Home loans for self-employed borrowers
Being self-employed does not make you a difficult borrower. It makes you a borrower whose income takes more work to evidence — and the difference between lenders on how they read that evidence is enormous.
Last reviewed
Why self-employed applications get declined
Rarely because the person cannot afford the loan. Usually because of one of these:
- The application went to a lender whose policy does not suit the structure
- Legitimate add-backs were not identified or not argued
- Financials were out of date, or the wrong ones were provided
- The business structure was not explained in a way the assessor could follow
- One poor year was taken at face value without context
All of these are fixable. The last two are largely about presentation.
What lenders are actually looking for
The underlying question is the same as for any borrower: is this income reliable and likely to continue? Self-employment just makes that harder to answer from a payslip.
Standard evidence:
- Two years of personal tax returns and notices of assessment
- Two years of business financials — profit and loss, balance sheet
- Business tax returns, where you trade through a company or trust
- BAS statements, often the most recent four quarters
- Business bank statements
- ABN and GST registration, with the period of registration
Not every lender wants all of it, and some will work with substantially less.
Add-backs — where applications are won
Your taxable income is deliberately minimised. Your actual capacity to service a loan is usually higher. Add-backs bridge that gap.
Commonly considered:
| Add-back | Why it counts |
|---|---|
| Depreciation | A non-cash deduction. It reduces taxable income without reducing money in your pocket |
| Additional superannuation | Voluntary contributions above the compulsory rate are discretionary |
| One-off expenses | Genuinely non-recurring costs, where they can be evidenced |
| Interest on debts being refinanced | If the debt is being paid out by this loan, its interest is not an ongoing cost |
| Net profit before tax | Where you trade through a company and profit is retained rather than drawn |
| Motor vehicle and some other deductions | Treated variably — depends heavily on the lender |
Which of these a lender accepts differs substantially. Two lenders looking at identical financials can arrive at assessable incomes tens of thousands of dollars apart.
This is the part worth a conversation. Working out which lender reads your financials most favourably is specific to your returns, not something a calculator can answer. Book a free chat.
Company and trust structures
If you trade through a company or a trust, the assessment gets more involved. Lenders will want to understand:
- The shareholding or beneficiary structure, and what proportion is yours
- Retained profits and whether they can be counted
- Director loans and how they are treated
- Distributions, and whether they are consistent
- Any guarantees you have given for business debt
None of this is a barrier. It simply means the file needs to be assembled properly, with the structure explained rather than left for an assessor to infer.
Low-doc and alt-doc lending
Where full financials genuinely are not available — you are newly self-employed, or the most recent return is not yet lodged — some lenders assess on alternative evidence:
- BAS statements for a recent period
- Business bank statements, typically six to twelve months
- An accountant’s declaration confirming your income
The trade-offs are real: higher rates, typically lower maximum loan-to-value ratios, and often lenders mortgage insurance requirements that kick in earlier.
These are legitimate products for genuine circumstances. They are not a way around affordability, and a broker suggesting one before exhausting full-doc options is not serving you well.
If you have been trading under two years
The two-year benchmark is a convention, not a law. Options exist:
- Some lenders accept one year of financials where the business is established and the trend is sound
- Continuity of industry matters. If you were employed in the same field for years and moved to contracting or your own business, some lenders will consider the whole period rather than only the time since your ABN was registered
- Alt-doc, using BAS and bank statements
The key point: being told no by one lender is that lender’s policy, not a verdict on you.
Preparing well
The strongest thing you can do is make the file easy to say yes to.
- Lodge on time. Overdue returns are the most common avoidable blocker. Lenders want current financials, and “my accountant has not finished them” is not a workaround
- Keep business and personal separate. Mixed accounts make income impossible to verify cleanly and make you look disorganised
- Talk to your accountant before you apply, not after. There is often a real tension between minimising tax and demonstrating income. If a purchase is a year or two away, that tension is worth planning around deliberately
- Do not take on new business debt in the months before applying
- Be ready to explain anything unusual — a bad year, a large one-off expense, a structural change. An explanation supported by evidence is generally accepted. An unexplained anomaly generally is not
What we do
The work on a self-employed file is mostly in three places:
- Reading the financials properly and identifying every add-back that can legitimately be claimed
- Matching you to a lender whose policy fits your structure, your trading history and your industry — this is where the biggest differences are
- Presenting the file so an assessor can follow the story without having to guess
That last one matters more than people expect. A well-prepared self-employed application and a poorly-prepared one, for the same person with the same numbers, do not get the same answer.
Common questions
How long do I need to have been self-employed?
Two years of trading with two years of financials is the conventional benchmark, but it is not universal. Some lenders will consider one year of financials, and some will consider a shorter period where you moved into self-employment in the same field you were previously employed in. If you have been trading eighteen months and been told no, that is one lender’s policy rather than the market’s answer.
Lenders only look at my taxable income. Can anything be added back?
Usually yes. Lenders commonly add back items that reduce taxable income without reducing your actual cash position — depreciation, one-off expenses, additional superannuation contributions above the compulsory rate, interest on debts being refinanced, and sometimes retained profits in a company structure. Which add-backs are accepted varies significantly between lenders, and this is often where a self-employed application is won or lost.
What is a low-doc or alt-doc loan?
A loan assessed using alternative income evidence — such as BAS statements, business bank statements, or an accountant’s declaration — rather than full tax returns. They exist for genuine cases where full financials are not available, typically at a higher rate and often with a lower maximum loan-to-value ratio. They are a legitimate tool, not a shortcut around affordability.
My last financial year was unusually poor. Does that ruin my chances?
Not necessarily. Lenders differ in how they treat a declining year — some average the two years, some take the lower, and some will consider an explanation supported by evidence where the decline was clearly one-off. Where the most recent year is the stronger one, some lenders will use it. The order in which lenders are approached genuinely matters here.
I am a contractor on a long-term contract. Am I self-employed?
It depends on the structure. If you invoice through your own ABN or company you will generally be assessed as self-employed. But some lenders have specific contractor policies that treat long-term contractors in certain industries much closer to PAYG employees, which can be considerably more favourable. Worth checking rather than assuming.
Have a question about your situation?
A first conversation costs nothing and commits you to nothing. Even if the answer is "wait six months", you will know why — and what to do in the meantime.