Guide - Self-Employed Home Loans
Self-Employed Home Loans: Approved on the Income You Actually Earn
If you work for yourself, your bank often reads your income as a problem to be solved rather than the result of a business you have built. We are former bankers. We know exactly how each lender assesses self-employed income, which figures they count, and which lender will say yes when another says no.
- Founded by two former bankers
- Commercial and business finance specialists
- Perth based, working Australia wide
- MFAA member
Quick facts: self-employed home loans
| Standard documentation | Usually 2 years of tax returns + financials |
| One-year option | Available with some lenders for established businesses |
| Alt-doc / low-doc | BAS, bank statements or accountant declaration instead of full returns |
| Deposit (full doc) | From 20% to avoid LMI, less with LMI, same as any borrower |
| Rates (full doc) | Same as PAYG when you fit a mainstream lender's policy |
| Cost to use a broker | $0. Brokers are paid by the lender at settlement. |
Being self-employed is not the problem. The wrong lender is
Self-employed borrowers are not riskier than salaried borrowers. In many cases the opposite is true. But a self-employed income is more work for a lender to assess, and lenders differ enormously in how they do it. One lender will add your depreciation and one-off costs back to your income and assess you as a strong applicant. Another, looking at the same tax return, will take your headline taxable figure at face value and decline you.
That is why a profitable business owner can be knocked back by their own bank while another lender would have approved the same person comfortably. The income did not change. The reading of it did. Most self-employed declines are not a genuine serviceability failure. They are a mismatch between your structure and the lender's credit policy.
We spent years inside the banks deciding these applications. We know which lenders are generous on add-backs, which accept one year of returns, which understand trust and company structures, and which to avoid for a director who pays themselves in a particular way. That knowledge is the difference between an approval and a credit enquiry on your file for nothing.
How lenders actually assess self-employed income
When you understand what a credit assessor is looking for, the whole process stops feeling like a black box. Here is what is going on behind the decision.
They start with your taxable income
For most full-documentation applications, the lender begins with the net profit on your tax returns, usually across the last two years. The most recent year is generally weighted most heavily, because it reflects where the business is now. A business that is growing reads very differently to one that is going backwards, even at the same average.
Then they add back the non-cash costs
This is where applications are won or lost. Depreciation, additional super contributions, one-off expenses, interest on debt being refinanced, and certain other items are added back to your income because they are not true ongoing cash costs. Lenders differ on which add-backs they accept. The right lender can assess you on materially higher income than your tax return suggests.
They test how the income is drawn
Whether you operate as a sole trader, a company, or through a trust changes how a lender treats retained profits, director wages, and distributions. Some lenders only count what you have paid yourself. Others will recognise profits retained in the company. Getting this wrong can hide a large part of your real income from the assessment.
They check consistency and trend
Lenders want to see income that is stable or growing, not a single strong year. A large jump in the latest year may be averaged down or questioned. A dip may need explanation. How you present a one-off event, a COVID-affected year, or a deliberate investment in growth can change how the figures are read.
Your documentation options
There is rarely only one way to get a self-employed application across the line. The right documentation path depends on how long you have traded, whether your latest returns are lodged, and how your income presents.
| Path | What it needs | Best for |
|---|---|---|
| Full doc, two years | Two years of tax returns and financial statements | Established businesses with lodged returns. Best rates, widest lender choice. |
| Full doc, one year | One year of returns plus supporting evidence | Newer but strong businesses, or where the latest year tells the real story. |
| Alt-doc / low-doc | BAS, business bank statements, or accountant declaration | Returns not yet lodged, or recently established. Larger deposit usually required. |
Alternative-documentation loans are a legitimate, useful tool, not a last resort. They suit a business between tax lodgements or one that is too new for two years of returns. They usually need a larger deposit and may carry a slightly higher rate, and in many cases they can be refinanced to a standard rate later once the financials support it. The skill is using each path where it genuinely fits, with a plan for what comes next.
The add-back point most people miss: minimising your taxable income is good tax planning, but it can quietly shrink your borrowing capacity. Before you assume you cannot borrow what you need, have the right lender read your figures with the correct add-backs applied. The number a specific lender will actually lend against is often well above your headline taxable income.
The most common reasons self-employed borrowers get declined
Almost all of these are avoidable with the right preparation and the right lender.
- Sent to a lender whose policy does not fit. The single biggest cause. A director or trust structure sent to a lender that does not handle it well reads as a weak application no matter how strong the business is.
- Add-backs left on the table. The application uses the headline taxable figure without adding back depreciation and one-off costs, understating real income.
- The latest year ignored. A growing business assessed on a two-year average rather than its current, stronger position.
- Multiple direct applications. Applying to several banks in turn, collecting a credit enquiry each time, which weakens the file before anyone has approved it.
- Returns not yet lodged. Treated as a dead end, when an alt-doc path or a one-year option would have worked.
- Income presented without context. A one-off dip or an unusual year left unexplained, when a short note from your accountant would have resolved it.
Why self-employed borrowers should use a broker, and why an ex-banker matters
For any borrower, a broker compares lenders so you do not have to apply to each one in turn. For a self-employed borrower, that comparison is the entire difference between approval and decline, because the same income produces wildly different outcomes depending on whose policy reads it.
One application means one credit enquiry. We assess your income against the policies of the lenders on our panel before anything is lodged, then submit to the one most likely to approve you on the best terms. You avoid the trail of enquiries that comes from going bank to bank.
The reason our background matters here specifically: we used to sit on the other side of these decisions. We know how a credit assessor reads a set of financials, what makes them comfortable, and what makes them nervous. We know which lenders genuinely understand business income and which only say they do. That is not something you learn from a rate comparison website. It is what gets a self-employed application approved.
