Getting a home loan with bad credit can be challenging, but some specialist lenders may consider your current finances and credit history. Understand your options before applying.
A bad credit home loan is a mortgage for people whose credit file wouldn’t get past a major bank. A $600 phone bill that went to collections in 2023 can be enough for the big four to say no. Specialist lenders usually ask what happened, and they look at how you’ve handled your finances since.
That’s where LoanCalculator.com.au comes in. We line up those lenders for you, rates and fees included, before you fill in a single form. You’ll probably pay a bit more than someone with a spotless record. We’ll show you how much more, in dollars, before you decide anything.
Same basic setup as any mortgage. The home itself backs the loan, and most people take 25 or 30 years to pay it off.
Where it differs is cost. More risk for the lender usually means a higher rate for you, a bigger deposit, or a risk fee added at settlement. Sometimes all three.
You’ll also see them called non-conforming or credit impaired home loans, and most come from non-bank lenders. If your credit file is clear, you can compare standard options on our home loans page.
Key features:
Compare how bad credit and standard home loans differ in eligibility, interest rates, deposits, fees and approval times.
| Feature | Bad credit home loan | Standard home loan |
|---|---|---|
| Who it’s for | Defaults, missed payments, judgements or past bankruptcy on file | Clean or near-clean credit history |
| Typical lender | Specialist and non-bank lenders | Banks and major lenders |
| Interest rate | Higher, priced to the risk on your file | Lower, based on standard risk tiers |
| Deposit | Often 10–20%, sometimes more depending on the file | Can be as low as 5–10% with LMI |
| Fees | Application, valuation and risk fees common | Standard application and valuation fees |
| Approval time | A week or two, sometimes longer | Often faster with a clean file |
If your file is clear, a standard loan on our home loans page will almost always work out cheaper. A bad credit loan exists for when that door’s closed, not as a like-for-like alternative.
Which score a lender sees depends on whether they check Equifax, Experian or Illion. Equifax scores you out of 1,200. The other two use a 1,000-point scale.
The national average Equifax score was 864 in 2025, three points higher than in 2024. A score in Equifax’s below average range (0–459) sits at the bottom of their five-band scale, below average, good, very good and excellent.
Lenders also check the details on your file, not just the score.
Common reasons for a low score:
Approval is only one part of the decision. Before you commit, look at what the loan will cost you over its full term.
Honestly, the stuff that helps most is pretty boring. It just takes a few months to show up on paper.
Every lender’s checklist looks a little different. Most will want the following, though.
Basic Eligibility:
Documents You May Need:
Understand the steps involved in applying for a home loan with bad credit.
Look at it before a lender does.
How much can you put down & What can you repay each month without strain.
Punch some numbers into our calculator.
Check rates, fees and terms across our 40+ lenders.
Send in your paperwork. Approval comes first, then settlement.
Not sure whether you qualify for a bad credit home loan? Get answers to common questions about eligibility, deposits, interest rates and applying with a poor credit history.
Usually a week or two once your paperwork’s in, sometimes longer if the lender wants more documents or a detailed explanation for what went wrong on your file.
Depends on the lender. Some will look at a small, paid default straight away. Others want 12 months of clean history first.
No, but it will show as paid rather than outstanding, and that distinction does count in your favour with most lenders.
Some lenders accept a family guarantee. Mum, Dad or another relative puts up equity in their own place, so you may need a smaller deposit. Miss repayments, though, and they’re on the hook.
You can. A few specialist lenders skip the two years of tax returns and go off your BAS or a letter from your accountant. The rate might be a touch higher.
Not really. Low doc is about proving income without full paperwork. Bad credit is about your repayment record. A few loans cover both.
Find out what your home loan could cost. Our free calculator takes about a minute.
