Home loan pre-approval, also called conditional approval or approval in principle, is a lender saying it would probably lend you up to a set amount once it has seen the property. At CommBank, Westpac and ANZ it lasts about three months, or 90 days. Moneysmart puts the range across lenders at three to six months. It is not a loan, and Westpac says so in plain words: approval in principle "does not guarantee a loan approval".
The number only becomes real at formal approval, when the lender values the property and checks your file again. That second look is where buyers get caught: a short valuation, a new job, a new car loan, or a rate rise. The last one is live. The Reserve Bank lifted the cash rate to 4.60% on 29 September 2026, its fourth increase this year, so any pre-approval issued before then was assessed at a lower rate than the lender uses today.
What home loan pre-approval actually is
Pre-approval is an assessment of you, not of a property. You hand over income, expenses, debts and savings, the lender runs a credit check, and it tells you a ceiling. ANZ calls it an approval "subject to conditions being met, including that security is satisfactory", security meaning the house. Before ANZ turns it into a formal approval, your offer must be accepted on a contract, the bank must confirm your finances have not changed, the property must be valued and building insurance arranged.
| Pre-approval (conditional) | Formal (unconditional) approval | |
|---|---|---|
| What is assessed | You: income, expenses, debts, credit file | You again, plus one specific property |
| Property valuation | None | Done by the lender's valuer |
| Credit check | Yes, recorded on your file | Repeated or refreshed before approval |
| How long it lasts | Usually 90 days, some lenders up to six months | Runs through to loan documents and settlement |
| Can the lender walk away? | Yes, if anything material changes | Less likely, but listed conditions such as insurance still apply |
| What it is good for | Setting a budget and bidding with some confidence | Removing the finance condition and settling |
CommBank estimates four to six weeks from application to settlement. Treat pre-approval as a signal, not as money you have.
How long does pre-approval last?
The big four cluster around three months. CommBank's conditional pre-approval is valid for 90 days. Westpac's lasts three months, and you may be able to extend it another 90 days if your circumstances have not changed. ANZ says "around three months". Mozo's June 2026 guide notes some lenders offer up to 180 days, usually with fresh payslips and statements at the three-month mark.
The expiry exists because your finances, the lender's policy and interest rates all drift. Lenders test your loan at the product rate plus a buffer, which APRA confirmed in May 2026 stays at 3 percentage points, so every rate rise passes straight into the rate you are tested at. Our guide to borrowing capacity in 2026 shows what that has cost buyers this year.
The practical rule: if your pre-approval was issued before 30 September, have it reassessed before you bid. The RBA Board meets again on 2 and 3 November and on 7 and 8 December, so diary those against your expiry.
The second clock for First Home Guarantee buyers
Buyers using the Australian Government 5% Deposit Scheme run two clocks. Your lender reserves a guarantee place, held for 14 days while you complete the application. Once Housing Australia pre-approves the place, you have 90 days to find a home and sign a contract. The scheme's guide adds that your loan "will also need to be approved by the lender", and the two approvals rarely start on the same day, so track both expiry dates.
What lenders check before they pre-approve you
Expect to provide photo ID, three months of payslips, employment confirmation, two to three months of bank statements, details of every debt and evidence of savings, per Mozo's guide. Lenders read the statements, so the months before you apply are the ones that matter.
Automated versus fully assessed pre-approval
Not every pre-approval involves a human reading your documents. Mozo puts an online basic assessment at 24 to 48 hours, a fully verified one through a broker at three to seven business days, and an application direct with a bank at five to 14 business days.
The fast version is often a calculation on numbers you typed in. Fine for a rough budget, not something to bid on. Before you rely on any pre-approval, ask: has a credit assessor verified my payslips, statements and debts? If not, the figure has not been tested.
Does pre-approval affect your credit score?
It shows up. Westpac says a request for conditional approval "will be recorded in your credit history, regardless of the outcome." Moneysmart says too many applications in a short time can lower your score.
