Self-Employed
The self-employed home loan guide
12 min read · By Jamee White, CPA · 30 May 2026
The short version
- Self-employed borrowers can absolutely get competitive loans, with the right lender and prep.
- Full-doc, one-year and low-doc pathways exist for different situations.
- Clean books and separated personal/business finances make everything easier.
- Timing your application around your tax returns and BAS matters.
Being self employed does not make you a worse borrower. It makes you a harder one to read. A PAYG applicant hands over two payslips and the lender knows what they earn. A business owner hands over tax returns, financials and an ABN, and the lender has to work out which parts of that are sustainable income and which are timing, structure or one off. Everything about self employed lending follows from that single difference.
Quick summary: lenders are not looking for a bigger number, they are looking for a defensible one. Two years of consistent, well documented income usually opens the full market at ordinary pricing. Where the documents are not there yet, alternative verification exists at a higher rate. The work worth doing is getting the paperwork and the structure into a shape a credit assessor can follow.
What counts as self employed to a lender?
More people than expect it. If you hold an ABN and your income depends on your own business rather than an employer, most lenders will assess you as self employed even where the work looks like a job. Sole traders and contractors, company directors, partners in a partnership and beneficiaries of a trading trust all sit in this category. So do people with a PAYG salary from their own company, which surprises a lot of owners who assume a payslip from their own business is read the same way as a payslip from an employer. It is not, because you control it.
Which document pathway will you use?
There are three broad routes and the one you take drives your rate, your deposit and how many lenders will look at you.
| Pathway | What you provide | Trade off |
|---|---|---|
| Full documentation | Two years of tax returns and financials | Widest lender choice, ordinary pricing |
| One year full doc | One year of returns, with some lenders | Narrower field, close to ordinary pricing |
| Alternative or low documentation | Business bank statements, BAS, or an accountant's declaration | Higher rate, larger deposit, fewer lenders |
Full documentation is the goal wherever the returns exist, because it is the cheapest way in. Alternative verification is not a lesser product so much as a bridge: it finances the purchase now on the evidence you actually have, and once enough returns are lodged you can generally move across to full documentation pricing. Going in with that exit in mind is the difference between a sensible decision and an expensive one.
How do lenders actually work out your income?
This is where most of the value sits, and where an accountant's involvement pays for itself. A lender does not use your turnover and it does not simply use your taxable income. It starts from net profit and then adjusts, adding back certain expenses that reduced your tax but do not reduce the cash genuinely available to service a loan.
| Add back | Why a lender may add it | How reliably |
|---|---|---|
| Depreciation | A non cash accounting deduction | Usually accepted |
| Additional superannuation | Voluntary contributions above the required amount | Often accepted |
| Interest on debts being refinanced | The commitment is being replaced | Usually accepted |
| One off or non recurring expenses | Will not repeat, so does not reduce future capacity | Case by case, needs evidence |
| Net profit retained in a company | Available to you as the owner | Varies widely, structure dependent |
| Motor vehicle and similar deductions | Partly private in substance | Least reliable, often declined |
Worked example, simplified to show the mechanic. A sole trader declares net profit of $90,000. Depreciation of $12,000 and $8,000 of additional superannuation are added back, giving assessable income of $110,000. The same applicant assessed on taxable income alone would look $20,000 poorer, which on a thirty year loan is a material difference in borrowing capacity. Nothing has changed about the business. Only the quality of the presentation has.
Where two years are provided, most lenders take the lower year, or an average, rather than the better year. A strong recent year against a weak prior year usually gets you the average, not the recent figure. Planning around that is far more effective than hoping a lender overlooks it.
What has changed in 2026?
Two constraints have tightened, and both hit self employed applicants harder than PAYG ones.
The first is the debt to income cap. Most lenders now apply a ceiling of around six times gross income regardless of what the serviceability calculation allows, and prudential limits keep lending above that level to a modest share of what each lender writes. For a business owner whose assessable income has already been reduced by averaging, that cap arrives sooner than it does for a salaried applicant on the same headline earnings.
