Getting a home loan when you're self-employed: what lenders actually want to see

Yes, you can get a home loan when you're self-employed in Australia. Most mainstream lenders want to see at least one to two years of self-employment, with tax returns and business activity statements (BAS) showing consistent income. Specialist lenders can sometimes lend with less history through low-doc and alt-doc loans, often with slightly higher rates. Lenders assess your taxable income (not your turnover), your business stability, your credit history, and your existing debts. The most common reason self-employed applications fail isn't the income, it's the paperwork. The right preparation, with the right broker, makes the difference between a smooth approval and a frustrating decline.

This guide walks you through what lenders actually want to see, the documents you'll need, and the most common mistakes that catch self-employed borrowers off guard.

I work with a lot of self-employed clients. Sole traders. Tradies. Consultants. Cafe owners. Freelancers. Business owners with twenty staff. The common thread is that most of them arrive having been told, by a banker or a friend or their own internal voice, that getting a home loan while self-employed is somewhere between difficult and impossible.

It is genuinely not. But it is different.

PAYG borrowers walk into a bank and show three payslips. Self-employed borrowers carry an entire business with them, and lenders look at the whole picture, not just one income figure. That's not because lenders distrust the self-employed. It's because there's no employer doing the documentation for you. You have to bring it yourself.

Here's exactly what that looks like.

What income do lenders actually use for a self-employed home loan?

Your taxable income, not your turnover.

This catches people out. You can run a business turning over $400,000 a year and still be assessed on a personal taxable income of $75,000 because that's what's left after your business expenses, deductions, and salary structure.

For sole traders, lenders generally use the net profit from your tax return. For company directors, they use the salary plus any dividends or director's drawings you've taken. For trust structures, they use distributions to you personally.

Many lenders will allow you to "add back" certain expenses that are paid through the business but are not true business costs (things like interest on debts being refinanced, one-off non-recurring expenses, director's superannuation above the statutory guarantee, and in some cases depreciation). Add-back policies vary significantly between lenders. Some accept depreciation in full, some accept only a portion, and some don't accept it at all. Instant asset write-offs are usually treated differently from standard depreciation. Knowing which add-backs each lender accepts (and how) can lift your assessable income significantly. This is one of the most valuable things a good mortgage broker does for self-employed clients, and one of the most often missed by big-bank assessors.

How long do I need to be self-employed before I can apply?

For most mainstream lenders, one to two full financial years of self-employment, evidenced by tax returns lodged with the ATO.

Some specialist lenders will lend with as little as six months of trading, particularly if you've moved from PAYG into the same industry. For example, an electrician who worked for an electrical company for ten years and started their own business six months ago can often qualify earlier than someone changing industries entirely.

There are also low-doc and alt-doc options for self-employed borrowers without two years of tax returns. These tend to come with slightly higher rates and may require larger deposits, but they exist, and for many newly self-employed borrowers, they're the right starting point.

The shortest version: don't assume you can't apply just because you only started your business last year. The right lender for you depends on how new your business is.

What documents will I need?

The honest answer: more than a PAYG applicant. Be ready for:

For sole traders:

• Last 1 to 2 years of personal tax returns
• Last 1 to 2 years of Notices of Assessment from the ATO
• Last 4 quarters of BAS statements
• Most recent business bank statements (3 to 6 months)
• Business registration / ABN evidence

For company directors:

• Last 1 to 2 years of personal tax returns and Notices of Assessment
• Last 1 to 2 years of company financial statements (profit and loss, balance sheet)
• Last 1 to 2 years of company tax returns
• Last 4 quarters of BAS statements
• Last 3 to 6 months of business and personal bank statements
• Confirmation of your shareholding and director status

For trust structures:

• Same as company directors, plus trust deed and any distribution evidence

Across all structures, also expect to provide:

• ID and address verification
• Bank statements for all personal accounts
• Existing debt statements (credit cards, HECS, car loans, business loans)
• Evidence of deposit and savings history

If you keep clean books and an organised cloud folder of financial documents, the application is significantly faster. If your records are scattered, expect to spend a week or two getting them together before any meaningful application can happen.

How do lenders assess business stability?

Lenders look at three things:

1. Length of trading history — generally one to two years minimum, longer is better
2. Income consistency — they prefer year-on-year stability or growth
3. Industry and structure — some industries are seen as more stable than others, and some structures (sole trader vs company vs trust) are assessed differently

If your income has dropped year-on-year (which can happen for many legitimate reasons, like COVID years, an industry shift, or a deliberate strategic decision), most lenders will use the lower of the two years. Some will average the two. Very few will use the higher year, even if it's the more recent one.

If your income has been growing steadily, some lenders will accept the most recent year's income as their assessment basis. This is a significant advantage and one of the reasons it's worth working with a broker who knows lender-specific policies.

What about my credit history?

Standard rules apply. Lenders will check your credit file for defaults, late repayments, and previous credit applications. Self-employed borrowers don't get special treatment here, but there are a few things worth knowing:

• Business debts in your name (or personally guaranteed) appear on your file and affect your borrowing capacity Late tax payments can show up on credit reports through ATO debt arrangements
• ATO debt, even on a payment plan, is something many lenders will consider a serious issue. Address it before applying if you can

Pull your credit report for free from Equifax, Experian, or illion before you apply. Knowing what's on your file is far cheaper than discovering it during assessment.

What deposit will I need?

