You can get a home loan with a default on your credit file, but the lender and the price depend on the default’s size, age and whether it is paid. A small paid default more than a year or two old, with a clear explanation, can suit some mainstream lenders. Recent, unpaid or several defaults usually mean a specialist lender first.

Defaults at a glance
Question Answer
When can a default be listed? When at least $150 is 60 days or more overdue, after the required notices
How long does it stay? 5 years from the listing
Does paying it remove it? No, it is updated to show it was paid
Can it be removed early? Only if it was listed incorrectly

How do lenders read a default?

  • Paid or unpaid: unpaid defaults are much harder; most lenders want them paid before settlement.
  • Age: the older it is, the more lenders will consider it.
  • Size and type: a small utility or phone default reads differently from a defaulted loan.
  • Number: one default with a reason is very different from a pattern.
  • Since then: clean repayments since the default carry real weight.

What is a paid default worth?

It stays on your file for the full five years, but lenders treat it as resolved. Combined with a short explanation, it often moves you from a specialist lender to a mainstream one, especially once it is more than a year old. The worked example of a first home buyer with a default shows how one was handled.

What if the default is wrong?

You can ask the credit provider and the credit reporting bureau to correct it, free of charge. If the required notices were not sent, or the amount or dates are wrong, it may be removed. If the provider will not fix it, you can complain to the Australian Financial Complaints Authority.

What will a specialist loan cost?

More than a standard loan, often by one to several percentage points depending on the default. On a $500,000 loan over 30 years, 6% costs about $2,998 a month and an illustrative 7.5% about $3,496, a gap of $498. That gap is why the plan matters: after 12 to 24 months of on-time repayments, many borrowers refinance to a standard rate; see refinancing with bad credit.

What should you do before applying?

  1. Get your free credit reports and check every listing; see the credit score guide.
  2. Pay the default if it is unpaid.
  3. Write a short explanation using the letter of explanation template.
  4. Avoid several applications; each adds an enquiry for five years.

Questions people ask

Can I get a home loan with a default?

Yes. Small paid defaults with a reason can suit mainstream lenders; others usually mean a specialist lender first.

How can a mortgage broker help with a default?

By reading your credit file before any application, matching the default’s age, size and whether it is paid to the lenders whose policy accepts it, and then applying once, so declined applications do not add more enquiries to your file.

How long does a default stay on my credit file?

Five years, whether or not it is paid.

Can I buy my first home with a default?

Often, yes, though scheme lenders apply their own credit rules. See bad credit home loans.

Charles Touma reads your credit file first and only applies where a default fits the lender’s policy, with a plan to move to a standard rate later. A free 30-minute call covers what is on your file. General information only, not credit advice; lender policies change, and your own circumstances decide what suits you.

Sources: OAIC, what stays on a credit report; OAIC, repayment history and defaults, checked 20 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.