How to get a home loan when you're self-employed

Can you really get a home loan when you work for yourself?

Yes. Plenty of sole traders, company directors, contractors and partners buy and refinance homes every year. The catch is not that lenders dislike self-employed people. It is that they have to be satisfied about your income, and a business owner’s income does not arrive on a neat payslip.

A salaried borrower proves income with a few payslips. A self-employed borrower proves it with a trail: tax returns, notices of assessment, BAS lodgements and bank statements. When that trail is complete and recent, getting a loan can be quite straightforward. When it is late, patchy or heavily reduced by deductions, the same person can look much weaker on paper than they are in real life.

That gap between what you earn and what the paperwork shows is where most self-employed knockbacks come from, and it is also where a broker earns their keep. At Ownright Custom Finance, director Trevor Scott has spent more than 40 years in finance and the team works on exactly these files, Australia-wide.

How do lenders work out a self-employed person’s income?

Lenders are looking for income that is both genuine and likely to continue. Under responsible lending rules, ASIC says credit licensees must make reasonable inquiries about a consumer’s financial situation, take reasonable steps to verify it, and assess whether the loan is not unsuitable. For a self-employed borrower, that verification step is where the paperwork comes in.

In practice, lenders tend to look at:

• Taxable income shown on your personal return, and for company or trust structures, the distributions or wages you actually draw.
• Business profit shown in your financials, where relevant.
• Trend over time. Rising or steady income reads better than a sharp drop in the latest year.
• Add-backs. Some lenders will add certain non-cash or one-off items back to profit, such as depreciation, which can lift assessable income. Policies on this differ between lenders.
• Existing commitments, including business debt, tax debt, personal loans and credit card limits.

Because policies vary, the same set of figures can produce quite different borrowing outcomes with different lenders. That is the reason matching matters more than shopping around blindly.

What are the main loan types for self-employed borrowers?

There are three broad paths. Which one suits depends on how current your lodgements are and how your income has moved.

Loan type	How income is verified	Often suits
Full doc	Tax returns, notices of assessment, financials, bank statements	Borrowers with up-to-date lodgements and steady taxable income
Low doc	Alternative evidence such as BAS, bank statements and an accountant’s letter	Borrowers whose tax returns are late or understate cash flow
Alternative doc or specialist	Case-by-case evidence of income and repayment ability	Newer businesses, unusual structures or complicated histories

Moneysmart describes a low-doc loan as one that asks for less documentation to verify income, assets and debts, and notes that these loans are mainly used by self-employed people and small business owners. The trade-off it flags is that they usually cost more and can carry limiting terms. That is a fair summary of the choice: low doc can open a door, but it is worth understanding what you are signing up to.

If you want the detail on paperwork, our low doc home loan requirements checklist lists what to gather, and the low doc loans page explains how those loans are arranged.

Who does this guide suit?

This guide is aimed at people who:

• Run a business as a sole trader, company, partnership or trust and want to buy, refinance or release equity.
• Have had a bank say no despite a healthy business.
• Are between tax returns, or have a late lodgement they are still catching up on.
• Have a new business and previous employment in the same field.
• Want to understand the process before talking to a broker.

If you are in the early years of your business, the home loans for new business owners page goes deeper on that specific situation.

What do lenders look at beyond income?

Income is only one part of the picture. A lender also weighs:

• Deposit or equity. More skin in the game usually widens your options.
• Credit history. Defaults, late payments and applications all show up. The OAIC says defaults and credit enquiries each stay on a credit report for five years, and repayment history for two.
• Tax position. Outstanding ATO debt, payment plans and missed BAS lodgements all get noticed.
• Business stability. Industry, customer concentration, how long you have traded and whether your ABN has been active.
• The property. Type, location and condition affect which lenders will consider it.
• Living expenses and debts. Lenders look at what you spend as well as what you earn.

Self-employed borrowers sometimes focus so hard on income that they overlook the rest. A tidy conduct record on existing loans can offset a quirky income history.

How should you get your records ready?

Moneysmart’s guidance for people in business is simple and relevant here: keep receipts, keep business and personal money in separate bank accounts, and track income and expenses regularly. Those habits make your file easy to read, and an easy-to-read file is easier to approve.

Before you apply, it helps to have:

• The last two years of personal tax returns and notices of assessment, where available.
• Business tax returns and financials if you operate through a company or trust.
• Recent BAS lodgements, which the ATO describes as the form used to report GST and PAYG amounts, among others.
• Six or more months of business and personal bank statements.
• A list of assets and liabilities, including any ATO payment arrangements.
• ID, plus details of the property you are buying or refinancing.

