Home loans for new business owners

Can you get a home loan in your first years of business?

Yes, with the right lender and the right preparation. The usual advice is that you need two full years of tax returns to qualify. That is true for many lenders, but not all. If you recently left a job to start a business, bought into a franchise or began contracting, the question is not whether you can borrow but which lenders will treat your situation fairly.

Ownright Custom Finance works with new business owners across Australia. Trevor Scott’s team looks at the whole picture, including what you earned before, how fast the business is growing and how much you have saved, and then finds lenders who weigh those things properly.

Why is a new business harder to assess?

A lender’s job is to judge whether your income will continue. A salary comes with a contract and a payslip. A new business comes with a first set of figures that may be unrepresentative. Typical concerns include:

• Start-up costs reducing first-year profit.
• Income that has not yet had time to settle into a pattern.
• Few or no lodged returns.
• Business and personal finances that are still intertwined.
• Uncertainty about whether the business will survive its early years.

None of this means a loan is impossible. It means evidence has to carry more of the load.

What evidence helps?

Evidence	What it shows
Previous employment history in the same field	You have relevant skill and a record of earning
Returns lodged so far	Actual income for the period, even if short
Business activity statements	Turnover and GST over recent quarters
Business and personal bank statements	Regular receipts and healthy cash flow
Contracts, orders or a client pipeline	Income likely to continue
Savings and deposit	Financial discipline and a buffer
Accountant’s letter	A professional view of how the business is performing

The ATO explains that the BAS is how businesses report and pay obligations such as GST and PAYG instalments, so lenders treat it as a recent snapshot of activity. Registration details on the Australian Business Register also help confirm when you started.

Who does this page suit?

• Tradies who have recently gone out on their own.
• Professionals, such as consultants and allied health practitioners, who have opened their own practice.
• Franchise buyers in their first year.
• Hospitality and retail owners who have just opened their doors.
• People who moved from employment into freelance or contract work.

If you work as a contractor or gig worker, see home loans for contractors and gig workers. If your business has traded for longer, self-employed home loans may suit better.

Not sure whether to apply now or wait?

Talk to us before you commit to a contract. Timing can matter as much as the lender.

What do lenders look at?

• Time in business and industry. Both the business and your wider experience.
• Income evidence. Whatever combination of returns, BAS and statements you can supply.
• Deposit and savings. Genuine savings and a healthy deposit show resilience.
• Debts and commitments. Business loans, equipment finance and personal debts.
• Household income. A partner’s income may support the application.
• Credit history. Particularly any business-related defaults.

Should I apply now or wait?

There is no single answer, which is why it is worth a conversation. These are the trade-offs we typically discuss.

• Apply now can work if your previous employment is in the same field, you have strong bank statements and a good deposit. It avoids the risk of a weak first return.
• Wait for your first return can work if the business has done well, because the return will provide stronger evidence. It can backfire if heavy first-year costs reduce your taxable profit.
• Wait for two returns gives access to a wider group of lenders, but delays your plans. If the property market is moving or a purchase opportunity exists, waiting has its own cost.
• Use an alternative route such as an alt-doc loan, a guarantor or a non-bank lender to bridge until your records mature. Our page on no doc and alt-doc loans explains how this works.

How does Ownright approach new business owner loans?

We build a narrative that a lender can follow. It starts with what you did before the business, explains why you started it, shows how it has performed and demonstrates why the income is likely to continue. Then we back each claim with documents.

We also match the lender to the story. A lender that values industry experience will treat a former employee-turned-owner more generously than one that insists on two returns. Some are comfortable with a shorter history if the deposit is large. Others look closely at bank statements. Finding that fit is our daily work. If Ownright can’t find the solution, no one can. We arrange loans in every state and territory from our Knoxfield, Victoria office.

For a broader view of the topic, read our guide on how to get a home loan when you’re self-employed.

How do lenders treat the income you earned before the business?

For many new owners, the strongest piece of evidence is not the business at all. It is the years of employment that came before it. If you spent a long time in the same trade or profession, a lender can reasonably conclude that your skills and client base carry over. Payslips, an employment contract, a termination or resignation letter and a reference from a former employer all help build that bridge.

Some lenders will also look at how the move happened. Leaving a salaried role to take on your former employer as a first client, or to contract back to the same industry, is generally seen as lower risk than starting in an unrelated field. If your new income is partly a continuation of the old one, say so clearly.

What does the first year of figures usually look like?

First-year accounts rarely tell the full story. Equipment, vehicles, fit-out, software and registration costs can pull profit down. Drawings may be irregular. Debtors may be slow. A few months of quiet trading can sit beside a few months of very strong trading. An accountant can often show what profit looks like once one-off start-up costs are separated out, and a short letter to that effect is often more persuasive than a spreadsheet.

Lenders also look at the shape of the year. Rising monthly turnover tells a better story than a single large invoice. A growing list of repeat customers matters more than one major client, since losing that client would be a blow.

Business structure and why it matters here

How you trade changes how a lender reads your income.

Structure	How income is usually assessed	A point to prepare
Sole trader	Net business profit from the personal return	Keep business and personal spending apart
Company director	Salary and sometimes dividends, plus retained profit in some cases	Be ready to explain how you pay yourself
Partnership	Your share of partnership profit	Partnership agreement and the split
Trust	Distributions, sometimes with the trust’s overall result	Trust deed and distribution statements

If you are still deciding on a structure, speak with your accountant before you apply, since changing mid-application can confuse the assessment.

Do you need a guarantor or a larger deposit?

Sometimes. A family guarantor, a bigger deposit or a property already owned can offset a short trading history for some lenders. Each carries trade-offs for the people involved, so it pays to hear the options before deciding. Others will not need any of these if the employment history and bank statements are strong. The point is that there is more than one way to make the file work, and the right one depends on your numbers.

If the business is still being set up and you also need funding for stock, equipment or working capital, it is worth planning both loans together so neither undermines the other. Our low doc loans page explains how alternative documents are treated, and the self-employed home loans page covers what changes once you have a longer trading record.

An illustrative example

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

A physiotherapist left a hospital role fourteen months ago to open her own clinic. Her first-year profit is modest because she bought equipment and fitted out the rooms. The bank she has used for a decade declines because she lacks two years of returns.

Ownright gathers her payslips from the hospital, her first-year accounts, recent BAS and a letter from her accountant showing growing monthly revenue. We approach a lender whose policy accepts industry experience in lieu of a full two-year history, and structure the loan with the deposit she has saved. Approval remains the lender’s decision, but the file presents a professional with a strong track record rather than a new risk.

Mistakes to avoid

• Buying a property first and discovering the lender’s policy afterwards.
• Taking on new business debt shortly before applying.
• Mixing personal and business spending in one account.
• Falling behind on BAS or tax lodgements.
• Applying with several lenders before understanding their policies.

Documents to have ready

• Photo ID and ABN registration details.
• Payslips and employment history from before the business.
• Any tax returns and notices of assessment so far.
• BAS for recent quarters.
• Business and personal bank statements.
• Details of loans, leases and credit cards.
• An accountant’s letter, if available.

Let’s plan your next step

Apply online or call Ownright Custom Finance on 03 7043 7233. If you also need funds for the business itself, see start-up business loans.