By James Gregors

Buying your first home is one of the biggest financial steps you’ll take. For many first home buyers, the challenge isn’t just saving a house deposit, it’s knowing what lenders actually look for and taking the time to position yourself as a strong candidate for a loan.

In 2026, the lending landscape continues to reward borrowers who are prepared, informed and strategic. To be home loan ready, you need to present a complete, well-thought-out financial picture that gives lenders confidence you can manage a mortgage not just today, but over the long term.

At The Property Education Company, we work with first-home buyers every day by focusing on preparation, education and lender strategy before an application is ever submitted. What we see consistently is this: the buyers who plan ahead, avoid common traps and get the right guidance put themselves in a far stronger position than those who rush in based on hearsay or outdated advice.

This article breaks down what’s changed for borrowers in 2026 and what lenders are really looking for, and provides a practical 10-step guide to becoming truly home loan ready.

Being home loan ready in short:

• Being home loan ready in 2026 requires more than a deposit. Lenders closely assess spending habits, credit limits, employment stability and savings behaviour.
• Borrowers are assessed at higher buffer rates, so you need to prove you can meet slightly more than the minimum repayments.
• Credit cards, Buy Now Pay Later services and unused credit limits can quietly reduce borrowing capacity, even if your balances are paid off.
• Government first home buyer schemes can help you be home loan ready sooner, but strict rules around savings, cash usage and eligibility may catch you off guard.
• A clear, step-by-step plan and early expert guidance puts first home buyers in a more positive position when it comes time to apply
  

What’s new for borrowers in 2026

While the fundamentals of lending remain the same, 2026 brings a few important shifts that first home buyers need to understand.

1. Tighter scrutiny on spending behaviour

Lenders are placing greater emphasis on how you manage your money day to day. When you apply for a loan, your bank statements will be reviewed in detail, not just to confirm income, but to understand spending habits, savings consistency, credit card repayment habits and existing commitments.

Buy Now Pay Later services, subscription stacking and large unused credit limits are all assessed as potential risk factors. Even if you pay everything on time, access to credit still counts.

Tip: Reduce your credit card limits, even if you never max your cards out, and close as many credit-related accounts as you can before you apply for a home loan.

2. Serviceability buffers remain

Borrowers are assessed at an interest rate higher than their actual loan rate. So, for example, if your rate is 4%, you’ll be assessed to make sure you can manage repayments with a rate 3% higher.

This buffer exists to ensure you will still be able to manage your home loan repayments if rates change. In practice, this means your borrowing capacity may be lower than you may figure using a basic calculator.

For higher-income earners, it’s worth being aware of APRA’s decision to limit high debt-to-income home loans in 2026. This is a move to constrain riskier lending, which has started to increase. From 1 February this year, the limit on home loans will allow authorised deposit-taking institutions (ADIs) to lend up to 20 per cent of their new mortgage lending at debt of six times income or more.

3. More tailored lender policies

In 2026, there is no single “best lender” for first home buyers. Policies differ widely depending on employment type, industry, visa status, location of the property and even how income is structured. This is where expert support comes in handy, to review your options and help you plan your approach.

Read more: Why there is no ‘best’ lender for first home buyers.

4. First home buyer schemes are available, but with conditions

Government support schemes continue to assist eligible buyers to enter the market, but they come with rules that can catch people off guard. Cash limits, genuine savings requirements and post-settlement cash restrictions are often misunderstood and need to be planned for carefully.

Read more: First home buyer grants and concessions in Victoria: What you need to know

Need a first home buyer mortgage broker who can help you be home loan ready?

We’ll show you how to map your preparation strategy.

Book a first home buyer strategy call here.

By the way, we’re happy to answer your questions. Our education-first approach is why many first home buyers choose The Property Education Company when they want to understand their borrowing position before speaking directly with a bank.

What Australian lenders are

really looking for

From a lender’s perspective, approving a home loan is about risk management. They want to see stability, consistency and evidence that you can comfortably manage repayments. It’s their goal to offer home loans at the end of the day, and they will do that with more ease if you are a good candidate to borrow money to buy a home.

Make no mistake: lenders want to lend! But they have to do so within a clear set of internal policies and in line with industry regulations.