Gathering these before the first conversation saves days later, especially when time is tight. Our self-employed home loans page shows how the process runs from there.

What if my tax returns show a low income?

This is the most common frustration. Business owners legitimately reduce taxable income through deductions, and then discover the same deductions limit borrowing power.

There are a few ways through it, depending on the lender and the loan:

1. Add-backs. Some lenders add certain deductions back to profit before assessing income.
2. Alternative evidence. Where tax returns understate cash flow, some lenders accept BAS and bank statements instead, usually under a low doc arrangement.
3. A larger deposit or more equity. This can make a lender more comfortable.
4. A different structure. Sometimes who is on the loan, or which property is offered as security, changes the answer.

None of these are guaranteed. They are the sorts of levers a broker can explore with you to see what fits.

What does a worked example look like?

This is an illustrative scenario only and does not describe a real client.

A sole trader in the trades has been running her business for about four years. Her tax returns are lodged but show modest taxable profit after equipment deductions. She has a deposit, a steady stream of repeat customers and clean bank statements. A mainstream lender assessed her on the latest tax return alone and declined.

Rather than apply to another lender at random, her broker reviewed the file, noted where the policies on add-backs and averaging differ, and matched her to a lender whose approach suited how her income actually looked. The conversation also covered which documents would strengthen the application, including BAS and an accountant’s letter. Whether a particular lender agrees is never guaranteed, but the example shows why fit matters.

How does Ownright approach a self-employed home loan?

We start by understanding the full story, not just the numbers on a form. Trevor Scott and the team ask what the business does, how income has behaved over time, what the plan is for the property and where previous lenders stumbled.

From there we look at the lenders and structures that suit your particular file, including options that most brokers never mention because they sit outside the usual lender lists. That is the whole point of Ownright: finding a path where the obvious one has closed. Nothing is promised in advance, since every loan depends on circumstances, but the search is thorough and honest.

If your income has been affected by a tax debt, the home loans when you owe the ATO page covers that scenario. If speed is part of the picture, the non-bank lenders explained guide shows why non-bank routes sometimes move differently.

When you are ready, start your enquiry on our apply page and tell us what you are trying to achieve.

How long does a self-employed application take?

It depends on the lender, the loan type and how quickly your documents arrive. A file with current tax returns, notices of assessment and tidy statements can move comparatively smoothly. A file that needs an accountant’s letter, a late return lodged first or an explanation of a tax payment arrangement takes longer, simply because there is more to verify.

Settlement dates are the other clock. If you are buying, the contract will set the timeline, so it is worth speaking to a broker before you commit to a short settlement. Where time really is tight, specialist and non-bank options can sometimes be quicker, though that is never a certainty and depends on the security and the paperwork.

What if my business is a company or trust?

Structure changes how income is read. Where you trade through a company, lenders often look at the wages and dividends you draw as well as company profit, and some will consider retained profit if you control the business. Trusts add another layer, because income may flow to beneficiaries in different shares. None of this is a barrier, but it means the lender needs the right financials to follow the money. Tell your broker how your structure works at the first conversation, and bring the latest company or trust returns so the policy match can be made properly.

What mistakes do self-employed borrowers commonly make?

• Applying everywhere at once. Multiple enquiries on your credit file can make you look more desperate than you are.
• Leaving lodgements late. An unlodged return or BAS can stall an otherwise good application.
• Mixing personal and business spending. It muddies bank statements and makes income harder to read.
• Ignoring tax debt. Unaddressed ATO debt is a red flag, while a managed payment plan is easier to explain.
• Assuming one no means no. Policies differ sharply, so a decline from one lender is information, not a verdict.
• Over-optimising for tax. Heavy deductions are legitimate, yet planning ahead of a purchase can help your borrowing position.

When is it worth getting help from a broker?

A broker earns their place when the file is not straightforward. If you are salaried with a deposit and a clean history, the process is mostly mechanical. If you are self-employed with a late lodgement, a new business, a trust structure or a tax payment plan, the right lender matters a great deal.

A good broker also lowers the chance of wasted applications. Our guide on how to choose a mortgage broker explains what to ask before you commit to anyone, including us.

What should you do next?

Start by collecting your documents and writing down what you want the loan to achieve. Then talk to someone who works with self-employed borrowers every day. Call Ownright Custom Finance on 03 7043 7233 or send us the details through our apply page. We work Australia-wide from our Knoxfield, Victoria head office, and we will be straight with you about what looks possible.

If Ownright can’t find the solution, no one can.