Self-Employed Home Loans Australia: The Complete Guide to Getting Approved
Getting a home loan when you're self-employed doesn't have to be complicated. While some banks and lenders require extra documentation from business owners, contractors, and sole traders, thousands of self-employed Australians successfully secure home loans every year – and you can too. At Buyvest, we've spent over 10 years helping self-employed borrowers in Sydney and across NSW navigate the home loan process. This complete guide answers every question you need to get approved, from documents required to deposit amounts and income verification methods.
Can I Get a Home Loan If I Am Self-Employed?
Yes, absolutely! Self-employed Australians can get home loans with the same interest rates and features as PAYG employees. The main difference is documentation – lenders need more proof that your income is stable and sustainable. Whether you're a sole trader, contractor, freelancer, company director, partnership member, or trust beneficiary earning business income, you qualify as self-employed and can apply for a home loan. The key is understanding what lenders look for and preparing your application properly.
Who Is Classified as Self-Employed for Home Loans?
Lenders typically consider you self-employed if you:
Earn more than 50% of your income from a business you own or control
Are a non-PAYE taxpayer (not receiving regular payslips with PAYG tax)
Have direct control over your work, hours, and business decisions
Are independent of external employer controls
Contribute operating capital to your business
Common Self-Employed Categories:
Sole traders – Operating under your own ABN
Contractors – Working on contracts rather than as employees
Freelancers – Project-based income from multiple clients
Company directors – Running your own company
Partnership members – Sharing business ownership
Trust beneficiaries – Receiving distributions from family or business trusts
Shareholders – Earning income through company dividends or wages
Is It Harder to Get a Loan If Self-Employed?
Being self-employed does add complexity to the home loan process, but "harder" doesn't mean impossible. Here's what makes self-employed home loan eligibility different:
Additional Requirements:
More documentation – Tax returns, financial statements, and business records
Income verification – Proving your business generates consistent profit
Longer trading history – Most lenders want 2 years minimum (some accept 1 year)
Financial stability proof – Demonstrating your business is viable long-term
Why Lenders Need More Information:
Self-employed income can fluctuate month-to-month, unlike regular PAYG salaries. Lenders want assurance you can comfortably afford repayments even during slower business periods. By showing consistent or growing income over time, you prove your business is reliable.
The good news? Working with an experienced mortgage broker like Buyvest makes this process significantly easier. We know which lenders are self-employed friendly and can present your application in the best possible light.
How Long Do I Need to Be Self-Employed to Get a Loan?
Most lenders require 2 years of self-employment history through completed tax returns and financial statements. This demonstrates your business has staying power and generates consistent income.
Less Than 2 Years? You Still Have Options:
NAB and select lenders accept 1 year of financials if:
Your loan-to-value ratio (LVR) is 80% or less (20%+ deposit)
Your business shows strong profitability
You have substantial industry experience
Specialised lenders like Pepper Money accept 6 months of:
ABN and GST registration
Business Activity Statements (BAS)
Bank statements showing business income
What Helps When You Have Limited Trading History:
Even with less than 2 years self-employed, lenders may approve your application if you demonstrate:
Extensive industry experience – 10+ years working in your field before going self-employed
Previous employment stability – Strong work history showing financial responsibility
Business growth trajectory – Rapidly increasing revenue and profitability
Higher deposit – 20%+ shows lower risk to lenders
Additional assets – Investment properties, shares, or substantial savings
Each lender assesses applications individually. At Buyvest, we've successfully helped clients with under 2 years self-employment by highlighting these supporting factors.
Self-Employed Home Loan Requirements: Essential Documentation
Understanding exactly what lenders need prevents delays and improves approval chances. Requirements vary based on your business structure.
For Sole Traders:
Personal tax returns – Last 2 financial years
ATO Notice of Assessments – Last 2 years
Bank statements – 3-6 months showing business income
ABN registration – Proof of active business
Optional: Recent BAS statements if limited tax history
For Partnerships, Companies & Trusts:
Everything sole traders need, plus:
Business tax returns – Last 2 years
Company/trust returns – Last 2 years
Financial statements – Accountant-prepared profit & loss, balance sheets
Depreciation schedules – Showing asset values
Business debt details – Leases, business loans, credit cards
Additional Documents That Strengthen Applications:
Accountant's letter – Confirming business profitability and viability
Client contracts – Proving ongoing work commitments
Business registration certificates – Official proof of operations
Credit card statements – Last 3 months for all accounts
Savings account statements – Demonstrating financial buffer
Pro tip: Organise these documents before applying. Missing paperwork is the #1 cause of loan application delays.
