Getting a home loan when you’re self-employed can feel like climbing a mountain of paperwork—but it doesn’t have to be. Whether you’re a freelancer, contractor, or small-business owner, the key is knowing which mortgage suits your income style and how to present your financials clearly.
This guide, written by an expert mortgage broker from Hunter Galloway, breaks down your options and shows how to build a strong application that makes lenders say yes.
Let’s dive in…
Table of Contents
Key Takeaways: Self-Employed Home Loans Made Simple
- You don’t need perfect financials to qualify — lenders now offer flexible home loans for self employed borrowers using BAS statements, bank records, or accountant letters.
- Keep your credit score strong and separate business from personal accounts to make your application more credible.
- A deposit of 20% or more can help you avoid Lenders Mortgage Insurance (LMI) and unlock better rates.
- Even with less than two years in business, you may still qualify through alt-doc or low-doc self employed home loans.
- Add-backs like car depreciation or super contributions can boost your assessable income when applying.
- Using a mortgage broker experienced with self-employed applicants gives you access to lenders who understand business cash flow.
- Lenders compare your business performance to others in your industry — showing consistent growth improves your chances.
- Switching from PAYG to business income? You can still use your old payslips and employment history to prove stability.
- Specialist lenders like Pepper Money and others now support shorter trading histories and alternative documentation.
- Always prepare early: tidy your tax returns, maintain stable income flows, and demonstrate genuine savings before you apply.
How To Get A Home Loan When Self Employed?
Working for yourself has lots of perks – you can decide your working hours, you can choose the people you want to work with, and the biggest advantage is you have control over your income.
However, the biggest advantage of being self-employed is also the biggest disadvantage when it comes to getting a home loan, as the banks will sometimes make it harder to get a home loan…
Often, those who are self-employed are asked many more questions and need to produce much more information than people who are in permanent full-time employment.
Why?
Because most lenders are looking for a stable income, which can be hard for some people who work for themselves.
The difference between self-employed home loans and regular loans is that as a self-employed borrower, you need to submit two years’ worth of tax returns, financials and notices of assessment, plus all the questions that come along with everything to do with the finances on your application. Now, this means a lot of plotting around to find your tax returns and have them completed. You must also have been trading in your business for at least 18 months.
But then, from there, it is the same for everyone.
Self-Employed Home Loan Common Issues
Generally speaking, lenders are often cautious when it comes to dealing with those who work for themselves.
In the past, lenders have found that self-employed people don’t always have as much financial stability as their employed counterparts – which is not true at all in our experience.
A few other common issues we have seen include:
- You need to have been in business for at least 18 months or in the same industry for at least 2 years. We usually see this issue with Contractors who might have received a salary in the past and are now self-employed.
- The business is trading, but you have a clever accountant who has reduced your tax bill – but as a result, your tax returns may not show enough profit to service your loan. If this is the case, you can look at Low Doc loan options or review your tax returns with your accountant.
- You have rapidly expanded the business, and profit has increased over 20% year on year. Now, the banks are asking lots of questions. However, there are banks that will only require the most recent year’s tax return because they understand businesses can grow rapidly.
- The lender is using the lower figure from your past 2 years of tax returns. Many banks will adopt the lowest profit figures from your past 2 years of income. The good news is we have lenders that will use your most recent figure, or possibly the higher one or the lowest at 120% of profit, depending on the situation.
The fact is, if you’re self-employed and #killingit, then you’ve got nothing to fear because, at Hunter Galloway, we are dedicated to making sure you get the best self-employed home loan available.
What Does A Lender Look For In Self-Employed Applicants?
Lenders are looking for financial stability and the ability to prove the following.
- Last 12 to 24 months Tax returns
- Sometimes, they will want a letter from your accountant to confirm your business is trading profitably
- At least 18 months to two years of proof of solid income
All this information is about showing the lender that you’re not a high risk, so the more proof you have, the better the outcome will be.
The Rise of the 2025 Entrepreneur
It’s no secret that a growing number of people in different fields are choosing to work for themselves, whether running a small business, freelancing or doing consultancy. Usually, this method of working is structured as a sole trader and is completely fine to get your loan approved.
Here are some ways that we can help the lenders rest easy, and you can be confident in your application as a self-employed individual.
Building A Strong Application As A Self-Employed Borrower
Getting a home loan when you’re self-employed can feel like a maze. The truth is, lenders want proof that your income is stable and your business is sustainable. By preparing the right way, you can build a strong application and boost your approval chances.
1. Show You Have Industry Experience
Most lenders want at least two years of self-employment history. This shows consistency in your field.
- If you’ve been self-employed for less than two years, highlight previous work in the same industry.
- Keep old payslips, invoices, and references to prove your track record.
