This article contains general information only and does not constitute personal financial advice. Please consider your own circumstances or speak with a qualified mortgage broker before making any decisions.
Starting your own business is an exciting milestone, but it also comes with plenty of questions, especially if you’re planning to buy a home.
One of the most common questions we hear is:
Can I still get a home loan if I’m self-employed?
The short answer is yes.
Being self-employed doesn’t automatically make it harder to qualify for a home loan. The main difference is that banks assess your income differently to someone earning a regular PAYG salary. Instead of relying on payslips, they want to understand how your business performs over time and whether your income is sustainable.
The good news is that there are more options available than people realise. While many lenders follow a fairly standard assessment process, others have specialist policies that may allow eligible self-employed borrowers to purchase much sooner than expected.
In this article, we’ll explain how lenders assess self-employed income, what documents you’ll typically need, and some lending policies that business owners don’t know exist.
What do I need to get a home loan if I’m self-employed?
The exact requirements vary between lenders, but most will generally want to see:
- At least two years of lodged tax returns and financials for sole trader, company & trust structures where applicable
- An active ABN, ideally registered for at least 18 months to two years
- Tax returns that have been lodged with the ATO, not simply prepared by your accountant
- A profitable business with income that appears sustainable
However, there are exceptions. Some lenders have specialist policies that may allow eligible borrowers to qualify with as little as one year’s financials or, in certain circumstances, six months of trading.
The key isn’t simply how long you’ve been self-employed. It’s about matching your circumstances with a lender whose policy best aligns with your business. Where a more flexible lending policy is used, it’s important to ensure there is a clear and realistic exit strategy that aligns with your business plan, so you’re not locked into a single lender over the long term.
How do banks assess self-employed income?
Unlike PAYG employees, self-employed borrowers don’t usually have regular payslips for lenders to verify.
Instead, lenders generally assess your income using your two most recent financial years of tax returns and financial statements.
Depending on your business structure, they may consider director’s wages, business profits, trust distributions and, in some cases, certain non-cash expenses such as depreciation and interest that can be added back to improve your assessable income. Every lender has different policies regarding what income and add-backs they will accept.
One thing that surprises many business owners is that lenders are looking for consistency, not simply the highest income.
If your income has steadily increased over the past two years, many lenders will average both years together. However, if your latest financial year is lower than the previous one, many lenders will assess your borrowing capacity using the lower figure instead.
| Scenario | Year 1 | Year 2 | Income Assessed |
| Steady growth | $90,000 | $110,000 | Average: $100,000 |
| Strong year followed by a weaker year | $130,000 | $95,000 | Lower year: $95,000 |
One exceptional year of income does not automatically increase your borrowing capacity with most lenders. They are looking for evidence that your income is sustainable over the long term, rather than the result of a single standout year.
That said, some lenders now accept just one year’s financial statements or tax returns. This can be particularly beneficial if your business is growing and your latest financial year is significantly stronger than previous years.
Even if your latest tax return has not yet been lodged, you may not need to wait. Some lenders are prepared to assess your most recently completed financial year together with recent Business Activity Statements (BAS) and other supporting financial information to demonstrate that your gross revenue has remained strong and consistent for company/trust structures.
Can I get a home loan if I pay myself a wage but don’t show much profit?
This is a question that comes up regularly when we speak with business owners.
Many company directors choose to retain profits within their business for tax or growth purposes while paying themselves a regular salary. As a result, their personal taxable income may not accurately reflect their true earning capacity.
Fortunately, some lenders have policies specifically designed for this scenario. Instead of relying on two years of tax returns, they may assess as little as six months of consistent director’s wages and treat that income similarly to a PAYG employee.
One important requirement is that the business generally needs to have been operating under the same ABN for at least 18 months. Provided this criterion is met, and the director’s salary has been paid consistently and is supported by the appropriate documentation, these policies can provide an alternative pathway to obtaining a home loan without waiting for multiple years of financial statements.
For example, if you have been paying yourself $10,000 per month consistently for at least six months, supported by payslips and salary credits into your bank account, some lenders may use that income to assess your borrowing capacity without requiring company tax returns.
It is also important to understand that once financial documents have been provided to a lender, they cannot simply be ignored or withdrawn from the assessment. That’s why having the right lending strategy and providing the appropriate documents from the outset is critical.
For the right borrower, these policies can bring forward the ability to purchase a home by more than a year rather than waiting for another financial year to be completed.
Do I always need two years of tax returns?
Not necessarily.
While many lenders still prefer two years of financials, there are a number of alternative assessment methods available depending on your circumstances.
Some lenders may assess one year’s financials, while others have specialist policies for company directors receiving a regular salary from their business.
As Kane Ladhams explains:
“Many business owners assume they need to wait two years before they’re eligible for a home loan. In reality, some lenders have policies that may allow the right borrowers to purchase much sooner.”
Kane Ladhams, Senior Mortgage Broker
The important thing to remember is that every lender assesses self-employed borrowers differently.
Just because one lender says no doesn’t necessarily mean another will reach the same conclusion. Finding a lender whose policy aligns with your circumstances can make all the difference.
What should self-employed borrowers take away?
Being self-employed doesn’t mean you need to put your property plans on hold.
There are now more lending options available than ever before, but understanding which lender is the right fit is crucial. Whether you’re relying on one year’s financials, director’s wages or the traditional two-year assessment, choosing a lender whose policy aligns with your circumstances can significantly improve your chances of approval.
Having organised financial records, lodged tax returns and a profitable business will always put you in the strongest possible position.
Every lender assesses self-employed borrowers differently. If you’re unsure where you stand, we’d be happy to review your situation, explain which lenders may be suitable for your circumstances, and develop a strategy that gives you the strongest chance of securing the finance you need.