How Much Deposit Do I Need for a Self-Employed Mortgage?
While standard home loans can accept 5-10% deposits, self-employed borrowers typically need:
Recommended Deposit Amounts:
10-20% minimum for competitive rates and mainstream lenders
20%+ ideal to avoid Lenders Mortgage Insurance (LMI) and access best rates
Additional savings buffer showing 3-6 months of living expenses
Benefits of a Larger Deposit:
✅ Better interest rates – Lower LVR means lower risk
✅ More lender options – Mainstream banks more willing to lend
✅ Lower monthly repayments – Borrowing less reduces costs
✅ Avoid LMI – Save thousands on insurance premiums
✅ Faster approval – Stronger applications process quicker
What Counts as "Genuine Savings"?
Lenders prefer deposits accumulated over time (3+ months) rather than:
Sudden large deposits or gifts
Recently sold assets
Borrowed money
Exception: First home buyers can use government grants (First Home Owner Grant) as part of their deposit.
Simplified Home Loans for Self-Employed Australians
Not all self-employed home loans require mountains of paperwork. Three main verification methods exist, each suited to different situations.
Method 1: Self-Employed Payslips for Income Verification
If you pay yourself a regular salary through your company, you can use a streamlined process similar to PAYG employees.
Requirements:
✅ Minimum 6 months of consistent payslips showing year-to-date income
✅ Bank statements confirming salary deposits for 6 months
✅ Accountant's letter verifying your business traded profitably for 2 years
✅ Minimum 2 years trading history (case-by-case exceptions possible)
Pros:
Simple, straightforward documentation
Similar to PAYG application process
Business debts don't reduce borrowing capacity
Faster processing times
Cons:
Only considers salary income (not business profits)
Not available for sole traders or partnerships
Must have consistent, regular salary payments
May limit borrowing capacity
Best for: Company directors or shareholders paying themselves regular wages who want simplicity over maximum borrowing power.
Method 2: Full Income Verification for Self-Employed
The most comprehensive method that considers your business profits for maximum borrowing capacity.
Required Documentation:
Personal tax returns (2 years)
Personal Notice of Assessments (2 years)
Company/business tax return (most recent year)
Accountant-prepared financial statements (P&L, balance sheets for 2 years)
Depreciation schedules
Business Activity Statements (if income varies 20%+ between years)
Business liability statements (loans, leases, credit)
Pros:
✅ Business profit counts toward income
✅ Maximises borrowing capacity
✅ Comprehensive financial picture
✅ Most competitive rates available
✅ Allows for "add-backs" (more on this below)
Cons:
Extensive documentation required
More thorough review process
Takes longer to assess
Best for: Established businesses with strong profits wanting maximum borrowing power and best rates.
Method 3: Low Doc / Alt Doc Self-Employed Home Loans
For borrowers who can't provide full financial documentation – typically newer businesses or non-standard accounting.
Typical Requirements:
ABN registration (6 months minimum, some require 2 years)
GST registration (6-12 months)
Recent Business Activity Statements (last 2 quarters)
Accountant's declaration letter
Bank statements (6 months showing business income)
Trade-offs:
⚠️ Higher interest rates (typically 0.5-2% above standard)
⚠️ Lower maximum LVR (usually 80% max)
⚠️ Larger deposit required (20%+)
⚠️ Fewer lender options
Best for: Recently self-employed (under 1-2 years) or those with complex tax structures unable to provide standard documentation.
Understanding "Add-Backs" That Increase Your Borrowing Power
When lenders assess your business income, they allow certain non-cash expenses to be "added back" to your profit, increasing your serviceability.
Common Add-Backs Include:
Depreciation – Non-cash accounting expense
One-off expenses – Unusual costs not expected to repeat
Interest on business loans – Deducted business financing costs
Business vehicle expenses – Car allowances and deductions
Home office deductions – Portion of home costs claimed
Superannuation contributions – Owner's super payments
Trust distributions – Income distributed to family members
Example of Add-Backs in Action:
Scenario: Your tax return shows $80,000 net profit after:
$15,000 depreciation
$5,000 one-off equipment purchase
$8,000 vehicle expenses
Lender calculation: $80,000 + $15,000 + $5,000 + $8,000 = $108,000 assessable income
This can increase your borrowing capacity by $100,000-$200,000 depending on the lender!
Important: Work with an experienced broker like Buyvest to identify and justify legitimate add-backs. Different lenders accept different add-backs.
