Can I get a home loan in Australia with a default on my credit file?
A default is one item on your credit file, not an automatic block. How lenders assess the whole picture, and where to get free help first.
Can I get a home loan in Australia with a default on my credit file?
A default on your credit file doesn’t automatically rule out a home loan, and it doesn’t guarantee one either. It’s one item lenders can see, considered alongside everything else in a responsible lending assessment — your income, expenses, existing debts and repayment history overall. What happens next depends on your full circumstances and the policy of the lender you apply with, which is genuinely not the same from one institution to the next.
If a default is something you’re dealing with right now and money is tight, it’s worth knowing free, independent help exists before you go any further with this article — see “Getting free help first” below.
What is a default, exactly?
A default listing is an entry a credit provider can add to your credit file when a debt has gone unpaid for a period and certain conditions are met.
As at July 2026, Moneysmart — the Australian Government’s consumer site, run by ASIC — sets out those conditions: a provider can report a default once the amount owed is $150 or more, they haven’t been able to contact you about it (called a “clearout”), 60 days or more have passed since the due date, and they’ve already asked you, by phone or in writing, to pay the debt. A provider must notify you before adding a default listing to your file.
How long does it stay on file?
As at July 2026, Moneysmart states a default stays on your credit report for five years — or seven years where it’s a “clearout” (the provider couldn’t contact you to collect the debt). If you go on to pay the debt, the listing itself remains, but your file will also show that it’s been paid.
How lenders weigh a default
Responsible lending obligations (ASIC RG 209) require a lender to make reasonable inquiries and take reasonable verification steps before deciding whether you can meet a loan’s repayments without substantial hardship — that assessment looks at the whole picture, not one entry on a file in isolation. A default sits alongside your current income, expenses and existing commitments, and alongside whatever explanation and supporting information you’re able to provide about it. Our guide to how banks calculate borrowing capacity covers that broader assessment in full.
Exactly how a lender treats a default — whether it’s paid or unpaid, old or recent, disputed or acknowledged — is a matter of that lender’s own credit policy, and policies vary between institutions. This article can’t tell you how a specific lender will read your file, and no general rule (“always fine” or “always a problem”) is accurate enough to state.
Getting free help first
Before weighing up loan applications, it’s worth knowing that free, independent financial counselling is available regardless of your situation — you don’t need to be in severe difficulty to use it, and using it doesn’t affect a future loan application. Moneysmart, the Australian Government’s free consumer website run by ASIC, is a starting point for understanding your credit file and your options. Free financial counselling services, including the National Debt Helpline, exist specifically to help people work through a default or broader debt situation without cost and without any product to sell.
As at July 2026, you can reach the National Debt Helpline free on 1800 007 007, weekdays 9:30am–4:30pm, or use its live chat, available weekdays 9am–8pm.
What to weigh if you’re planning to apply
There’s no single right time to apply with a default on file — waiting can let a listing age or let you resolve the underlying debt, but it also means more time saving or paying rent in the meantime; applying sooner means dealing with the default as part of the application now. Which matters more depends on your own finances, your timeline, and whether the default is something you can explain or have already resolved. This article isn’t going to pick one of those for you.
Where this leaves you
As at July 2026, there is no published rule — from ASIC, Moneysmart, or any single source — that says a default makes home loan approval impossible, and equally none that guarantees it won’t be a problem. What’s actually in your credit file, how it came about, and how a given lender’s policy treats it are specific to you. A licensed mortgage broker can talk through how your file is likely to be assessed and what supporting information tends to help; if the default is connected to a wider money problem, the National Debt Helpline and Moneysmart are the right free starting points, ahead of any lending decision. If you’re earlier in the process and still working out deposit paths, see our guide to first home deposits in Australia.