For example, if you’re a freelance photographer, show that you worked in a studio before starting your own business. This demonstrates continuity of income.
2. Keep Your Credit Score Healthy
Your credit score is one of the first things lenders check.
- Pay all bills and credit cards on time.
- Lower your credit limits if possible.
- Avoid multiple loan applications within a few months.
According to Equifax Australia, a score above 660 is considered “good” and can help you access better interest rates.
3. Boost Your Deposit and Lower Your LVR
A larger deposit reduces your Loan-to-Value Ratio (LVR) — and your risk in the lender’s eyes.
- Aim for at least a 20% deposit to avoid paying Lenders Mortgage Insurance (LMI).
- Example: On a $700,000 home, a 10% deposit means around $12,000 in LMI costs, which you can save with a higher deposit.
4. Keep Business and Personal Finances Separate
Mixing personal and business expenses makes it harder for lenders to see your real income.
- Use separate bank accounts for business and personal spending.
- Maintain clear, consistent records to make income verification easier.
This small step can make a big difference when applying for self employed home loans.
5. Prove Stable and Predictable Income
Lenders prefer steady income over big, irregular payments.
- Pay yourself a regular salary or draw to show consistent cash flow.
- Have up-to-date financial statements and BAS ready for review.
If your income fluctuates, lenders often average your last two years’ income — or use the lowest figure — to assess risk.
6. Understand What Lenders Look For
When you apply for self employed home loans in Australia, here’s what lenders typically assess:
- Business history: At least two years of operation with stable income.
- Tax returns: Your latest returns help lenders forecast future earnings.
- Industry stability: Lenders check sector-wide data. If your industry shows higher default rates, your application may face extra scrutiny.
The Reserve Bank of Australia notes that small-business lending is growing steadily, but lenders still see self-employed borrowers as higher risk — which makes strong documentation essential.
Expert Tip
If you’ve worked for yourself for less than a year, don’t panic. Some lenders may use your previous PAYG income to strengthen your case. A mortgage broker can match you with lenders open to flexible documentation.
How Can I Get My Tax Returns Looking Perfect?
Now that we’ve determined that your tax returns are practically the lifeblood of your application, it’s important to know what lenders look for in tax returns.
Each tax return you send across needs to come with a notice of assessment, which the lender will use to check the signatures and certification to make sure everything matches. The lender will look at your tax return in detail and may even ask for further documentation, depending on whether you’re a company or a sole trader.
Next, they review any odd expenses that they don’t see as part of your regular business. In some cases, they may add this to your income to determine a more realistic figure; others won’t. This is called an add-back. These expenditures can reduce your taxable income, so the lender recognises this as something other than an ongoing expense.
What’s An Example Of An Add-back?
- Interest paid on a business or personal loan
- Extra contributions made to your superannuation fund
- Depreciation on taxable assets
- Net profits you retain in a company
- Any income distributed to others through a trust
- One-off expenses that don’t show up on other tax returns
- Company cars also can sometimes be considered an add-back expense.
Which Banks Are The Best For Self Employed Loans?
Banks’ policies on home loans for self employed people change all the time.
We have included a snapshot to give you an idea of what the major bank’s criteria are for self-employed loans.
The table below tells you the bank’s income criteria depending on whether they use your current year’s income, the lower of the past 2 years’ income or an average.
- Current Year’s Income: The bank will use your current financial year’s income. So, for example, if you had an average income year in FY22, and then in FY23 had a much better year, the bank will use the higher figure and (potentially) look at lending you a higher figure. So, for example, if in FY22 you made $20,000 and then in FY23 you made $100,000, the bank would adopt $100,000 and increase your borrowing capacity significantly.
- Lower of Past 2 Years’ Income: The bank will use the lowest of your past 2 years’ income or profit figures. So, for example, if you had a great year in FY22, making a profit of $50,000 and then a bad year in FY23, making a profit of $40,000, the bank will use the lower figure of $40,000, which will reduce your borrowing power.
- Average of Past 2 Years’ Income: The lender will use the average of your past 2 years’ income. So, for example, if you earned $50,000 in the 2023 financial year and earned $70,000 in the previous financial year, the bank will adopt the average of the two or $60,000 as your income figure. This can also reduce your borrowing power. Some banks will even just adopt 120% of the lower figure, which still works out to be $60,000 in this case.
ANZ | CBA | NAB | Suncorp Bank | Macquarie | Westpac | |
Current Years Income | Yes, if less than 80% LVR | Yes, if less than 80% LVR | ||||
Lower of the past 2 years Income | Yes, up to 90% LVR | |||||
Average of the past 2 years Income | Yes, up to 95% LVR | Yes, up to 90% LVR | Yes, up to 95% LVR |
There are banks that have even more flexible criteria for self employed people. Speak to our expert Mortgage brokers about your situation. Call us on 1300 088 065 or complete our online form for a callback.