Here’s what matters most when banks and lenders assess your application:

1. A stable and provable income

Whether you’re PAYG, casual or self-employed, lenders want to see income that is consistent and sustainable. Changing jobs isn’t necessarily a problem, but frequent changes across industries can raise questions.

In the leadup to applying for a loan, aim to have your income looking as steady as possible, and don’t make plans to change jobs (unless there is a huge pay raise involved… then it may be worth it, but check in with your broker first).

2. A clean and accurate credit history

Your credit file tells a story. Missed bills, multiple applications and forgotten defaults can all impact your assessment. Importantly, this isn’t just about a “credit score” – it’s about the full credit file and what appears on it.

I have had clients with black marks on their credit ratings that they weren’t even aware of. In one instance, it was due to fraud and took some work to untangle. So it is important to review your credit status (your broker can help) and not apply for any loans which may be rejected. 

Want help to check your current credit status? Call 0468 026 200 today.

3. Sensible use of credit

Large credit card limits, even if unused, reduce your borrowing capacity. So, for example, if your credit card limit is $50k, lenders assume that limit could be fully drawn at any time. In essence, this account is a liability, so close it if you can.

To add to this, a lot of people don’t see store cards, student loans or Buy Now Pay Later accounts and Latitude cards as credit. They may have different names, but that’s essentially what they are.

When you’re preparing to be home loan ready, anything you can do to reduce the credit you have access to and the amount of debt you have will help.

4. Healthy and ongoing savings

Especially for first home buyers, showing that you can save consistently is a strong positive signal. Gifts can help with deposits, but lenders still want to see financial discipline.

Set a goal for your savings, contribute the minimum each month and have evidence ready to share. This will really help when you apply for a home loan.

5. A clear and reasonable borrowing goal

Just because a bank may approve a certain amount doesn’t mean it’s the right amount for you. Lenders tend to look more favourably on borrowers who understand their own budget and limits.

6. Good property choices

The property matters as much as the person paying for it. Buying a property in a rural or isolated area or paying a great deal above market value puts the bank at risk of having to deal with a home that can’t be sold in order to recoup funds if you default on your payments. Your loan application is not likely to be approved if you’re thinking too much with your heart rather than your head, so choose the property you want to buy strategically.

The 10-Step Guide to Being Home Loan Ready in 2026

Step 1: Understand your full financial position

Before speaking to a lender, take stock of everything: income, expenses, debts, assets and savings. Knowing your numbers gives you clarity and helps avoid surprises later.

Sit down with a pen and paper, review your expenses in detail and be ready to share with your broker and lender.

Tip: Review your finances and start using a budgeting app.

Step 2: Check your credit file early

Request your full credit report well before applying for a loan. Look for errors, old defaults or signs of identity fraud. Fixing issues can take time, so early action matters.

Tip: Need help to access your credit report? Get in touch with The Property Education Company.

Step 3: Avoid new debt

In the lead-up to buying, avoid applying for credit cards, car loans or BNPL accounts. Even small amounts can significantly impact your borrowing capacity.

Tip: Dealing with lots of small loans that you can’t pay off straight away? Consider consolidating them into one loan at a competitive interest rate.

Step 4: Reduce existing credit limits

If you have credit cards with high limits, consider reducing or closing them (with advice). Lenders assess the limit as well as the balance.

Tip: Holding onto large credit cards because you want the points? Review the fees you’re paying and the interest… you may still be better off without the cards.

Step 5: Show consistent savings

Even if part of your deposit comes from a gift, having a track record of saving strengthens your application and demonstrates discipline. Give yourself three-six months if you haven’t already to prove you can set aside a set amount each month.

Tip: Set up a savings account without a card attached to it so you have to physically log in to access the money. When you’re 3–12 months away from buying, that’s the ideal window to speak with The Property Education Company about being home loan ready.

Step 6: Stabilise your employment where possible

If you’re planning a job change, timing matters. Staying in the same role or industry leading up to your application may help to simplify the borrowing process.

Tip: If you are self-employed, keep detailed records of your revenue and income, and speak to your accountant about how to ensure your tax return reflects your genuine income.

Step 7: Understand how much you should borrow

Work backwards from a comfortable repayment, not the maximum loan size. A sustainable mortgage is one that fits your lifestyle and future plans. And don’t forget about things like council rates, home repairs and insurance as these expenses go hand in hand with home ownership.