The second is the buffer. Affordability is tested at a rate three percentage points above the actual rate, which as at August 2026 puts the assessment rate well above anything you would be charged. Combined with a business income figure that is already conservative, the gap between what you feel you can afford and what a lender will approve is wider than it was.
Why your accountant and your broker should talk
There is a genuine tension in self employed finance that nobody enjoys naming. Good tax work minimises your assessable income. Good lending outcomes depend on demonstrating it. The same set of numbers is being optimised in two opposite directions, usually by two people who have never spoken.
That is not an argument for paying more tax. It is an argument for timing. If you know a purchase is twelve to eighteen months away, the structure of that year's return matters, and it is a conversation to have before lodgement rather than after. Our co founder is a CPA, which is the main reason we tend to catch this earlier than most: the lending constraints and the tax position get looked at together rather than in sequence.
The single most expensive mistake in this space is lodging two years of aggressively minimised returns and then deciding to buy. The returns are done, the assessable income is what it is, and the borrowing capacity follows. Timing beats optimisation.
How do you prepare properly?
- Get your lodgements current. Overdue returns or BAS narrow the field immediately, and some lenders will not proceed at all until they are in.
- Separate business and personal banking cleanly. Mixed accounts make an assessor's job harder, and a harder file is a slower and more conservative one.
- Reduce or close undrawn credit card and overdraft limits, since the limit counts against you whether you use it or not.
- Keep the last two years of returns, financials and a current ATO position ready as a set rather than assembling them under time pressure.
- Ask your accountant for a view on add backs before you apply, so the income figure you are working from is the one a lender will recognise.
- Get the file assessed against lender policy before you sign a contract, not after.
What if your income is genuinely uneven?
Seasonal trade, project based work and a business still scaling all produce income that does not sit neatly in an averaging model. That is a documentation problem rather than a disqualification. A clear explanation of why a year looks the way it does, supported by evidence, is treated very differently from an unexplained dip. Contracts in hand, a run of recent BAS or a management account for the current year can all do real work here.
The important thing is that the explanation reaches the assessor. A credit assessor reading a file with no narrative fills the gap with the most conservative assumption available. Supplying the narrative is one of the more valuable things a broker actually does for a self employed applicant.
General information only, current as at August 2026. Lender policy on add backs, documentation and averaging varies between lenders and changes over time, and your own position determines what applies. We do not provide tax advice: speak with your accountant about your returns and structure.
Run the numbers
Frequently asked questions
How long do I need to be self employed to get a home loan?
Two years of returns opens the widest choice at ordinary pricing. Some lenders will consider one year, particularly where you have a track record in the same industry, and alternative verification exists below that at a higher rate.
Do I pay a higher interest rate because I am self employed?
Not on a full documentation loan. Where the returns exist, self employed applicants are generally priced the same as anyone else. A higher rate applies to alternative or low documentation products, which is the trade for the lighter evidence.
What is an add back?
An expense that reduced your taxable income but does not reduce the cash available to service a loan, such as depreciation. Lenders add these back to net profit to reach assessable income. Which ones are accepted varies between lenders.
Will lenders use my best year or my worst?
Most take the lower of the two years, or an average. A strong recent year after a weak one usually produces the average rather than the recent figure, so planning matters more than hoping.
Does a payslip from my own company count as PAYG?
Generally no. Because you control the company, lenders usually assess you as self employed and look through to the business financials rather than treating the payslip as employer income.
Can I get a loan with overdue tax returns?
It narrows your options significantly and some lenders will decline outright. Bringing lodgements up to date is usually the single highest value thing to do before applying.
Should I tell my accountant I am planning to buy?
Yes, and ideally before the return is lodged rather than after. Once the returns are in, your assessable income is largely fixed and your borrowing capacity follows from it.