Where Do Business Loans Sit?
Depending on how your business is set up, some lenders will send you to the business department. However, beware of setting up a loan as a business, as it won’t benefit you if you’re using your residential property as security on the home loan. Instead, it will only result in more fees and a higher interest rate. So, look for a lender that offers standard residential rates. Our team of experts will help you with this situation through an in-depth consultation.
Read more: Five questions to ask your mortgage broker.
What About A Low-Doc Loan? Am I Eligible?
You could be. But, again, it really comes down to the lender and whether they will allow you to submit an income declaration instead of your tax return. This will then be used to decide whether or not they will give you a home loan.
The problem with low-doc loans is that they come with strings attached. For example, your borrowing capacity will be lowered, and you’ll be charged Lenders Mortgage Insurance (LMI). So it really comes down to your priorities and what’s more important to you.
In fact, many banks are starting to get rid of the low doc loan option. This is so that they can simplify their offerings. On the flip side, getting rid of low-doc loans may make it more difficult for small to medium-sized businesses to obtain a home loan when their income doesn’t meet the lending criteria.
These days, you still need to provide some documentation with low doc loans. This includes:
- Business Activity Statement (BAS) for the last 12 months showing your annual revenue
- A letter from your accountant confirming your total income
- Business banking statements showing your income
- Older tax returns from 2+ years ago
- Management accounts, or profit & loss statements
Full-Doc vs Alt-Doc Loans: Snapshot
Below is a quick comparison of the main types of self-employed home loans, including documentation needs, trading period, and who each loan suits best.
Loan Type | Typical Docs Needed | Minimum Trading Period | Max LVR | Ideal For | Works Best For |
Full-Doc Home Loan | 2 years of business & personal tax returns + Notices of Assessment + financial statements | 2 years or more | Up to 95% | Established businesses with steady income | Long-term sole traders, company directors, or business owners with stable earnings |
Alt-Doc (Low-Doc) Home Loan | BAS statements + business bank statements + accountant’s letter (some lenders also accept profit & loss reports) | 6 to 12 months | Up to 80% | New or fast-growing businesses without two full tax years | Contractors, freelancers, ABN holders, start-ups |
Low-Doc Home Loan (Specialist Lender) | Declaration of income + ABN registration + 1 year BAS or bank statements | 1 year (min.) | Up to 85% | Self-employed borrowers with complex income or recent start-ups | Business owners or sole traders recovering after income dips |
Specialist or Non-Conforming Home Loan | Mix of documents – BAS, invoices, bank statements, contracts + explanation of income variation | Case-by-case | Up to 80% | Borrowers with irregular income, credit issues, or short trading history | Self-employed borrowers with bad credit or fluctuating income |
Pros and Cons by Loan Type
Loan Type | Pros | Cons |
Full-Doc Home Loan |
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Alt-Doc (Low-Doc) Home Loan |
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Low-Doc Home Loan (Specialist Lender) |
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Specialist or Non-Conforming Home Loan |
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BONUS: Massive Home Loan Changes For Self Employed/Business Owners.
The banks have made it easier to get a home loan by accepting your self-employed salary as an income in the assessment without too much verification required. So, if you’ve been getting a regular salary from your business, you can use this to apply for a home loan instead of a mountain of paperwork.
All you have to do is submit any one of the following three things:
- Proving six months salary credited into your bank account.
- Showing a pay slip with more than six months year-to-date on the payslip itself.
- If you have less than six months year-to-date on your income payslip, you can actually provide a pay slip plus your pay-as-you-go summary or a financial tax return to show your income is consistent.
Remember, you only need to submit one of these three. However, regardless of which option you choose, you will need an accounts letter on company letterhead with the date your business started, a statement saying your salary is regular and continuing, plus evidence that there’s enough profit for your business to sustain itself.
With this new method, the bank only uses your salary to assess your ability to repay your loan. They will ignore any profit your business is making, no matter how big it is. But that shouldn’t be a problem as long as you can afford to repay the loan.
This change is a big win for many business owners with a company structure that they’re paying themselves a salary through the company, and they don’t really want to go into the weeds about their business by providing all the financials. This works well if you just want a quick and easy solution.
Unfortunately, if you’re a sole trader, you’ll often pay yourself to your own ABN, so you still need to provide your financials to the banks for the last two years.
Another thing that’s worth mentioning is that if you’re thinking of buying an expensive mansion and your borrowing is limited, it’s better to provide your financial statements of your business or apply for things like low documentation loans where the banks can potentially extrapolate a little bit more income than you might be paying yourself as a wage.
