Self-employed Self-employed home loans
Lenders don’t read business income the way they read a payslip. They rebuild it from your tax returns, add some costs back, and some of them ignore the profit you’ve left in the business. The same figures can get a different answer from the next lender.
Key takeaways
- Most lenders want two years of lodged tax returns. Some accept one year, and a few look at less with a strong work history in the same field.
- Lenders add back some costs, such as depreciation, which can lift your assessed income above your taxable income.
- Whether a lender averages two years or uses the latest one can change your assessed income by tens of thousands of dollars.
- Tax advice and structure stay with your accountant. I work out what lenders will make of the figures you have.
Which one sounds like you?
Start with how you earn your income. Each page explains what lenders ask for and where the differences between lenders sit.
What do lenders ask self-employed borrowers for?
For a full doc loan, most lenders ask for:
- Your personal tax returns and ATO notices of assessment for the last two years.
- Business tax returns and financial statements, if you trade through a company or trust.
- Recent BAS, to show the business is still trading at the level the returns show.
- Your ABN, and GST registration if your turnover is $75,000 or more.
- An ATO statement, if you have a tax debt or a payment plan.
A low doc loan swaps the tax returns for other evidence, usually BAS, business bank statements or an accountant’s declaration. It can work, but rates are usually higher and the maximum loan is usually lower.
Why I work with self-employed clients
I’m a Chartered Accountant (FCA, ICAEW). I’ve spent years reading financial statements, so I know where a lender will look and what it will question.
Before any application, I rebuild your income the way each lender would: which costs they add back, whether they average or use the latest year, and what they make of profit left in the company. Then I show you the lenders where your figures read best.
What I don’t do is tell you how to structure your business or what to claim. That’s your accountant’s job, and if your accountant wants to talk the figures through, I’m happy to.
ATO debt or a payment plan?
It doesn’t rule you out, but it changes which lenders fit. See home loans with ATO debt.
FAQ Questions clients ask
Can I get a home loan if I’m self-employed?
Yes. Lenders lend to self-employed people every day, they just read the income differently. Most want two years of tax returns, some accept one, and some accept other evidence such as BAS or an accountant’s letter. The question is which lender reads your figures best.
How long do I need to be self-employed to get a home loan?
Two years is the standard, and it opens the most lenders. Some lenders accept one year of tax returns, and some look at an ABN held for less than a year if you did the same work as an employee before. Each step down usually narrows the choice of lenders.
Do self-employed people pay higher interest rates?
Not usually, if the application is full doc, with tax returns and notices of assessment. Rates tend to be higher on low doc loans, where the lender relies on BAS, bank statements or an accountant’s letter instead of lodged returns.
Is my tax return or my BAS more important to a lender?
For a full doc loan, the tax return. Lenders build your income from lodged returns and notices of assessment, then use recent BAS to check the business is still trading at that level. BAS on its own is usually a low doc loan.
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