Two people earn the same salary. They apply for a similar home loan. One receives a sharp interest rate, while the other is offered a more expensive deal—or is declined altogether. It feels unfair. The reason is simple: your income is only one part of your mortgage application. Banks assess your full financial profile, including your deposit, credit history, debts, spending, employment, property and loan purpose.
In my experience, borrowers often focus on how much they earn when they should be asking a better question: “How risky does my application look to the lender?” That difference can affect your borrowing power, home loan interest rate and repayments for years. Here is why two people with the same income get very different home loan rates—and what you may be able to do about it.
Why Do Two People With the Same Income Get Different House Loan Rates?
Lenders do not approve or price a house loan based on salary alone. They assess the chance that the borrower will repay the mortgage without falling into financial stress.
Imagine Alex and Jordan both earn $100,000 a year.
Alex has a 20% deposit, no personal loans, a low credit card limit and a strong repayment history. Jordan has a 10% deposit, a car loan, several credit cards and a few late payments.
Their salaries match, but their risk profiles do not. Alex may qualify for a lower home loan rate, while Jordan may have fewer lender choices, a smaller borrowing capacity or higher upfront costs.
The same principle applies when comparing home loans from CommBank, Westpac, ANZ, NAB, Macquarie Bank, ING and other Australian lenders. Each lender has its own products, credit policy, pricing tiers and appetite for different borrowers.
a-Credit History Can Change the Home Loan Rate You Receive
Your credit report tells a lender how you have managed debt in the past. It may show credit applications, repayment history, defaults and other credit accounts.
A high credit score does not automatically guarantee Australia’s lowest home loan rate. However, a clean credit history can give you access to more lenders and competitive mortgage products. A weaker credit profile may limit those options.
This is where frustration can creep in. A borrower may have a good salary but still be affected by an old unpaid account, repeated late repayments or a burst of recent credit applications.
Before applying for a mortgage, check your credit report and correct any errors. Avoid making several home loan applications in quick succession simply to “see what happens”. Each lender will still assess the full application, and repeated enquiries may work against you. Equifax explains that borrowers with stronger-than-average credit may be offered better interest rates and loan terms.
Can Your Credit Score Cause Different Home Loan Rates on the Same Income?
Yes, but the result depends on the lender. Some lenders use credit scores to decide whether an application fits their standard lending policy. Others may offer different products or pricing for borrowers with credit problems.
Major banks do not always price every prime home loan directly according to a credit score. Loan purpose, LVR, repayment type and product selection can have a greater effect on the advertised rate. Your credit history still matters because it can decide whether you qualify for that product in the first place. The rate that looks brilliant in an advertisement is not very helpful if your application does not meet its eligibility rules.
b-Your Deposit and LVR Can Unlock a Lower Home Loan Interest Rate
Your loan-to-value ratio, or LVR, compares the amount you want to borrow with the lender’s valuation of the property.
If you buy a home valued at $800,000 and borrow $640,000, your LVR is 80%.
A lower LVR usually means the lender is taking less risk. It may give you access to a more competitive home loan rate, lower costs or a wider range of mortgage products.
ASIC’s Moneysmart notes that a lower LVR can reduce costs and improve the chance of loan approval. Borrowing more than 80% of the property’s value can also lead to Lenders Mortgage Insurance, known as LMI. LMI protects the lender rather than the borrower. Depending on the lender and product, a high-LVR borrower may also face different pricing or fewer choices.
Why Do Borrowers With Larger Deposits Get Better Home Loan Rates?
A larger deposit creates a bigger safety margin for the lender. If the borrower cannot repay the house loan and the property must be sold, a lower LVR reduces the lender’s potential loss. That lower risk can translate into better mortgage pricing.
For example, a borrower at 60% LVR may qualify for a sharper rate than someone at 85% LVR, even when both earn the same income. This is visible in the home loan rate tables published by lenders such as CommBank and Westpac, where rates and discounts can change across LVR tiers. It is one reason the “best home loan rate” is not one universal number.
c-Home Loan Rates Differ for Owner-Occupiers and Property Investors
How you plan to use the property matters.
An owner-occupier home loan is used to buy a property in which you will live. An investment home loan is used to purchase a property that will be rented to tenants.
