Being self-employed does not stop you getting a home loan. It changes what you have to prove, and it changes which lender you should be talking to.
The problem is rarely that you earn too little. It is that a business owner’s income arrives in a shape banks were not built to read: it moves year to year, sits partly inside a company or trust, and gets legitimately reduced by every deduction your accountant claims. A salaried applicant hands over two payslips. You hand over two years of accounts and hope the assessor reads them properly.
What a self-employed home loan actually is
In most cases it is an ordinary home loan. Same rates, same features, same lenders. What differs is the assessment: instead of payslips, the lender works your income out from tax returns, notices of assessment and business financials.
Where you cannot produce those, you move to a low doc loan, which accepts alternatives like an accountant’s declaration or twelve months of business bank statements. Low doc costs more and usually wants a bigger deposit, so it is a fallback rather than a starting point.
Who lends to the self-employed
Almost everyone will, but not on the same terms. The majors are the strictest and generally want two full years of returns. Second-tier and non-bank lenders are more flexible — some will assess on one year, some accept a shorter trading history, some read add-backs more generously.
That variation is the whole game. The same application can produce materially different borrowing limits at different lenders, which is why going to your own bank first and stopping there is the most expensive habit in self-employed lending.
Why approval is harder
- Income moves. Lenders usually take the lower of your last two years, or an average, rather than your best year.
- Deductions cut your assessable income. Minimising tax and maximising borrowing power are opposite goals, and the tax return the ATO likes is the one the bank likes least.
- Structures complicate it. Income sitting in a company or trust has to be traced to you, and not every assessor does that well.
- Trading history matters. Under two years narrows your options sharply, though it does not close them.
Add-backs, and why they matter
A good broker will add back expenses that reduced your taxable income but are not really money leaving your pocket — depreciation, one-off purchases, your own superannuation contributions above the minimum, interest on debts being refinanced. Add-backs regularly move a borrowing limit by six figures, and they are the single biggest reason two lenders can look at identical financials and reach different answers.
“One of the biggest misconceptions among self-employed borrowers is that having a profitable business automatically guarantees home loan approval. Lenders are looking for consistency, well-prepared financial records and evidence that your income is sustainable over the long term. The stronger your documentation, the smoother the approval process is likely to be.”
Mary Nebotakis
Mortgage & Property Finance Specialist | Natloans
“Low doc loans are a perfect solution for borrowers whose currently quarterly income figures do not accurately depict their overall situation, this is where an accountant that understands your situation can assist with a signed declaration to help get your loan over the line”
Mansour Soltani, Soren Financial
What you will be asked for
- Two years of personal tax returns and notices of assessment
- Two years of business financials — profit and loss, balance sheet
- Six to twelve months of business bank statements
- Your ABN and GST registration details
- An accountant’s letter, on some applications
- Evidence of your deposit and genuine savings
- Details of every existing debt, business and personal
Outstanding tax returns are the most common blocker. Most lenders will not proceed without them lodged, and getting them up to date is usually the first job before any application.
What lenders are assessing
- Income, after add-backs. Usually the lower or the average of two years.
- Trading history. Two years is standard, one year is possible with the right lender, under a year is hard.
- Deposit and loan-to-value ratio. Twenty per cent avoids Lenders Mortgage Insurance. Self-employed applicants with a smaller deposit face more scrutiny, not just more cost.
- Credit history, personal and business.
- Serviceability at a buffer. Lenders test you at roughly three percentage points above the actual rate. With the cash rate at 4.35% as at August 2026, that buffer is doing real work.
Costs and rates
A full-documentation self-employed loan is normally priced the same as any other loan. Low doc carries a premium, often meaningfully so, plus a larger deposit requirement.
The usual costs apply either way: application and valuation fees, LMI under a 20% deposit, ongoing account fees, and break costs on a fixed loan. Our guide to fixed versus variable covers which structure suits an income that moves.
Do you need a broker?
For a salaried borrower a broker is useful. For a self-employed borrower it is close to essential, and for one reason: lender selection. Knowing which lender reads trust income properly, which accepts one year of returns, and which allows the add-backs your accountant has claimed is not something you can find on a comparison site.
A broker also presents the file. A self-employed application that arrives with the add-backs already calculated and explained is assessed very differently from the same numbers submitted raw. Compare brokers in Sydney, Melbourne or Brisbane, or read broker versus bank.
How to improve your chances
- Lodge every outstanding return. Nothing moves until this is done.
- Talk to your accountant a year out. There is a real tension between minimising tax and maximising borrowing power, and it is worth deciding deliberately which one this year is for. Accountants who work with borrowers understand the trade.
- Clear consumer debt. Credit cards count at their limit, not their balance. Closing an unused card often does more for your borrowing power than anything else available to you.
- Keep business and personal accounts separate. Mixed accounts make an assessor’s job harder and their answer more conservative.
- Save a bigger deposit. It removes LMI and reduces how hard the file is scrutinised.
- Get pre-approval before you shop so you know your real number.
- Consider a guarantor if family support is available — see the requirements first.
Mistakes that cost people approvals
- Applying to several lenders at once. Each one marks your credit file and a cluster reads badly.
- Going straight to your own bank and accepting its answer as the market’s answer.
- Claiming every possible deduction in the year before applying.
- Not knowing your own numbers. If you cannot explain a dip in last year’s profit, the assessor will assume the worst.
- Leaving a tax return unlodged and hoping it will not come up.
FAQs
How long do I need to be self-employed to get a home loan?
Two years of returns is the standard. Some lenders will work with one year, and a few will consider less with a strong deposit and a related work history.
Do I pay a higher rate because I am self-employed?
Not on a full-documentation loan. Low doc loans do carry a premium because the lender has less to verify.
What if my tax returns are not up to date?
Lodge them. Almost no lender will proceed without them, and it is the first thing to fix.
Can I get approved with one year of financials?
Yes, with the right lender. It narrows your options and usually wants a larger deposit and a clean credit file.
Why is my borrowing power lower than my income suggests?
Because lenders assess your taxable income after deductions, not your turnover, and they test you at a rate around three points above the real one. Add-backs recover some of the gap.
Is a low doc loan my only option?
Rarely. Most self-employed borrowers with lodged returns qualify for a normal loan. Low doc is for people who genuinely cannot produce standard evidence.
Mansour Soltani
Financial Services Expert
With over two decades of experience in Australia’s real estate sector, Mansour has built a career specialising in the acquisition and sale of investment and commercial properties, spanning major metropolitan hubs and regional areas. As the founder and owner of a finance brokerage firm, he manages a loan portfolio exceeding $250 million while serving a broad range of clients nationwide.
A frequent contributor to money.com.au, Mansour has developed a deep understanding of diverse investment strategies, enabling him to provide valuable, well-informed perspectives on market trends and opportunities.