Being self-employed doesn’t mean buying a home is out of reach. Whether someone runs their own business, works as a sole trader, operates a company or earns an income as a freelancer, getting a home loan may still be possible.
However, applying for a self-employed home loan can involve a little more preparation than applying as a PAYG employee. Instead of relying mainly on regular payslips, lenders generally need to understand how the business earns money, how consistent the income is and whether it can support ongoing loan repayments.
The good news is that different lenders have different ways of assessing self-employed income. Understanding what they look for can help borrowers prepare before starting an application.
Can You Get a Home Loan If You’re Self-Employed?
Yes. Self-employed Australians can apply for a home loan, provided they meet the lender’s eligibility and borrowing requirements.
Lenders may consider applicants such as:
- Sole traders and independent contractors
- Small business owners
- Company directors
- Business partners
- Freelancers and consultants
- People earning income through a trust or company structure
The main difference is how income is verified. A PAYG employee may be able to provide payslips and employment details, while a self-employed applicant may need to provide tax returns, financial statements or other business records.
Each lender has its own assessment policy, so the documents and requirements can vary depending on the business structure and financial circumstances.
What Do Lenders Look At When Assessing Self-Employed Income?
When assessing a self-employed home loan, lenders want to understand whether the applicant has a reliable and sustainable income.
Some of the key factors include:
1. Business income and profitability
Lenders generally look beyond the total sales or turnover of a business. They want to understand how much income is available after business expenses and other financial commitments.
2. Length of time in business
The length of time a person has been self-employed can influence which lenders and loan options may be available. Some lenders prefer to see one to two years of financial history, while others may consider different circumstances.
3. Consistency of income
If business income has remained steady or increased over time, it may help demonstrate financial stability. If income has dropped, the lender may want to understand why and whether the change is temporary or ongoing.
4. Existing debts and financial commitments
Personal loans, credit cards, car finance, business debts and other commitments can affect how much an applicant may be able to borrow.
5. Savings and deposit
As with other home loan applications, lenders consider the applicant’s deposit, available savings and overall financial position.
What Documents Do Self-Employed Borrowers Need?
One of the most important steps when applying for a self-employed home loan is preparing the right paperwork.
Depending on the business structure and lender, applicants may be asked to provide:
- Personal tax returns
- Business tax returns, where applicable
- ATO Notices of Assessment
- Business financial statements, including profit and loss statements and balance sheets
- Business Activity Statements (BAS)
- Personal and business bank statements
- ABN and GST registration details, where applicable
- Accountant’s letter or other supporting financial information
For example, CommBank’s published application requirements include personal and business tax information and recent business financial statements for many self-employed applicants. NAB also outlines alternative documentation requirements for eligible borrowers.
Not every applicant will need every document listed above. The exact requirements depend on the lender, business structure and application.
Do You Need Two Years of Tax Returns to Get a Home Loan?
Not necessarily.
Many lenders commonly request financial information covering the previous one to two financial years. However, some lenders may consider an application using one year’s financial information, depending on the applicant’s circumstances and the lender’s policy.
For example, NAB states that eligible applicants may be able to explore lending opportunities using one year’s financial statements where the loan-to-value ratio (LVR) is 80% or less. Other conditions apply.
This is why it is worth understanding the lender’s requirements before assuming that an application cannot proceed.
If the most recent tax return has not yet been completed, there may also be other ways to demonstrate the business’s current financial position.
What If Your Business Income Changes From Year to Year?
Business income does not always stay the same. Some businesses experience seasonal changes, new contracts, growth periods or unexpected expenses.
Lenders may review financial information from more than one year to understand the income pattern. Depending on their policy, they may use an average of the available income or place greater weight on the most recent financial year.
If income has increased, decreased or changed significantly, supporting information may help explain what has happened.
For example, an applicant whose business has recently secured new contracts may need to provide additional information to demonstrate the current position of the business.
The way changing income is treated will depend on the lender’s assessment policy.
What Is a Low Doc Home Loan?
A low documentation, or low doc, home loan is an option that may be available to eligible self-employed borrowers who cannot provide all the usual financial documents required for a standard home loan application.
Depending on the lender and product, alternative income evidence may include:
- Business Activity Statements (BAS)
- Business bank statements
- An accountant’s letter
- A signed income declaration
- Other supporting business financial information
However, low doc does not mean no documentation or no income assessment.
Lenders still need to establish that the borrower can afford the repayments. Some low doc products may also have different interest rates, fees, deposit requirements or lending criteria compared with standard home loans.
Not all lenders offer low doc home loans, so it is important to understand the available options before applying.
Can I Get a Home Loan If I’ve Recently Started My Business?
It may still be possible, but having a shorter business history can make the application more challenging.
Some lenders prefer to see an established trading history, while others may consider factors such as:
- Previous employment in the same industry
- Experience and qualifications
- Current business income
- Existing contracts or ongoing work
- Available financial records
- Overall financial position
For someone who has recently moved from employment into running their own business, previous industry experience may help provide context for the application.
The available options will depend on the lender’s policy and the strength of the supporting information.
How Can You Improve Your Chances of Getting a Home Loan?
Preparing ahead of time can make the application process easier and help identify any potential issues before approaching a lender.
Here are some practical steps self-employed borrowers can consider:
Keep your financial records organised. Make sure personal and business financial records are up to date and easy to access.
Stay on top of tax returns. Keeping tax lodgements and ATO records current can help avoid unnecessary delays.
Separate personal and business finances. Clear records can make it easier to demonstrate business income and expenses.
Review existing debts. Consider how personal and business financial commitments may affect borrowing capacity.
Understand your borrowing position. Reviewing income, expenses, savings and deposit requirements can help set realistic expectations before looking at properties.
Speak with a mortgage broker early. A broker can help identify which lenders may consider the applicant’s business structure, income and available documents.
Being self-employed should not automatically put your home ownership plans on hold.
While lenders may ask for additional financial information, there may be home loan options available depending on the business structure, income history and overall financial position.
At QMP Financial, the team can help self-employed borrowers understand what lenders may look for, review their circumstances and explore suitable home loan options.
If you’re self-employed and thinking about buying a home, refinancing or getting pre-approved, call the QMP Financial team to discuss your situation and take the next step towards your property goals.
*General information only. Lending criteria, documentation requirements and eligibility vary between lenders and are subject to change. All applications are assessed on their individual circumstances.