmart notes you can expect to pay a deposit straight away, for example 10% of the price.

By private treaty

With a private sale, you can usually make your offer subject to finance, with a date by which formal approval must be in place. Pick a finance date your lender can realistically meet, and make sure the condition is in the contract when you sign.

Most Queensland residential contracts outside auctions also give the buyer a five-business-day cooling-off period, although ending the contract in that time can cost up to 0.25% of the price.

Your pre-approval document checklist

  • Photo ID, such as a driver licence or passport

  • Recent payslips, plus an employment letter if you are new to the role

  • Tax returns and notices of assessment if you are self-employed

  • Recent statements for your everyday and savings accounts, and for every loan, card and buy now pay later account

  • Evidence of your deposit and savings history, and a gift letter if family is helping

  • Details of other income, such as rent

  • A list of your monthly living expenses that matches your statements

  • Your credit report, checked for errors

Common questions

Is pre-approval the same as unconditional approval?

No. Unconditional, or formal, approval usually comes once you have a signed contract, the property has been valued and the lender's remaining conditions are met.

Do I have to use the lender that pre-approved me?

No, pre-approval doesn't commit you to a loan. Changing lenders later means a new application, another credit enquiry and a fresh assessment, which takes time.

When should I get pre-approval?

Usually once you are ready to make offers or bid, as it only lasts a few months. Until then, a calculator estimate may be enough, and first home buyers can see our first home buyers page.

Try the numbers

Our Borrowing Capacity calculator gives an indicative figure, and the Property Fees calculator estimates stamp duty and other purchase costs. Not sure which step comes first? Find Your Next Step asks a few short questions and points you to the right tool or enquiry.

Talk it through

If you are getting ready to make offers or bid, Christian can help you choose a lender and prepare your pre-approval application.

Sources

General information only. This article does not take into account your objectives, financial situation or needs. Your full financial situation and requirements must be considered before any offer or acceptance of a loan product. All lending is subject to the lender's assessment and criteria, and fees and charges apply. Figures and rules are correct as at the checked date shown and can change.

Avantgarde Financial Brokerage Pty Ltd, Corporate Credit Representative 580346, authorised under Australian Credit Licence 389328 held by Connective Credit Services Pty Ltd.

FIND OUT WHAT YOU COULD BORROW

Get an estimate in the borrowing capacity calculator, or ask Christian for a borrowing capacity report based on how lenders on the AGFB panel assess your situation. No credit check to enquire. Christian replies the same business day.

bottom of page