Can You Buy a House with Bad Credit in Australia?

Can You Buy a House with Bad Credit in Australia?

Buying a home is a dream for many Australians — but if you have a bad credit score, it might feel out of reach. The good news? You might still qualify for a home loan, even in 2025. Here’s what you need to know.

What Is Considered Bad Credit?

In Australia, a credit score below 600 is often considered “subprime” by lenders. Missed payments, defaults, bankruptcies, or too many credit applications can all drag your score down.

Can You Still Get a Loan?

Yes, but it’s not easy. Some lenders, especially non-conforming or specialist lenders, offer “bad credit home loans” — often with stricter terms and higher interest.

What Lenders Look For

  • Stable employment and income
  • Larger deposit (at least 20% preferred)
  • Explanation of your credit history (e.g. illness, divorce)
  • Improved recent repayment behavior

Tips to Increase Your Chances

  1. Pay off existing debts and clean up your credit file
  2. Save a higher deposit — it shows commitment and reduces lender risk
  3. Use a mortgage broker who works with bad credit lenders
  4. Provide supporting documents like rent history or bank statements

Risks to Consider

Bad credit loans often come with:

  • Higher interest rates (5–8%+)
  • Higher fees
  • Lower borrowing capacity
Make sure you understand the total cost of borrowing before proceeding.

Final Word: Bad credit doesn’t mean no credit. With patience and preparation, homeownership is still within reach.

Disclaimer: This post is for general information only. Seek advice from a mortgage broker or financial professional before making decisions.

Couple checking bad credit home loan options in Australia 

 

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