Self-employed borrowers can absolutely get a home loan — but the process is more involved than for PAYG employees. Lenders cannot rely on a payslip, so they require additional documentation to verify your income is stable and sufficient to service the debt.
Most mainstream lenders require a minimum of two consecutive years of personal tax returns and Notices of Assessment (NOA) from the ATO. They also want two years of business tax returns and financial statements — profit and loss and balance sheet — if you operate through a company or trust.
Lenders take the lower of the two years' taxable income, or average both years if income has been rising. If your income dropped significantly in year two, expect the lender to use the lower figure or decline. The averaging policy varies by lender, which is why broker comparison matters.
Tip: If your income has grown substantially over two years, some lenders will use a year-two-only figure or weight toward the most recent year. This can meaningfully increase your borrowing capacity compared to a strict average.
Most lenders require your ABN to be at least two years old, matching the income history requirement. A handful of specialist lenders will consider 12-month ABNs with a strong income track record. If your annual turnover exceeds $75,000, you must be registered for GST — lenders verify this, and non-registration where registration is required raises questions about the accuracy of your financials.
For sole traders, lenders use your taxable net profit from the personal tax return. For companies, they typically use director salary plus dividends, and may add back certain non-cash deductions like depreciation. For trusts, the assessable income is your share of the trust distribution.
Add-backs are an important part of the process. Lenders add back non-cash expenses such as depreciation, amortisation of goodwill, and interest on business loans. These adjustments can improve your assessed income substantially depending on your business structure and capital expenditure.
Tax minimisation vs. borrowing power: Every legitimate deduction you claim reduces your taxable income — and therefore the income a lender will assess. There is no workaround: the ATO income figure is the lender income figure. If your accountant has minimised your tax aggressively, your borrowing capacity may be lower than your actual cash flow suggests.
If you cannot provide two years of full financials — because your business is newer or you have changed structures — low-doc and alt-doc loans offer an alternative path. These loans use alternative verification:
The trade-off is higher interest rates (typically 0.5–1.5% above standard), lower maximum LVRs (usually capped at 80%), and higher fees. Specialist lenders such as Pepper Money, Liberty Financial, and La Trobe Financial are the primary providers.
The Big Four banks have strict two-year policies and limited exceptions. More flexible options for self-employed borrowers include:
A mortgage broker who specialises in self-employed lending will know which lenders have the most favourable policies for your specific business structure. This is genuinely worth the engagement — policy differences between lenders can add or remove hundreds of thousands of dollars of borrowing capacity.
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