Under the rules the Office of the Australian Information Commissioner (OAIC) oversees, a credit enquiry stays on your report for five years. Comprehensive credit reporting adds repayment history, kept for two years, so lenders see whether you paid on time each month, not just whether you defaulted.
What Australia lacks is a soft-enquiry system for shopping around invisibly. In August 2024 the OAIC postponed considering one until a government review of credit reporting was done, and the 2025 credit reporting code does not include it. Assume every application with a credit check leaves a mark other lenders can see.
How many lenders should you apply with?
One, or two at most. Four applications in a fortnight looks like someone being knocked back. Compare lender policies before anything is lodged. Since 1 January 2021 mortgage brokers have been legally required to act in your best interests, and a good mortgage broker can match your income type and target property to a lender, then lodge one application.
Why buyers get declined after pre-approval
Formal approval is a fresh decision. These are the usual reasons it goes wrong.
The valuation comes in short
NAB says that where the market value and the bank valuation differ, a lender "will generally use the lower of the two" to set your loan-to-value ratio (LVR). Above 80% LVR you are into lenders mortgage insurance (LMI), and ANZ notes an application above 95% LVR typically won't proceed.
Your job, income or debts changed
Moneysmart lists high expenses, other debts, missed repayments and many recent credit applications among the reasons loans are rejected, and Mozo names changing jobs and taking on new debt as classic ways a pre-approval is withdrawn. Do nothing financially interesting between pre-approval and settlement.
The property type or postcode does not suit the lender
Canstar notes you may be "hard-pressed to find a lender" for an apartment under 40 square metres, and some lenders refuse studios or want a 20% deposit. Lenders also keep unpublished lists of higher-risk suburbs where they may cap your LVR.
Lender policy moved
Since 1 February 2026, APRA has limited each bank to 20% of new lending at six times income or more, counted separately for owner-occupiers and investors. APRA says a bank near its limit could offer a lower DTI loan or defer the application, whatever your pre-approval said. If your ratio sits near six, read our piece on APRA's debt-to-income cap before you bid.
Worked example: what a valuation shortfall actually costs
These figures are hypothetical, and they leave out stamp duty and other costs. Say two buyers each sign a contract, and each property values $30,000 below the price.
| Buyer A: 20% deposit | Buyer B: 5% Deposit Scheme | |
|---|---|---|
| Purchase price | $750,000 | $700,000 |
| Planned deposit | $150,000 (20%) | $35,000 (5%) |
| Pre-approved loan | $600,000 | $665,000 |
| Bank valuation | $720,000 | $670,000 |
| LVR if the loan stays the same | 83.3% | 99.3% |
| Maximum loan at the target LVR | $576,000 (80% of valuation) | $636,500 (95% of valuation) |
| Extra cash needed | $24,000 | $28,500 |
Buyer A has a choice: find $24,000 to stay at 80%, or borrow the original $600,000 at 83.3% and pay LMI, which ANZ says can be added to the loan if you can service it.
Buyer B has none. The scheme requires a deposit of at least 5% of the "Property Value", defined as the value assessed by the lender, and lets you borrow up to 95% of it. A $30,000 shortfall asks him for $28,500 more, 81% on top of the entire deposit he saved. The smaller your deposit, the harder a short valuation hits.
Timing pre-approval against auctions, private sales and the First Home Guarantee
At auction, Moneysmart is blunt: there is no cooling-off period, the sale is final, and the deposit (typically 10%) is due on the day. You cannot buy at auction subject to finance, so your pre-approval is your only finance protection. Make sure it is current, fully assessed and dated after the latest rate decision, and bid below its ceiling. Our auction playbook covers the rest.
On a private sale, you can usually ask for a finance clause. Victoria's standard contract has one: if the box is ticked and the loan is not approved by the approval date, you can end the contract, but only by serving notice with written evidence of the rejection within two clear business days. The NSW standard contract has no finance condition. It warns the buyer "should be satisfied that finance will be available at the time of completing the purchase", so a finance clause must be negotiated as a special condition. Cooling-off may buy a few days, and our guide to cooling-off periods by state sets out each state's rules.