Lenders commonly offer different rates for these loan purposes. Investor home loan rates are often higher, although the actual difference varies by lender, product, LVR and repayment type.
The rate is not different merely because one borrower earns more or less. It reflects the loan’s purpose and the lender’s pricing for that category.
You must describe the property’s use honestly. Telling a lender that an investment property will be owner-occupied to obtain a cheaper mortgage rate may amount to misrepresentation
d-Are Investor Home Loan Rates Higher Than Owner-Occupier Rates?
They often are, but not in every comparison. An owner-occupier paying principal and interest may receive different pricing from an investor making interest-only repayments. Fixed rates, variable rates, package discounts and special offers can also change the result. When comparing investment property loans, compare like with like. Look at the interest rate, comparison rate, fees, loan features and total repayments—not just the number displayed in the largest font.
e-The Property Can Affect Your Mortgage Application
The borrower is only half of the home loan equation. The lender must also be comfortable with the property being used as security.
A standard house in an established suburban area may be acceptable to many lenders. A tiny studio apartment, serviced apartment, unusual rural property or home in a high-risk location may have fewer suitable lenders.
Banks also manage concentration risk. If one lender already has significant exposure to a particular apartment complex, development or postcode, it may limit further lending there.
Sometimes the result is not a higher home loan rate. The lender may instead require a larger deposit, reduce the amount it will lend or decline the property altogether.
This can feel absurd when you have strong income and savings. However, the lender is asking a different question: “If this mortgage goes wrong, how easily could this property be sold?”
Can the Property You Buy Change Your Home Loan Rate?
Yes. The property may influence your eligible products, maximum LVR and lender options. If one bank will only lend 70% against a particular property while another accepts 80%, the second lender may be more suitable—even if its advertised rate initially looks less exciting. Flood, bushfire and insurance risks can also affect the purchase. If adequate insurance is unavailable or extremely costly, that can create problems before settlement.
f-Employment Type Can Lead to Different Home Loan Rates
Two people may each earn $120,000, yet their income may be assessed very differently.
One may receive a fixed PAYG salary from a long-term employer. The other may be self-employed, work on contracts or earn much of their income through overtime, commission or bonuses.
The second borrower is not necessarily less reliable. Their income simply requires a different assessment.
A lender may average variable earnings, use only part of a bonus or request more documents from a self-employed applicant. Some lenders accept one year of financial statements, while others may want two years. Certain lenders also offer alt-doc home loans for eligible self-employed borrowers.
The product that accepts more flexible income evidence may not have the lowest advertised rate. Yet it could be the most suitable—or only—workable option.
Do Self-Employed Borrowers Pay Higher Home Loan Rates?
Not always. A self-employed borrower with strong financial records may qualify for standard home loan rates. A borrower using an alt-doc or specialist mortgage may pay a higher rate because the lender is using a different assessment process. This is why comparing only CommBank home loan rates, ANZ home loan rates, NAB home loan rates or Westpac home loan rates can miss part of the market. A non-bank lender or specialist lender may understand a complex income structure more effectively. The goal is not simply to find the lowest rate online. It is to find the lowest suitable rate for which you can realistically qualify.
g-Living Expenses and Existing Debts Change Your Borrowing Power
Income tells a lender what comes in. Serviceability also considers what goes out.
Rent, childcare, private school fees, insurance, subscriptions, personal loans and everyday living expenses can reduce borrowing capacity. Credit card limits may also affect the calculation, even if the balance is currently zero.
This explains why two applicants with matching salaries can receive very different home loan outcomes. One might have few commitments, while the other supports a larger household and carries several debts.
Australian banks also test whether borrowers could manage repayments at a higher interest rate. As of May 2026, APRA confirmed that the mortgage serviceability buffer remained at three percentage points.
In plain English, a lender usually assesses your ability to repay at a rate above the rate you will initially receive. This creates a safety buffer but can also reduce your borrowing power.
Does a Credit Card Affect Your Home Loan Application if You Owe Nothing?
It can. A lender may assess the potential debt attached to your credit card limit, not just the current balance. A $20,000 limit can therefore affect serviceability even when the card is fully paid off. Reducing unused credit limits before applying may improve borrowing capacity, but do not close essential accounts without first considering your wider finances. A mortgage broker can model the potential effect before you make changes.
h-The Loan Features You Choose Can Change Your Home Loan Rate
Not every mortgage is built the same way.