Standard deposit rules apply:

• 5 percent with the Australian Government 5% Deposit Scheme if you qualify (eligibility for self-employed varies by lender)
• 10 to 20 percent for most standard loans
• 20 percent to avoid Lenders Mortgage Insurance
• 20 to 30 percent for low-doc or alt-doc loans, sometimes more depending on lender

Self-employed borrowers using specialist or alt-doc lenders often need larger deposits as a trade-off for the flexibility in income documentation.

Settlement funds, savings, gifts, and proceeds from selling property can all be used as deposit, but each needs to be properly documented. A mortgage broker will walk you through what each lender requires.

What are the most common mistakes self-employed borrowers make?

After years of working with self-employed clients, the same handful of mistakes come up repeatedly:

• Maximising tax deductions, then being surprised by low borrowing capacity. Yes, deductions reduce your tax bill. They also reduce the income lenders can use. There's a balance to strike, and your accountant and broker should talk to each other before tax time.
• Mixing personal and business finances. Lenders want to see clean, separable records. Mixed finances slow down approvals and sometimes cause declines.
• Not lodging tax returns on time. If you're behind on lodgements, most lenders won't proceed. Get current before applying.
• Applying with the wrong lender. Every lender has different policies on self-employed income. The wrong one will decline you for things the right one would have approved.
• Underestimating expenses or overestimating income on the application. Lenders compare what you tell them against your bank statements and tax returns. Discrepancies cause delays and declines.
• Not knowing what add-backs are available. Most self-employed applicants leave borrowing capacity on the table simply by not knowing how to present their income.

Should I go to my bank or a broker?

Honest answer: for self-employed borrowers, a mortgage broker is almost always the better starting point. Not because banks are bad, but because:

• Different lenders treat self-employed income very differently
• Specialist self-employed lenders often don't deal directly with the public
• A broker can match your specific business structure and trading history to the lender most likely to approve
• A broker who works with self-employed clients regularly knows what evidence helps and what doesn't

Your bank assesses you against their own policy. A broker compares your situation across 30 or 40 lenders and picks the right fit.

Frequently asked questions

Can I get a home loan if I've only been self-employed for one year?

In some cases, yes. Specialist lenders and alt-doc loans can sometimes proceed with as little as 6 to 12 months of self-employment, particularly if you've moved from PAYG into the same industry. Mainstream lenders generally require one to two full financial years of tax returns. A mortgage broker can identify which lenders match your trading history.

Do lenders use my business income or my personal income for a home loan?

Lenders use your personal taxable income, which is what's left after business expenses, deductions, and salary structure. For sole traders, this is the net profit on your tax return. For company directors and trust structures, it's the salary, drawings, or distributions you've personally received. Turnover on its own is not used for assessment.

What is a low-doc home loan?

A low-doc (low documentation) home loan is designed for self-employed borrowers who can't provide the full set of tax returns and financial statements required for a standard loan. Instead, you provide alternative documentation, such as BAS statements, accountant declarations, or business bank statements. Low-doc loans usually require a larger deposit and may come with slightly higher rates, but they're a valuable option for newly self-employed or non-standard borrowers.

Will having business debt affect my home loan application?

Yes. Business debts that you have personally guaranteed or that appear on your credit file (in your name) will count against your borrowing capacity. Debts held entirely in a separate company structure with no personal guarantee may not affect your assessment, but each lender treats this differently. A mortgage broker can advise on how your specific business debts will be assessed.

You're not at a disadvantage. You just have a different story to tell.

Self-employment doesn't make you a risky borrower. It makes you a borrower whose income takes more paperwork to evidence. That's all.

The self-employed clients I work with who land the best outcomes are the ones who treat their home loan application like a project rather than a phone call. They get their books in order. They talk to their accountant before tax time about the next twelve months. They keep clean personal and business records. They get advice early, not when they've found a property and need to move fast.

If you want to know what's realistic for your specific situation, the conversation is worth having early. A mortgage broker can run the numbers, identify the lenders that fit your structure, and tell you honestly whether you're ready to apply now or whether a few months of preparation would significantly improve your position.

If you want a private, free space to start understanding your financial position before you talk to anyone, that's exactly what Runa was built for. No sales pitch, no broker calls.

Sign up free at runaapp.com.au

If you'd like a confidential, no-obligation conversation about your self-employed home loan options, I'm here.

Book a confidential conversation at matildatreefinance.com.au

You may also find these helpful

• Low-doc and alt-doc home loans in Australia: what they are and who they're for
• How long do I need to be self-employed before I can get a home loan?
• Add-backs explained: how lenders actually calculate self-employed income
• Self-employed and separating: why your home loan story gets harder

Sources and references

This post is primarily based on Rielle's professional experience as a mortgage broker. The following sources are relevant to topics covered:

• ASIC Moneysmart on home loans: moneysmart.gov.au/home-loans
• Australian Taxation Office on self-employed income reporting: ato.gov.au/business
• APRA macroprudential guidance (serviceability buffer): apra.gov.au/macroprudential
• Australian Government 5% Deposit Scheme: firsthomebuyers.gov.au/australian-government-5-percent-deposit-scheme

This article is general information only and does not constitute financial, legal or tax advice. Please speak to a licensed financial adviser, solicitor and your superannuation fund about your specific circumstances.

Rielle Berglund is a mortgage broker and the founder of Matilda Tree Finance. She works with Australian women navigating major financial transitions, including separation, divorce, terminal illness and bereavement. She is also the creator of Runa, a free financial literacy app built for exactly this stage of life.

Book a confidential conversation with Rielle at matildatreefinance.com.au or start with Runa, free, at runaapp.com.au.