Non-conforming loan

Having trouble fitting in with the banks? Are your finance needs a bit out of the ordinary? Having your loan application rejected can be disheartening and stressful, so it pays to know why it might be happening - and what other options might be out there for you.

What are non-conforming loans?

People with low credit scores or who have finance needs that are a little out of the ordinary can often have trouble sourcing a home loan. Many lenders now offer what are known as 'non-conforming loans' for people in this type of situation.

While lenders are willing to overlook prior credit problems, they will want to see some evidence of your ability to repay the loan. A larger deposit than what is usually required for traditional loans may also be required.

Here are some of the signs that you might not be a 'perfect match' for some of the lenders out there:

  • You don't have a perfect credit history (e.g. previously declared bankruptcy, missed loan/bill payments in the past)
  • You have a solid income, but not much of a deposit
  • Your work means you regularly change jobs (it may look like there's no stability, but it's just the nature of the industry)
  • You need to consolidate a few other debts such as personal loans, credit cards or business debt
  • You have recently started a business or a new job
  • You are self-employed

But even if the banks have said 'no', it doesn't mean there aren't other options. 

At Mortgage Choice, we have access to hundreds of home loans, from over 35 lenders – which includes lenders that specialise in helping people just like you. We’ll have a chat to get to know you and understand your situation, so we can help find the lender, and the loan, that best suit you.

What are the pros and cons of non conforming loans?


  • May overlook low credit rating
  • May be able to access a lower rate after a period of time (where repayments have been made on time)


  • Higher interest rate than traditional loans in recognition of higher level of risk
  • A larger deposit than is required for traditional loans
  • May also require stricter repayment conditions
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How can Mortgage Choice help you?

  • Provide you with a copy of your credit history report plus expert advice on why it matters, how to keep it in good shape and what to do if it contains blemishes.

  • Offer you a free Home Loan Health Check on your current home loan to see if you could take advantage of different loan features or secure a lower rate.

  • Discuss possible options for consolidating your debts to get them under control so you can relax and enjoy life.

Non-conforming loans FAQs

A non-conforming lender is a specalist lender that offer loans that cater to people who dont meet standard lending criteria. As non-conforming lenders have a greater perceived risk, they often have a different fee structure and can incur higher rates compared to other lenders.

These days some evidence of income is required, you cannot obtain a loan without some evidence of income. 

If you are self-employed or an investor you may be able to apply for a low doc home loan if you are unable to supply a conventional proof of income in your application, like payslips. However, these loans require different kinds of evidence of income

To get approved for a home loan, you will need to go through the home loan application process. 

This begins with meeting with your Mortgage Broker to understand your financial and lifestyle goals as they can calculate your borrowing power, work out repayments and answer any questions you may have. From there you will need to provide your financial documents to your broker to be assessed, this will include your payslip, identification, and other relevant documentation. 

At this stage your Mortgage Choice broker will be able to search through thousands of home loans and provide expert advice to help find the right home loan for you. Your broker will then be able to prepare your home loan application and submit it to a lender for conditional approval. Finally, you will receive unconditional approval as a formal acknowledgement that your home loan application has been approved by the lender. 

To obtain unconditional approval for a loan you will need to have found the property you want to buy and provide a valuation of the property or a fully signed and dated contract of sale.