Everything you need to know about Home Loans for Self-Employed

Self-employed buyers can absolutely get a home loan, but the application works differently.

Lenders want to see consistent income over time rather than a single payslip, which means you'll need to show tax returns, business financials, and sometimes additional documentation. The process takes a bit more preparation, but once you understand what lenders are looking for, it becomes much more straightforward.

What Lenders Actually Look for in Self-Employed Applications

Lenders assess your taxable income, not your turnover. If you're claiming every possible deduction to reduce your tax bill, that same reduced figure is what lenders use to calculate how much you can borrow. Most lenders want to see at least two years of tax returns showing stable or increasing income. Some will accept one year if your circumstances are strong, but two years is the standard.

Your ABN needs to be registered for at least 12 months before you apply, though some lenders require two years of ABN history. If you've recently moved from full-time employment to self-employment in the same field, some lenders treat this more favourably because your income history carries over in a sense.

Consider a buyer in Craigieburn who works as a freelance project manager. They left a salaried role 18 months ago and now contract through their own business. Their tax return shows an income of $78,000 after deductions. That figure is what the lender uses, even if their gross revenue was higher. They provided two years of tax returns, a current notice of assessment from the ATO, and six months of business bank statements. The application was approved without drama because the documentation was complete and the income was verifiable.

How to Present Your Income When It Fluctuates

If your income moves up and down across the year, lenders average it. They take the total taxable income across your most recent two financial years and divide by two. A strong year followed by a weaker year can still work if the average sits within the lender's serviceability range.

Some lenders allow you to declare future income if you have contracts in place. If you're a tradie with six months of locked-in work or a consultant with a signed retainer, that can sometimes be factored in, though you'll need written agreements to support it. This isn't available with every lender, but it's worth exploring if your current tax returns don't fully reflect your earning capacity.

Debt servicing is assessed the same way as it is for employed buyers, but the buffer applied to your income can be more conservative. Where a PAYG employee might be assessed at their gross salary, you're assessed on your net taxable income. That's why keeping your deductions reasonable in the years leading up to a home loan application can make a material difference to how much you can borrow. If you're planning to apply within the next 12 to 18 months, speak to an accountant about structuring your tax position with that in mind.

Documents You'll Need to Gather Before You Apply

You'll need your last two years of full tax returns, not just the tax return summary but the complete lodgement including all schedules. Your notices of assessment from the ATO for those same years are also required. Most lenders ask for business bank statements covering the last three to six months, and some want to see your business activity statements as well.

If you operate through a company or trust structure, lenders may ask for financial statements prepared by your accountant. Sole traders and partnerships typically don't need full financials unless the loan amount is large or the income is complex.

You'll also need the same personal documents any buyer provides, such as proof of savings, identification, and details of your existing debts. If you're accessing schemes like the Australian Government 5% Deposit Scheme, the documentation requirements don't change, you still need to meet the lender's self-employed income policy on top of the scheme eligibility rules.

Low Doc Loans and When They're Worth Considering

Low doc loans let you apply without providing full tax returns, usually by signing a declaration of your income instead. They're designed for self-employed buyers who can't meet standard documentation requirements, often because they're early in their business journey or their tax position doesn't reflect their actual earning capacity.

The trade-off is a higher rate, typically between 0.3 and 1 per cent above standard variable rates, and often a higher deposit requirement. Some low doc lenders want at least 20 per cent deposit to avoid LMI, though a few will lend at higher LVRs with insurance.

If you've been self-employed for under two years or your taxable income has been minimised for tax planning, a low doc loan might be the only option until your next tax return is lodged. It's not ideal long-term, but it can get you into the market sooner. Once you have two full years of returns showing stronger income, you can refinance to a standard product with a lower rate.

Building Your Borrowing Capacity Before You Apply

Borrowing capacity improves when your taxable income increases and your debts decrease. If you're carrying a car loan, personal loan, or credit card debt, paying that down or closing unused accounts will lift how much you can borrow. Lenders assess your credit limit, not your balance, so even a card you never use can reduce your capacity.

If your income fluctuates and you're applying soon, timing your application to follow a strong financial year helps. Lodging your tax return as early as possible after June 30 means lenders can assess your most recent income rather than relying on older figures.

For buyers in Craigieburn looking at properties near Highlands or Elevation estates, the local market has a solid mix of townhouses and detached homes that suit different budgets. Knowing your borrowing capacity before you start looking means you can focus on properties within your range rather than falling for something you can't finance. You can explore how different income levels affect your borrowing using a calculator, or speak to a broker who works with self-employed buyers regularly and understands how different lenders assess your situation.

Why Your Accountant and Broker Need to Work Together

Your accountant structures your tax position to minimise what you pay the ATO. Your broker structures your loan application to maximise what a lender will lend you. These two goals can conflict. An accountant focused purely on tax won't always consider how their advice affects your borrowing capacity, and a broker can't change your tax returns once they're lodged.

If you're planning to apply for a loan within the next one to two years, let your accountant know. They can help you balance tax efficiency with loan serviceability, perhaps by claiming fewer deductions in one year or adjusting how income is distributed if you operate through a trust or partnership.

Once your tax position is set, a broker can match you with lenders whose policies suit your structure. Some lenders are more flexible with sole traders, others prefer company structures, and a few specialise in specific industries. The right broker won't try to fit you into a single lender's policy, they'll find the lender that fits your circumstances and has appetite for self-employed lending at the time you apply.

Call one of our team or book an appointment at a time that works for you. We work with self-employed buyers in Craigieburn and across Victoria, and we'll walk you through exactly what you need to get your application over the line.

Frequently Asked Questions