Tax Minimisation Strategies: A Double-Edged Sword
Many accountants recommend tax minimisation strategies for business owners – claiming maximum deductions to reduce taxable income. While this saves on tax, it reduces your apparent income to lenders.
Common Tax Strategies That Hurt Loan Applications:
Excessive depreciation claims
Large one-off expense deductions
High personal use vehicle claims
Maximising every possible deduction
Strategic Tax Planning for Home Buyers:
If you're planning to apply for a home loan in the next 1-2 years:
Discuss with your accountant – Balance tax savings vs loan serviceability
Limit aggressive deductions – Show stronger income in tax returns
Time your equipment purchases – Avoid large deductions in application years
Document add-backs clearly – Make it easy for lenders to adjust income
Tip: Some lenders are more generous with add-backs than others. Buyvest knows which lenders work best for your situation.
Common Reasons Self-Employed Applications Get Declined
Understanding why applications fail helps you avoid these pitfalls:
1. Incomplete or Outdated Documentation
Solution: Ensure all tax returns and financials are current and lodged with the ATO before applying.
2. Inconsistent or Declining Income
Solution: Wait until you have 2 years of stable or growing income. If one year is lower, be prepared to explain why (e.g., COVID impact, business transition).
3. Excessive Business Debt
Solution: Pay down business credit cards and loans before applying. High business debt reduces borrowing capacity.
4. Short Trading History
Solution: Use specialised lenders accepting shorter histories, or wait until you have 2 years of returns.
5. Industry Risk Profile
Solution: Some industries (hospitality, construction, seasonal businesses) face tighter criteria. Work with a broker who knows which lenders are flexible for your industry.
6. Poor Credit Score
Solution: Check your credit report 3-6 months before applying. Dispute errors and address any defaults or late payments.
7. Messy Bank Statements
Solution: Avoid gambling transactions, direct debit dishonours, frequent overdrafts, and unexplained large deposits for 3-6 months before applying.
Step-by-Step: The Self-Employed Home Loan Process
Step 1: Preparation
Gather 2 years of tax returns and ATO notices
Request financial statements from accountant
Check credit score and address issues
Save additional deposit if possible
Clean up bank statements
Step 2: Pre-Approval
Contact Buyvest for a free assessment
Submit documentation for lender review
Receive conditional approval with borrowing capacity
Get pre-approval certificate for property shopping
Why pre-approval matters: Shows sellers you're serious and financially ready. Speeds up the purchase process when you find the right property.
Step 3: Property Search
Shop within your approved budget
Consider ongoing costs (rates, maintenance, insurance)
Factor in buffer for slower business months
Step 4: Formal Application
Submit full application with property details
Lender orders property valuation
Final assessment of your financial position
Conditional approval with specific requirements
Step 5: Loan Settlement
Meet any remaining lender conditions
Arrange building and pest inspections
Organise insurance and utilities
Sign loan documents
Settlement day – property ownership transfers!
Total timeline: 6-10 weeks from start to settlement for most self-employed borrowers with complete documentation.
Self-Employed One Year of Income: Special Considerations
Some lenders will assess applications with just 1 year of financials, but with conditions:
Lenders Accepting 1 Year:
NAB – If LVR ≤ 80% (20% deposit)
Select non-bank lenders – With higher interest rates
Specialist lenders – For strong business profiles
Requirements for 1-Year Applications:
Minimum 20% deposit
Exceptional business profitability
Strong industry experience
Excellent credit score
Substantial cash reserves
Accountant's letter confirming viability
Industry-Specific Considerations
Different industries face different lending criteria:
Lower Risk (Easier Approval):
Professional services (accounting, legal, consulting)
Healthcare (doctors, dentists, allied health)
Established franchises
Technology and IT services
Moderate Risk:
Retail businesses
Real estate agents
Tradespeople with steady contracts
Marketing and creative services
Higher Risk (Tighter Criteria):
Hospitality (cafes, restaurants)
Construction and building
Seasonal businesses (tourism)
Startups and new ventures
Don't let your industry discourage you! Buyvest knows which lenders specialise in different industries and can match you accordingly.
Fast-Track Options for Self-Employed Borrowers
Fast Track Assessment:
If you have:
20% deposit saved
Last 2 years of ATO notices
Regular salary/distributions
No reliance on other income sources
You can skip providing full business financials for faster processing.
