Home Loans for
Self-Employed Borrowers
Getting a home loan when you are self-employed is an achievable goal with the right preparation. The loan product is often the same as for salaried borrowers — lenders just verify income differently.
What you need to know
Before diving in, here are the most important points every self-employed borrower should understand.
Who is considered self-employed?
A borrower is generally considered self-employed if they earn income from their own business or independent work rather than receiving a fixed salary from an employer.
Examples of self-employed borrowers
What most lenders look for
ABN & GST registration
Your ABN should generally be active for at least 6–24 months. GST registration may be required if your business earns more than $75,000 annually.
Proof of income stability
Many lenders prefer two years of tax returns, although some lenders may accept alternative income verification.
Good credit history
A credit score of 650 or higher can improve your chances of loan approval and access to better interest rates.
Consistent business performance
Lenders review business financials, bank statements and profitability to determine whether your income is sustainable.
The key difference: how lenders calculate usable income
For PAYG workers, income verification is straightforward. For self-employed borrowers, lenders consider business income volatility, tax deductions, the difference between revenue and profit, and one-off items that may be excluded or averaged out.
Why self-employed borrowers are assessed differently
Lenders aim to estimate how much of your income is sustainable and available to service repayments. For self-employed borrowers, several factors complicate this.
Business income volatility
Is income steady, growing, or declining? Lenders look for consistency over time.
Tax deductions
Legitimate expenses reduce taxable profit but don't always reflect actual cash available.
Revenue vs profit
High turnover with low profit may reduce borrowing power — lenders focus on net profit.
One-off items
Large one-off gains or expenses (asset sales, repairs) may be excluded or averaged out.
Add-backs: what lenders may reinstate
Lenders use tax returns, financial statements and other records to build a picture of sustainable income. They may "add back" certain deductions to reflect real cash flow — such as depreciation, one-off expenses or non-recurring items.
How long you have been trading matters
Your trading history directly affects which lenders and products you can access. Here is what to expect at each stage.
More than 2 years
Most optionsAccess to the widest range of lenders and products. Most mainstream lenders prefer two years of stable income history.
Typical requirements
These are full-documentation (full-doc) home loans — generally the most competitive rates and terms.
1–2 years
Some optionsYou may still qualify. Some lenders consider prior industry experience and stable cash flow.
Typical requirements
Example: A plumber who ran their own business for 1 year but previously worked as a plumber for 5 years may be considered favourably.
Less than 1 year
Specialist lendersMost mainstream banks expect at least one year. Specialist lenders sometimes accept as little as six months with additional conditions.
Typical requirements
Specialist lenders and some smaller banks can be a good route if you're newly self-employed.
Home loan pathways for self-employed borrowers
There are several home loan pathways available depending on your documentation, deposit size and overall financial position.
Full-doc home loans
Best for
Self-employed borrowers with complete financial records and at least two years' trading.
Typical evidence
Two years personal & business tax returns, ATO Notices of Assessment, P&L statements, balance sheets, BAS and business bank statements.
Pros
Generally lower interest rates, higher borrowing capacity and the widest choice of lenders.
Cons
Requires full, well-prepared documentation and usually two years of trading history.
Low-doc home loans
Best for
Contractors, freelancers, consultants or new business owners who can't provide full tax returns or two years of accounts.
Typical evidence
BAS statements, business bank statements, an accountant's declaration or letter, invoices or ongoing contracts.
Pros
Provides a route to borrowing where standard documentation is incomplete.
Cons
Usually requires a larger deposit, can attract higher interest rates and may have lower borrowing limits.
Guarantor home loans
Best for
Borrowers with limited deposit savings who have a willing guarantor (often a close family member).
Typical evidence
Standard self-employed docs plus guarantor's property and financial details.
Pros
May avoid or reduce LMI, increase borrowing power and fast-track purchase with less saved deposit.
Cons
The guarantor takes on real risk — their property can be at stake if repayments are missed.
Specialist & smaller lenders
Best for
New businesses, unusual income structures or industries where mainstream banks are conservative.
Typical evidence
Flexible — lenders may accept BAS, bank statements, contracts and accountant letters.
Pros
More flexible on documents and income assessment — a broker who knows specialist lenders can be invaluable.
Cons
May charge slightly higher rates or fees compared to mainstream lenders.
How lenders calculate self-employed income
Because self-employed income can fluctuate from year to year, lenders review financial records over a longer period and apply different calculation methods.
Lowest income year
Some lenders take the lowest income figure from the last two years to reduce lending risk.
Two-year average
Many lenders calculate the average income across two financial years to determine borrowing capacity.
Most recent year
If income has steadily increased, certain lenders may consider the most recent financial year as the basis.
120% income buffer
Some lenders may calculate borrowing capacity using 120% of the lowest income year if the business shows consistent growth.
Worked example — two-year average
If Year 2 is clearly higher and sustainable, some lenders may use $95,000 instead of the average, which increases borrowing power.
Common add-backs lenders may apply
How much deposit do self-employed borrowers need?
Deposit size strongly affects your approval chances, LMI costs and the interest rates available to you.
Documents required for self-employed home loans
Below is a typical list lenders request. Requirements vary between lenders and loan types — always confirm with your broker.
Trust structures
If your business operates under a trust structure, lenders will also require a trust deed and distribution statements in addition to the standard documentation.
How does refinancing work for self-employed borrowers?
Refinancing lets you replace your current home loan with a new one — it can be especially useful for self-employed borrowers looking to improve rates, access equity or consolidate debt.
What lenders will review
Tips to improve refinance prospects
Refinancing can yield meaningful savings, but factor in fees, discharge costs and whether a better rate outweighs switching costs.
How to boost your home loan approval
Lenders are looking for signs that you can reliably service repayments despite variable income. These practical steps often make a real difference.
Mistakes self-employed borrowers should avoid
These are the most common pitfalls that reduce borrowing power or lead to declined applications.
Self-employed home loan checklist
Use this checklist before you apply to make sure you have everything in order.
Common questions
Everything self-employed borrowers frequently ask before applying for a home loan.