There is no cost to you. Brokers are paid by the lender at settlement, disclosed to you in writing before any application is submitted, under the Best Interests Duty that applies to all Australian mortgage brokers. The rate you receive is the same rate the lender offers its direct customers.
We work alongside your accountant, not around them. Your accountant has built your tax position and knows your structure. We know how each lender reads it. Together we present your income the way a lender needs to see it. We never give tax advice, that stays with your accountant. We make sure the picture they have built is read correctly by the right lender.
What the process looks like
A broker-managed self-employed application involves less back-and-forth than going direct, because the lender is chosen to fit you before anything is lodged.
| Stage | Who handles it | Typical timeline |
|---|---|---|
| Review your income and structure | Your broker (with your accountant where useful) | Same day |
| Match to the right lender and document path | Your broker | 1-2 days |
| Document collection and packaging | You provide, broker packages | 2-5 days |
| Application lodged | Your broker | Day 1-3 after documents in |
| Credit assessment and valuation | Lender | 5-10 business days |
| Formal approval and settlement | Lender, coordinated by your broker | Total: 3-6 weeks typical |
Frequently asked questions
Can I get a home loan if I am self-employed?
Yes. Self-employed borrowers get home loans every day. The difference is in how your income is assessed, not whether you qualify. Lenders read self-employed income differently to a PAYG salary, and they vary widely in how they treat company profits, add-backs, and how recent your figures need to be. The most common reason a strong self-employed applicant gets declined is being sent to a lender whose policy does not suit their structure, not a genuine inability to service the loan. Matching your situation to the right lender from the start is the whole game.
How many years of financials do I need to be self-employed for a home loan?
Most lenders want two years of tax returns and financial statements, with the most recent year usually weighted most heavily. Some lenders accept one year of returns if your business is established and the figures are strong. A smaller group offer alternative documentation (alt-doc or low-doc) options for borrowers who have been trading for less time or whose latest returns are not yet lodged, using business activity statements, an accountant's declaration, or business bank statements instead. The right path depends on how long you have traded and how your income presents.
What are add-backs and why do they matter?
Add-backs are expenses in your tax return that a lender will add back to your taxable income because they are not true ongoing cash costs. Common examples include depreciation, one-off expenses, additional superannuation contributions, interest on debts being refinanced, and a company car. Many self-employed borrowers structure their affairs to minimise taxable income, which is sensible for tax but can understate your real borrowing capacity. A lender that recognises the right add-backs can assess you on materially higher income than your headline taxable figure. Knowing which add-backs each lender accepts is one of the biggest levers in a self-employed application.
Can I use low-doc or alt-doc to buy a home when self-employed?
Yes, alternative-documentation loans exist for self-employed borrowers who cannot provide two years of lodged tax returns. Instead of full financials, the lender relies on documents such as business activity statements, business bank statements, or a signed accountant's declaration of income. These loans usually require a larger deposit (often 20% or more) and may carry a slightly higher rate to reflect the reduced verification. They are a legitimate and useful option for newer businesses or borrowers between tax lodgements, not a last resort. The key is using them where they genuinely fit, with a clear path to refinancing to a standard rate later if appropriate.
Do self-employed home loans have higher interest rates?
Not if you qualify on a full-documentation basis. A self-employed borrower with two years of returns who fits a mainstream lender's policy gets the same rates as a PAYG borrower. Higher rates only come into play with alternative-documentation loans, where the reduced income verification is priced in. Even then, the gap is often smaller than people expect, and the loan can usually be refinanced to a standard rate once you have the financials to support it. The goal is to get you onto the best-fit product available for your situation now, with a plan to improve it over time.
How much deposit do I need as a self-employed buyer?
The deposit requirement is driven by the loan-to-value ratio, not by being self-employed. On a full-documentation loan you can borrow up to 80% of the property value without lenders mortgage insurance, and higher with LMI, the same as any borrower. Alternative-documentation loans typically require a larger deposit, often 20% or more, because of the reduced income verification. A larger deposit also widens the range of lenders willing to consider your application, which can matter for self-employed borrowers with less conventional income.
Why do self-employed borrowers get declined when their business is doing well?
Usually because the application was sent to the wrong lender, or the income was presented in a way that did not show the lender what it needed to see. A profitable business can still read as a weak application if depreciation and one-off costs are not added back, if the most recent year is ignored in favour of an older one, or if the lender's policy simply does not suit company directors or trust structures. The numbers can be strong and the application still fails on policy. This is the single most avoidable reason self-employed borrowers get knocked back, and it is exactly what a broker who understands lender credit policy is there to prevent.
Should I use a broker or go direct to my bank when self-employed?
Going direct means you get one lender's reading of your income, against one set of credit policies. If your bank's policy does not suit your structure, you are declined, and that enquiry sits on your credit file. A broker assesses your income against many lenders' policies before any application is lodged, then submits to the one most likely to approve you on the best terms. For self-employed borrowers, whose income two lenders can assess very differently, this matters more than for any other type of applicant. Brokers are paid by the lender at settlement, so there is no cost to you, and the rate is the same as going direct.
Do you work with my accountant on a self-employed application?
Yes, and the best applications are built that way. Your accountant knows your business structure, your add-backs, and your tax position. We know how each lender reads those figures. Working together, we can present your income in the way a lender needs to see it, and your accountant can provide declarations or confirmations where a lender requires them. We never give tax advice, that is your accountant's role. We make sure the financial picture they have built is read correctly by the right lender.
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