Home loan pre-approval: how it works, how long it takes and how long it lasts

What pre-approval means

The lender has looked at your income, spending, debts, savings and credit history and says it is prepared, in principle, to lend up to a set amount. CommBank describes it as "an estimate of how much you could borrow based on the information you provide". It tells you your price range and shows agents and sellers you are a serious buyer. It does not lock in a rate, and the lender can still decline the final loan.

From pre-approval to settlement

1. Pre-approvalApply with your documents. NAB says it can take "a few hours" or "a few days or weeks", depending on how quickly you supply documents and how simple your income is. Valid about 90 days
2. Offer acceptedSign the contract, ideally subject to finance (not possible at auction, where pre-approval matters most).
3. Formal approvalThe lender values the property and finishes its checks. CommBank says formal approval follows "within 1-5 business days" of receiving the contract. 1 to 5 business days at CommBank
4. SettlementThe lender pays the seller and you get the keys, on the settlement date set in the contract.

How long does pre-approval last?

At CommBank and NAB, 90 days. AMP says that in most cases it lasts 90 days "providing your financial position doesn't change". Some lenders give longer, and most can renew it with updated payslips and statements. Apply when you are close to making offers, so it does not expire mid-search.

What you will need

• Identification, such as a driver licence and passport
• Proof of income: recent payslips, or tax returns and ATO notices of assessment if you are self-employed
• Recent bank statements showing savings and spending
• Details of debts: credit cards (the limit counts, not just the balance), car loans, buy now pay later, HECS-HELP
• Your deposit, and where it came from

How lenders test what you can borrow

Banks must check you could still meet repayments if your rate were at least 3 percentage points higher, APRA's serviceability buffer. At today's average of 6.20%, a $600,000, 30-year loan is assessed at about $4,914 a month, not $3,675. Since 1 February 2026 APRA has also capped each bank's new lending at six or more times the borrower's income at 20 per cent of its new loans.

Why home loan pre-approval can fall through

Pre-approval is based on what you told the lender on the day you applied. The final decision is made on the actual property and your circumstances at that point, so check these before you sign:

• The valuation comes in low. The lender lends against its own valuation, not the price you pay. Say you agree to pay $700,000 with $140,000 saved and a pre-approved $560,000 loan, 80 per cent of the price. If the valuer says $660,000, the same loan is about 85 per cent of the value, so the lender may want lenders mortgage insurance, a bigger deposit, or a smaller loan. If it will lend only 80 per cent of $660,000, that is $528,000, leaving you $32,000 short on the day you settle.
• Your circumstances change. A new job still in its probation period, reduced hours, a new car loan or a higher credit card limit can all change the lender's numbers. AMP's 90 days come with the condition that your financial position does not change.
• The property does not suit the lender. Lenders assess the home as security as well as you as a borrower. Tell the lender or broker what you are buying before you bid.
• The pre-approval expires. If your search runs past 90 days, renew it before making an offer rather than after.

Pre-approval and buying at auction

Pre-approval matters most at auction, because the usual protections do not apply there. NSW Government guidance for buyers says there is no cooling-off period when you buy at auction, and the winning bidder pays the deposit on the spot, usually 10 per cent of the price. On a $700,000 home that is $70,000 on the day. It also suggests confirming with your lender the maximum you can borrow, including stamp duty, before you bid. Rules vary by state, so check the guidance where you are buying, and remember that a pre-approval is not formal approval of the property you win.

Does pre-approval affect your credit score?

A full pre-approval usually involves a credit enquiry that stays on your file. NAB warns that "multiple applications within a short period can lower your credit score". Apply with one lender, or use a broker who can compare several lenders before submitting one application.

Common questions

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General information only, not credit or financial advice. We are not a lender or a broker and hold no Australian Credit Licence. Rates shown are RBA market averages, not offers.