A basic variable home loan may have a lower rate but fewer features. A package loan with an offset account may carry an annual fee. An interest-only loan may be priced differently from a principal-and-interest loan.
Fixed home loan rates can also differ from variable rates. A fixed rate may provide repayment certainty, but it can include restrictions, break costs and limits on extra repayments.
This is where the comparison rate becomes useful. It combines the interest rate with certain fees and charges into a single percentage. It is still only a guide because the standard calculation may not match your loan amount or term.
I always think of the advertised rate as the shop window. The real cost is what reaches your bank account each month—and what the loan costs over the period you keep it.
i-Why Negotiation Creates Different Home Loan Rates
Two similar borrowers can receive different rates from the same lender because one asked for a discount and the other did not.
Banks may use discretionary pricing, package discounts, refinancing offers or retention deals. Available discounts can depend on the loan size, LVR, product and strength of the application.
An existing customer may also remain on an older rate while new customers receive a sharper offer. This is often called the loyalty tax, although the exact pricing depends on the lender.
A proactive mortgage broker may compare offers across multiple lenders and request sharper pricing. Borrowers approaching a bank directly can also ask whether a better rate is available.
The slightly awkward phone call could save real money. Silence is rarely a powerful negotiation strategy.
Can a Mortgage Broker Get You a Lower Home Loan Rate?
A mortgage broker may be able to identify suitable lenders, compare products and request a pricing discount. However, no broker can guarantee that a lender will approve a loan or offer a particular rate. The bigger benefit is often lender matching. A good broker can recognise which lenders are more likely to accept your income, property, deposit and credit profile. That can help you avoid unsuitable applications, delays and unnecessary credit enquiries.
How to Improve Your Chances of Getting a Better Home Loan Rate
Start by checking your credit report, existing debts and credit card limits. Save the strongest deposit you reasonably can, while keeping enough money for purchase costs and an emergency buffer. Keep your account conduct clean. Pay bills and loans on time. Avoid taking on new personal debt just before applying for a mortgage.
Prepare clear income documents, especially if you are self-employed or earn bonuses, commission or overtime. The easier your income is to verify, the easier it may be for a lender to assess your position. Compare more than the headline rate. Review the comparison rate, fees, offset account, redraw conditions, repayment flexibility and total cost. Most importantly, compare home loans based on your own financial profile. Your colleague’s great deal, your cousin’s bank and the rate from an online advertisement may not be the right answer for you.
Frequently Asked Questions About Different Home Loan Rates
Why is my home loan rate higher than someone else’s?
Your rate may be higher because of your LVR, loan purpose, repayment type, credit history, product, lender or available discount. Your income is only one part of the assessment.
What determines your home loan interest rate in Australia?
Home loan rates can be influenced by the lender’s funding costs and pricing strategy, as well as your deposit, LVR, loan type, property use, repayment method and overall risk profile.
What credit score do you need for the best home loan rates?
There is no single credit score that guarantees the best mortgage rate across all Australian lenders. Each lender uses its own credit rules. A strong repayment history and clean credit file can improve your lender and product options.
Does a bigger deposit give you a lower mortgage rate?
It can. A larger deposit produces a lower LVR, which may unlock better home loan rates, reduce costs and increase the number of suitable lenders.
Why are refinance home loan rates sometimes lower than existing customer rates?
Lenders may use special offers to attract new customers. Existing borrowers may remain on older pricing unless they request a review or refinance their home loan.
Which bank has the best home loan rate?
There is no single bank that is best for every borrower. CommBank, Westpac, ANZ, NAB, Macquarie, ING and other lenders have different rates, fees and eligibility rules. The best home loan is the competitive option that suits your circumstances and provides the features you need.
Your Salary Is Only the Starting Point
The real reason two people with the same income get different home loan rates is that no two mortgage applications are identical. Deposit size, credit history, debts, living costs, employment, property type, loan purpose and negotiation can all change the outcome. A small difference in your interest rate can become a large difference in repayments over time.
Before accepting the first offer, see what your financial profile could qualify for. Compare home loan rates through RateBuster or explore our mortgage calculators to estimate your repayments, borrowing power and potential refinancing savings. A few minutes of comparison today could lead to years of relief—and far less money disappearing into interest.
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