Under the First Home Guarantee, both the purchase price and the lender's Property Value must sit under the price cap for the location. Our First Home Guarantee guide has the caps.
How to get home loan pre-approval: a step-by-step list
- Check your own credit report first. Fix errors and forgotten accounts before a lender sees them.
- Close or cut card limits you do not use. ANZ notes lenders may count a card's full limit as potential debt even when you owe nothing on it.
- Estimate a range. Run the borrowing power calculator with a rate a point above today's, so you are not anchored to a number no lender will give you.
- Gather the documents. ID, payslips, statements for every account, and every debt including HELP and buy now pay later.
- Compare policies before lodging. One full application with the right lender beats four quick ones.
- Ask for the loan you actually intend to take. If you want an offset account, say so now rather than switching products at formal approval.
- Get the conditions in writing. Is it fully assessed, when does it expire, can it be extended, and which property types or postcodes are excluded?
- Diary the expiry and the next RBA meeting, and refresh before either if you are still searching.
- Freeze your finances until settlement. No new credit, no avoidable job change, no large unexplained transfers.
Frequently asked questions
How long does home loan pre-approval last in Australia?
Usually about three months. CommBank, Westpac and ANZ all work to roughly 90 days, and Westpac may extend by another 90 if nothing has changed. Moneysmart puts the range across lenders at three to six months. After expiry you reapply at current rates.
Does pre-approval affect your credit score?
It is recorded on your credit report whether or not you are approved, and enquiries stay for five years. Moneysmart warns that many applications in a short time can lower your score, so limit yourself to one or two.
Can you be declined after pre-approval?
Yes. Pre-approval does not guarantee a loan. Common reasons are a short valuation, a change in income or job, new debts or missed repayments, a property the lender will not accept, and policy or rate changes since you were assessed.
Is conditional approval the same as pre-approval?
Mostly, yes. Lenders use pre-approval, conditional approval and approval in principle for the same thing: an assessment of your finances before a property is chosen. Formal approval comes later, after the lender has valued the specific property.
Before you start bidding
Get pre-approved by one lender that has actually read your documents, check the expiry against the next rate decision, and bid with a margin below the ceiling. A pre-approval is an informed guess, and at auction it is the only finance protection you have.
This is general information, not financial or credit advice. A licensed broker or lender can tell you what your own file will support.
Sources
- Commonwealth Bank, "Conditional pre-approval and home loan process". Accessed 6 October 2026.
- Westpac, "Home loan pre-approval". Accessed 6 October 2026.
- ANZ, "Apply for home loan pre-approval" and "Why bank valuation and purchase price can differ". Accessed 6 October 2026.
- NAB, "Understanding loan to value ratio (LVR)". Accessed 6 October 2026.
- Moneysmart, "Buying a house" and "Loan rejection". Accessed 6 October 2026.
- OAIC, "What stays on a credit report?" Accessed 6 October 2026; and "Update on application to vary the Credit Reporting Code". 30 August 2024.
- Mozo, "Home loan pre-approval explained". Updated 17 June 2026.
- Canstar, "Apartment Loans". Updated 28 May 2025.
- Reserve Bank of Australia, "Statement by the Monetary Policy Board: Monetary Policy Decision". 29 September 2026.
- APRA, "Activating debt-to-income limits as a macroprudential policy tool". 27 November 2025; and "APRA maintains current macroprudential policy settings in highly uncertain environment". 28 May 2026.
- Housing Australia, "Australian Government 5% Deposit Scheme For First Home Buyers: Information Guide". 1 July 2026.
- Law Institute of Victoria and REIV, "Contract of Sale of Land". January 2024; and Law Society of NSW, "Contract for the sale and purchase of land". 2022 edition.
- ASIC, "ASIC publishes new regulatory guidance for mortgage brokers". June 2020.