Tip: Factor in room for rainy day funds when you’re figuring out your budget as part of the home loan process.

Step 8: Factor in all purchase costs

Stamp duty, legal fees, property inspections, moving costs and ongoing expenses all add up. Being home loan ready means accounting for the full picture.

Tip: Not sure how much stamp duty you will pay? Use our stamp duty calculator.

Step 9: Plan your cash position post-settlement

Some first home buyer schemes limit how much cash you can retain after purchase. This often surprises buyers. Planning ahead ensures you know what you are signing up for.

Tip: Get started with your savings, then connect with a mortgage broker to make a more concrete plan.

Step 10: Get expert guidance early

Lending policy is complex and constantly changing. Working with specialists who deal with this every day helps you avoid mistakes and position your application correctly from the start.

Tip: There are often no costs involved with using a home loan broker. Reach out and I can explain how everything works… you’ll have no obligation to continue.

The Property Education Company:

What we do

The Property Education Company specialises in helping first home buyers become home loan ready before they apply, by educating them on lender policy, structuring their finances, and guiding them through the preparation phase.

For first home buyers who want to be home loan ready before speaking to a bank, working with a broker that focuses on education rather than transactions can make the process clearer and less stressful. This is the approach taken by The Property Education Company.

Why first home buyers choose

The Property Education Company

At The Property Education Company, we don’t just lodge loan applications to help you be home loan ready. We educate, strategise and advocate for our clients.

We take the time to understand your story, your goals and your concerns. We then help to match you with lenders whose policies align with your situation. You’ll have full control of every decision, but you’ll be able to do it with an experienced voice behind you.

Importantly, we provide ongoing support. Lending doesn’t stop at settlement and we continue to review and reassess loans as circumstances change, ensuring our clients remain well-positioned over time.

Home Loan Ready FAQs

1. What does “home loan ready” actually mean?

Being home loan ready means more than having a deposit saved. It relates to your income, credit history, spending behaviour, savings habits and overall financial structure are aligned with current lender policies, giving you the best possible chance of approval on suitable terms.

2. How early should first home buyers start preparing for a home loan?

Ideally, preparation should start at least six to twelve months before you buy. This allows time to clean up credit files, adjust spending habits, reduce debt and build a consistent savings history without pressure.

3. Do Buy Now Pay Later services affect home loan applications?

They can do. Even small or infrequently used BNPL accounts are treated as credit facilities by lenders. They can reduce borrowing capacity and, in some cases, raise concerns about spending behaviour.

4. Can I still be home loan ready if part of my deposit is a gift?

In many cases, yes. Gifted deposits are common for first home buyers. However, lenders may still want to see evidence of genuine savings and clear documentation confirming the funds are a non-repayable gift. Speak to your broker for personalised information.

5. Why should I speak to a mortgage specialist before I start house hunting?

Lending policies vary significantly between lenders and change regularly. Getting the support of an expert early on in the process helps you understand your true borrowing power, avoid costly mistakes and approach the market with confidence rather than guesswork.

Being home loan ready is a process

Becoming home loan ready in 2026 isn’t about rushing or relying on generic advice. You need preparation and personalised education to make informed decisions.

For first home buyers, the earlier you start planning, the more options you’re likely to have. With the right strategy and guidance, the path to your first home becomes clearer and far more manageable.

Even if you don’t buy until December this year, the steps you take today will put you in a better position for approval, and it’s never too early to start the process.

If you’re thinking about buying your first home and want to understand where you stand, speaking with a team that specialises in education-led lending can make all the difference. Contact The Property Education Company for support with home loan-ready strategies!

Got a goal to be home loan ready in 2026? Call 0468 026 200 right now or connect with The Property Education Company here. 

About the author:

As an MFAA-certified finance broker, James Gregors has been helping first home buyers and other investors to build their property portfolio for many years. He is especially dedicated to helping first time buyers experience the excitement of buying their first home.

James loves learning about property opportunities then sharing what he has learnt with his clients. He has a natural flair for figures, which makes him a whiz at working out the most advantageous borrowing opportunities.

Disclaimer: This advice is general in nature. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.

Licensing Statement: Credit Representative 365124) is authorised under Australian Credit Licence 389328.