This is where working with a mortgage broker can really help you because they can guide you in the right direction. They can help you choose from the following 3 options:
- The low doc option, where you provide less information, but you might be able to increase your borrowing ability
- The full documentation path where you still provide two years’ worth of documentation, but you can extrapolate your profit and use that in your income
- The new methodology where you just use your income that you’re receiving from the business and really go from there.
Real-Life Scenarios: Self-Employed Home Loan Financing
These quick case studies show how different types of self-employed borrowers successfully got finance for their home loans — even with complex or evolving income situations.
Example 1 – Contractor Turned Consultant
Problem: James, a 42-year-old construction contractor, had recently transitioned into independent consulting after years working under a company ABN. His income was solid but inconsistent month to month, and lenders initially viewed his finances as too unstable.
Docs Used: Two years of ABN history, business activity statements, and add-backs for car depreciation, business equipment, and voluntary super contributions to boost his taxable income.
Outcome: By including legitimate add-backs, his broker increased his assessable income and James was approved for an 85% LVR alt-doc loan to purchase and investment property in Brisbane.
Example 2 – Small Business Owner
Problem: Sarah, a café owner who had left her PAYG job 14 months earlier, was worried her short trading history would hold her back. She’d just started paying herself a consistent company salary but didn’t have two full financial years of business returns.
Docs Used: BAS statements showing steady growth, a letter from her accountant confirming ongoing profitability, and six months of company payslips.
Outcome: Under a new lender policy recognising shorter trading periods for incorporated businesses, Sarah was approved for a full-doc home loan at 90% LVR and was able to buy her family home
Example 3 – Freelancer Under 1 Year
Problem: Alex, a 29-year-old graphic designer, had only been freelancing for nine months after leaving a full-time design agency role. Most banks turned him down due to insufficient tax history.
Docs Used: Six months of business bank statements, a signed letter from his accountant verifying income continuity, and his previous PAYG group certificate.
Outcome: The lender used his strong transaction history and consistent client invoices to approve an 80% LVR alt-doc home loan. Alex was able to purchase an apartment while continuing to build his design business.
Home Loan For Self Employed Borrowers FAQs
Can I still qualify if my accountant reduces my taxable income?
Yes — many lenders assess add-backs like car depreciation, super contributions, or one-off business costs when calculating your income. A good mortgage broker can match you with lenders who understand self employed home loans and allow these adjustments.
How many years do I need to be self-employed to get a home loan?
Most lenders prefer at least two years of self-employment history. However, some offer alt-doc or low-doc home loans for borrowers with as little as six to twelve months’ trading history — especially if you can show prior experience in the same field or strong cash flow.
What documents will a lender accept if I’m self-employed?
You’ll usually need two years of tax returns and Notices of Assessment for full-doc loans. Alt-doc loans may accept BAS statements, business bank statements, or an accountant’s letter instead. Providing consistent, verifiable income evidence will improve your approval chances.
Can I use previous PAYG income if I recently started my own business?
Yes — if your new business is in the same industry, lenders may use your previous PAYG income to demonstrate income stability. Combining this with current bank statements or BAS reports can strengthen your application.
What is an add-back expense and how will it help my borrowing capacity?
Add-backs are non-recurring business expenses that lenders “add back” to your taxable income — such as depreciation or interest on one-off business purchases. This can increase your assessable income and help you qualify for a larger home loan.
How does my deposit size (LVR) affect a self-employed application?
A larger deposit lowers your loan-to-value ratio (LVR) and reduces lender risk. For self-employed borrowers, aiming for a 20% deposit can help avoid Lenders Mortgage Insurance (LMI) and improve your approval odds.
What is a Low-Doc or Alt-Doc home loan and am I eligible?
Low-doc or alt-doc home loans are designed for self-employed borrowers who can’t provide full financials. If you can show 6–12 months of BAS statements, bank records, or an accountant’s declaration, you may qualify for up to 80% LVR.
I have been self-employed for one year — can I get a mortgage?
Yes, but options are limited. Some specialist lenders accept one year of trading history, especially if your business shows consistent revenue and you have prior experience in the same role. A mortgage broker can guide you to the right lender.
How much deposit do I need for a self-employed mortgage?
Most self-employed borrowers need at least a 10–20% deposit. With a strong application and clean credit history, you could qualify for up to 90–95% LVR on a full-doc loan. However, a 20% deposit remains the safest path to avoid LMI and secure better rates.
Next Steps And Settling Your New Home
Our team at Hunter Galloway is here to help you buy a home in Australia. Unlike other mortgage brokers who are just one-person operators, we have an entire team of home loan experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please get in touch here, and we can book a time that suits you – either a phone call information session or a face-to-face meeting (which doesn’t cost anything for you).
Further Reading For Home Buyers…
Note: Information is current as of November 2025 and subject to change without further notification. Any home loan application is subject to credit approval and verification of all supporting documentation. Consider this article as general in its nature and not as advice.
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