Other Fast-Track Opportunities:
Strong existing bank relationship
Refinancing with current lender
Purchasing in established suburbs
Clean credit history
Tips to Strengthen Your Self-Employed Home Loan Application
Financial Preparation:
Maintain clean records – Organised, current documentation
Build savings buffer – 3-6 months living expenses beyond deposit
Minimise personal debt – Pay down credit cards and personal loans
Improve credit score – Pay everything on time for 6+ months
Business Optimisation:
Show consistent growth – Increasing revenue and profit trend
Maintain business registrations – Current ABN, GST, licenses
Document recurring contracts – Prove ongoing income streams
Separate personal and business – Clear distinction in accounts
Application Strategy:
Apply at the right time – When financials are strongest
Use a specialist broker – Self-employed expertise matters
Be transparent – Explain any anomalies upfront
Provide context – Help lenders understand your business model
Frequently Asked Questions About Self-Employed Home Loans
Can self-employed people get the same interest rates as employees?
Yes! Self-employed borrowers qualify for identical interest rates as PAYG employees. Your rate depends on your deposit size, credit score, and loan features – not your employment type.
What if my income fluctuates significantly?
Lenders typically average income across 2 years. If one year is significantly lower, they may use the lower amount conservatively. Providing contracts or consistent BAS statements helps demonstrate ongoing income stability.
Do I need an accountant?
While not legally required, an accountant is highly recommended for self-employed home loans. They prepare financial statements in the format lenders need and can provide supportive documentation letters.
What if I've only been self-employed 18 months?
Some lenders will assess your application with less than 2 years if you have strong industry experience, high deposit, and clear income trajectory. Alt doc lenders may also be suitable.
Can I include my partner's income?
Yes! If applying jointly, your partner's income (whether PAYG or self-employed) is combined with yours for borrowing capacity calculations.
What's the maximum I can borrow?
This depends on your assessable income, expenses, debts, and deposit size. Most self-employed borrowers can access 5-6 times their annual assessable income, similar to employees.
Why Choose Buyvest for Your Self-Employed Home Loan?
At Buyvest, we specialise in helping self-employed Australians navigate the complexities of home loan applications. With over 10 years as your trusted local mortgage broker in Ryde, we offer:
Specialised Self-Employed Expertise:
✅ Deep knowledge of which lenders are self-employed friendly
✅ Experience with all business structures (sole traders, companies, trusts, partnerships)
✅ Understanding of add-backs and income optimisation strategies
✅ Industry-specific lending insights
Personalised Service:
✅ Free initial consultation to assess your situation
✅ Documentation checklist tailored to your business structure
✅ Application preparation to highlight your strengths
✅ Direct communication with lenders on your behalf
✅ Support throughout the entire process
Access to Multiple Lenders:
✅ Major banks (Westpac, NAB, CommBank, ANZ)
✅ Non-bank lenders (Pepper Money, specialised lenders)
✅ Competitive rate negotiations
Local Sydney Knowledge:
✅ Understanding of Sydney/NSW property market
✅ First Home Buyer grant expertise
✅ Stamp duty concession guidance
✅ Local property insights
Ready to Get Your Self-Employed Home Loan Approved?
Don't let being self-employed hold you back from homeownership. With proper preparation and expert guidance, you can secure a competitive home loan that works for your unique business situation.
Start Your Journey Today:
Phone: 0426 002 202
Email: Hello@buyvest.com.au
Visit: Level 2 / 129 Blaxland Rd, Ryde NSW 2112
What to Bring to Your First Consultation:
Last 2 years tax returns (if available)
Recent ATO notices of assessment
Business financial statements (if you have them)
Approximate savings/deposit amount
Property budget and goals
Let Buyvest turn your self-employed home loan concerns into confidence. We've helped hundreds of business owners, contractors, and sole traders achieve their homeownership dreams – and we're ready to help you next.
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Important stuff:
Please note that the views and opinions expressed in this post are general information only, and this is not financial advice.
Any advice and information is provided by Buyvest Pty Ltd ABN 91 684 841 496, Australia Credit Licence No. 567392 and is general in nature, for educational purposes only and is not intended to constitute specialist or personal advice. This website has been prepared without considering your objectives, financial situation or needs. Therefore, consider the appropriateness of the advice for your situation and needs before taking any action. It should not be relied upon to enter into any legal or financial commitments. Specific investment advice should be obtained from a suitably qualified professional before adopting any investment strategy. If any financial product has been mentioned, you should obtain and read a copy of the relevant Product Disclosure Statement and consider the information contained within that Statement concerning your circumstances before deciding whether to acquire the product. You can obtain a copy of the PDS by emailing hello@buyvest.com.au. If you want to change your financial circumstances, such as applying for a loan, all loan applications are subject to credit approval.
All information on this website is subject to change without notice.
