Self-employed borrowers in Johnston can access the same home loan products as PAYG workers.
The difference is how lenders assess your income and what documentation they need to verify it. You're not applying for a different type of loan, you're just proving your income in a different way. Most lenders will assess your application using the same home loan products they offer everyone else, including variable rate, fixed rate, and split loan options. What changes is the verification process, not your access to features like offset accounts or the ability to build equity over time.
How lenders assess self-employed income
Lenders typically assess self-employed income by averaging your net profit over the past two financial years.
If your business is registered as a company or trust, the lender will look at the taxable income shown on your tax returns, plus any add-backs like depreciation or one-off deductions that don't reflect your ongoing earning capacity. If you're a sole trader, they'll use the net profit from your individual tax return. In our experience, lenders want to see consistent or growing income. A borrower who earned $70,000 in one year and $90,000 the next will be assessed more favourably than someone who went from $90,000 to $70,000, even though the average is the same.
Consider a tradie in Johnston who has been operating as a sole trader for three years. Their accountant has lodged tax returns showing net profit of $82,000 and $88,000 for the past two years. Most lenders would assess their income at around $85,000. If that borrower wanted to apply for a home loan on a property in Zuccoli or nearby suburbs where median prices sit around $550,000 to $600,000, they would need to demonstrate they can service the loan amount after accounting for living expenses and existing debts.
Documentation lenders require from self-employed applicants
You'll need at least two years of tax returns and two years of financial statements or Notices of Assessment from the ATO.
Some lenders will also ask for your business activity statements or accountant-prepared declarations. If you've been self-employed for less than two years, you may still be able to apply through a low doc loan, though this usually comes with a higher interest rate and stricter loan to value ratio (LVR) requirements. The key is that your financials are lodged and up to date. If your most recent tax return is 18 months old, lenders will question whether your income is still at that level.
A business owner in Johnston who runs a landscaping company submitted tax returns showing strong income, but their most recent return was from two years prior. The lender requested current profit and loss statements prepared by their accountant to confirm their income hadn't dropped. Once those were provided, the application moved forward without issue.
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Can I use my ABN income without full financials
Some lenders offer low doc or alternative documentation loans that accept accountant-prepared declarations instead of full tax returns.
These products are designed for borrowers who have been self-employed for less than two years or who have complex business structures that don't show their full income on a standard tax return. The trade-off is usually a higher interest rate and a lower maximum LVR, often capped at 80% rather than the 90% or 95% available to borrowers with full documentation. Lenders Mortgage Insurance (LMI) may also be priced differently. These loans still require proof that you operate a legitimate business and earn consistent income, just through different documentation.
How your business structure affects home loan approval
Your business structure, whether sole trader, partnership, company, or trust, changes how lenders calculate your income.
Sole traders are usually the most straightforward because your individual tax return shows the business income directly. If you operate through a company, lenders will look at your salary, dividends, and the retained earnings in the business. Trust structures can be more complex because income can be distributed to multiple beneficiaries. In that case, lenders want to see what portion of the trust income you actually receive and control. The key is making sure your accountant structures your tax affairs in a way that shows lenders the income you have access to, not just what the business earns on paper.
What if my income fluctuates from year to year
Lenders understand that self-employed income isn't always consistent, but they prefer to see stability or growth.
If your income has dropped in the most recent year, be prepared to explain why. A one-off drop due to maternity leave, a business restructure, or a known contract delay is easier to manage than an unexplained decline. Some lenders will use the most recent year's income if it's higher and you can demonstrate it's ongoing. Others will average both years regardless. If you're applying for home loan pre-approval, it's worth having this conversation upfront so you know what income figure the lender will use and how that affects your borrowing capacity.
A business consultant in Johnston saw their income drop from $95,000 to $72,000 in one year due to taking three months off after a family illness. They provided a letter from their accountant explaining the circumstances and showing that their client base and contract pipeline had returned to previous levels. The lender accepted the explanation and used an averaged income figure, allowing the application to proceed.
Can I include rental income or other sources in my application
Yes, lenders will consider rental income, investment dividends, and other verifiable income streams when assessing your borrowing capacity.
Rental income is usually assessed at 80% of the gross rent to account for vacancies, maintenance, and management costs. If you're self-employed and also own an investment property, this can help improve borrowing capacity by adding another income source. Just make sure the rental income is declared on your tax return and you have a lease agreement to support it. Lenders won't accept cash-in-hand arrangements or informal income that isn't documented.
Does being self-employed affect the interest rate I can access
Not usually, provided you meet the lender's standard income verification requirements.
Once your income is verified through two years of tax returns and financials, you'll have access to the same variable interest rate, fixed interest rate, and rate discount offers as any other borrower with similar deposit size and credit profile. If you choose a low doc product due to limited trading history or incomplete documentation, you may face a slightly higher rate, but that's due to the product type, not your employment status. If you're applying for an owner occupied home loan with a 20% deposit and strong financials, your self-employed status shouldn't limit your access to lower rates.
What about Lenders Mortgage Insurance for self-employed borrowers
Lenders Mortgage Insurance (LMI) applies to self-employed borrowers in the same way as PAYG employees when the loan to value ratio exceeds 80%.
The premium is based on the loan amount and LVR, not your employment type. If you're borrowing more than 80% of the property value, you'll pay LMI unless you qualify for an LMI waiver through certain professional occupations or first home buyer schemes. Some lenders offer no LMI loans for first home buyers under specific conditions, and these can apply to self-employed applicants who meet the criteria.
How long does approval take for self-employed applicants
Approval times are similar to PAYG applicants once all documentation is submitted, usually within a few business days to a week.
The difference is in the preparation time. Gathering two years of tax returns, financial statements, and supporting documents takes longer than providing a few recent payslips. If your tax returns aren't lodged yet, you'll need to get those finalised before most lenders will assess your application. If you're buying in Johnston or nearby areas like Zuccoli or Palmerston, where the property market can move quickly, it's worth getting your documents together before you start looking so you can move fast when you find the right place.
If you're self-employed and considering a home loan, the process is very manageable when you know what lenders need. Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can I get a home loan if I've only been self-employed for one year?
Most lenders require two years of tax returns to assess self-employed income. If you've been self-employed for less than two years, you may need to consider a low doc loan, which typically has a higher interest rate and lower maximum LVR.
Do self-employed borrowers pay higher interest rates?
No, not if you provide standard documentation like two years of tax returns and financial statements. You'll access the same rates as PAYG employees with similar deposit size and credit profile.
What documents do I need to provide as a self-employed borrower?
You'll need at least two years of tax returns, two years of Notices of Assessment from the ATO, and financial statements or profit and loss reports. Some lenders may also request business activity statements or accountant declarations.
How do lenders calculate my income if I'm self-employed?
Lenders typically average your net profit over the past two financial years. They may also add back certain deductions like depreciation that don't affect your cash flow.
Can I use my business income if I operate through a company or trust?
Yes, lenders will assess income from companies and trusts by looking at your salary, dividends, and distributions. Your accountant can help structure your tax affairs to show lenders the income you actually receive.
