Self-employed home loans

How do lenders assess self-employed income?

Self-employed Australians represent a significant portion of the workforce, yet the home loan process often feels tilted against them. The fundamental challenge is that lenders assess loan serviceability based on taxable income, and self-employed individuals typically, and legitimately, minimise their taxable income through business deductions. The very strategies that reduce your tax bill also reduce your apparent ability to repay a mortgage in the eyes of a lender.

Turnover, deductions and taxable income

Consider a business owner earning $200,000 in gross revenue who claims $100,000 in legitimate business expenses including vehicle costs, home office deductions, depreciation on equipment, and professional development. Their taxable income of $100,000 is what lenders use to calculate borrowing capacity, even though the owner may have significantly more disposable income available, particularly from non-cash deductions like depreciation that do not actually reduce their cash flow.

Add-back policies

This is where choosing the right lender becomes critical. Some lenders are far more accommodating of self-employed income than others. Certain banks and non-bank lenders use "add-back" policies where they add non-cash deductions like depreciation back to your taxable income when calculating serviceability. This can increase your borrowing power by $50,000-$200,000 depending on the size of your deductions.

Can I get a home loan with only one year self-employed?

Often, yes, but read the fine print on what "one year" means. Most lenders separate two things: how long the business has been trading, and how many years of figures they assess on.

One year of figures

ANZ asks for one financial year's tax statements for most applications. NAB will assess on a single year's financial statements where the loan is 80% of the property value or less. Westpac and AMP will assess on one year's income but still require the ABN to have been trading for two full financial years. So "one year of documents" is now common at the majors; "one year of trading" usually means a specialist lender.

Less than two years of trading

If the business is younger than two years, the published paths are Pepper Money's alt doc loan, available with as little as six months of ABN and GST registration, and Bluestone's alt doc loan from twelve months of ABN history (less can be considered through a broker). Both assess on bank statements, BAS or an accountant's declaration rather than tax returns, and both cap the loan at a lower share of the property value than a full doc loan. The low doc home loans guide compares the alt doc lenders in detail.

What does each lender ask for?

Checked against each lender's published policy on 19 September 2026. Policies change without notice; confirm the current position with the lender or your broker before relying on it. Where a lender does not publish a figure the cell says so.

What documents do I need for a self-employed home loan?

When you apply for a full-doc self-employed home loan, lenders will request your most recent two years of individual tax returns and corresponding ATO notices of assessment. If you operate through a company, partnership, or trust, they will also require the entity's financial statements and tax returns for the same period.

How lenders average your income

Lenders analyse these documents to determine your average income over the two-year period. If your income is increasing, some lenders will use the most recent year's income rather than the two-year average, which benefits borrowers whose businesses are growing. Conversely, if income has declined, lenders will typically use the lower figure.

Where BAS fits

BAS (Business Activity Statements) play a supplementary role even in full-doc applications. Your quarterly GST turnover reported on BAS confirms the consistency of your business revenue and can support the income figures on your tax returns. For low-doc applications, BAS becomes the primary income evidence, so lodging your BAS on time and keeping it accurate is essential.

What is the difference between full doc, low doc and alt doc?

Full doc means the lender verifies income from lodged tax returns, notices of assessment and, for companies and trusts, financial statements. It gets the same rates and maximum loan-to-value ratio as a PAYG borrower.

Low doc and alt doc are used interchangeably by most lenders and mean income is verified from alternatives: BAS, business bank statements, or a declaration from your accountant. The trade-off is a higher rate and a lower maximum LVR, which in practice means a larger deposit or more equity.

If you have two years of clean returns, full doc is almost always the better deal; low doc is for businesses too young or too recently restructured to produce them.

How can I increase my borrowing power as a self-employed borrower?

Preparation is everything when applying for a self-employed home loan. The following strategies can significantly improve both your chances of approval and the amount you can borrow:

Plan your deductions strategically

If you know you will be applying for a home loan in the next financial year, consider whether some deductions can be deferred. For example, postponing a large equipment purchase by a few months could increase your taxable income for the assessment period. This does not mean paying more tax than necessary; it means timing your deductions to align with your borrowing plans.

Keep personal and business finances separate

Lenders scrutinise your bank statements, and mixed personal and business transactions make income verification more difficult. Separate accounts present a cleaner picture of your business cash flow.

Reduce unnecessary credit facilities

Even if you do not use them, unused credit card limits, overdraft facilities, and lines of credit reduce your borrowing capacity. Lenders assume you could draw on these facilities at any time, so close any facilities you do not actively need before applying.

Pay down existing debts

Credit card balances, personal loans, and car finance all reduce your borrowing capacity. Clearing these debts before applying frees up serviceability for your home loan.

How does my business structure change the assessment?

How your business is structured affects the way lenders assess your income, and some structures are easier to lend against than others.

Sole traders

Sole traders have the simplest assessment. Your business income flows directly through your personal tax return, and lenders assess your net business income after deductions. Add-backs for depreciation and other non-cash deductions are commonly applied.

Partnerships

Partnerships are assessed based on your share of the partnership profit. If you are a 50% partner in a business that earns $200,000 profit, lenders attribute $100,000 to you. Partnership agreements should clearly document profit-sharing arrangements.

Company directors

Company directors present a more complex picture. Lenders look at your director salary, any dividends paid, and potentially the retained earnings of the company. If you pay yourself a modest salary and retain profits in the company, some lenders will consider those retained earnings as available income, while others will not.

Trust beneficiaries

Trust beneficiaries require the trust's financial statements and distribution minutes. Lenders assess the distributions you have actually received, which must be consistent with the trust's income. Discretionary trusts can be challenging because the trustee has the power to vary distributions each year, creating income uncertainty from the lender's perspective.