Can You Get a Home Loan If You're Self-Employed?

Self-employed borrowers in Australia generally take one of two paths. Full-doc loans use your standard tax-assessed income. Most major banks want two complete years of personal and business tax returns, plus the matching ATO Notices of Assessment, and sometimes interim financials if you are well into a new financial year. With a clean two-year history, full-doc rates and LVRs are identical to PAYG borrowers. Low-doc (or alt-doc) loans use alternative income evidence. Common acceptable evidence includes: • Six or twelve months of business activity statements (BAS) • An accountant's declaration confirming your trading income • Six to twelve months of business bank statements Low-doc loans usually require a larger deposit (often 20% minimum) and carry a small rate premium versus full-doc. They are particularly useful when you are between tax returns, when your most recent return is not yet lodged, or when your trading has improved sharply since your last return.

Lender assessment policies vary widely. Common approaches: • Two-year average: most banks average the last two years of net profit (or salary plus dividends in a company structure) • Lower-of method: some banks use the lower of the two years to be conservative • Most-recent-year method: a smaller number of lenders will use the most recent year if income is increasing, which can dramatically increase borrowing capacity • Add-backs: depreciation, interest on the loan being refinanced, one-off expenses, and superannuation contributions can sometimes be added back to lift assessed income The difference between lenders can be significant. Two banks looking at the same accountant-prepared financials can produce assessed incomes that differ by $30,000 or more, which translates to roughly $150,000 to $200,000 difference in borrowing capacity. A broker who works with self-employed clients regularly will know which lender to approach for your specific structure (sole trader, company, trust, partnership) and trading pattern.

Prepare these before you apply: • Two years of personal tax returns and Notices of Assessment • Two years of business tax returns and financials (P&L and balance sheet) • Most recent four BAS lodgements • Last six months of business bank statements • Last three months of personal bank statements (transaction, savings, offset) • Any rental property statements • ABN and GST registration details • Photo ID (driver licence and Medicare or passport) • If using a low-doc product: an accountant's declaration on lender-issued forms If you operate through a company or trust, the lender will also want company constitutions, trust deeds, and confirmation of all directors and beneficiaries.

Self-employed applications stumble on predictable issues: • Aggressive tax minimisation: legitimate deductions reduce taxable income, which reduces borrowing capacity. Plan ahead in the years before applying. • ATO debt: outstanding tax debt or active payment plans must usually be cleared before settlement • Mixing business and personal expenses on bank statements • Newly established businesses (under two years) are harder but not impossible; lenders like Liberty, Pepper, Bluestone, and a few mainstream lenders consider 12 months of trading • Income spikes that look unsustainable; consistent growth is easier to lend against than a sudden one-off year • Working in industries the lender views as high-risk (some hospitality, gig-economy roles, or commission-only sales) If you are planning to buy in the next 12 to 24 months and you are self-employed, talk to a broker before your next tax return. Small structural changes now can materially lift the income a lender will use later.

This is general information only, not personal credit advice. Your actual options depend on your full financial picture, including your income, deposit, credit profile, and the specific loan structure you need. Speak with a licensed broker for advice tailored to your situation.