Running your own business often means your income is strong, but your paperwork tells a messier story. Lenders are cautious with self-employed borrowers because income can fluctuate. With the right preparation and lender, though, you can borrow just as well as a PAYG employee.
How lenders assess self-employed income
Full doc loans
Most lenders want:
- Two years of personal tax returns and notices of assessment
- Two years of business tax returns and financial statements (for companies and trusts)
- ABN registered for at least two years
Some lenders accept one year of returns if you've been in the same industry for longer.
How income is calculated
Lenders often use the average of two years, or the lower year if income dropped. Some use the most recent year if income has increased.
Add-backs
Lenders can add back certain non-cash or one-off expenses to your taxable income, such as:
- Depreciation
- Interest on loans being refinanced
- Superannuation contributions above the compulsory amount
- One-off expenses with evidence
Add-backs can make a big difference to borrowing power.
Low doc and alt doc loans
If your tax returns aren't up to date or don't reflect your current income, alternative documentation loans may help. These use:
- BAS statements
- Business bank statements
- An accountant's declaration
Rates are usually a bit higher and LVRs a bit lower. See our existing guide to low doc and alt doc loans.
Common challenges
Minimising tax: Low taxable income reduces borrowing power. If you plan to buy, talk to your accountant about the trade-off.
Late tax returns: Lenders want recent figures. Lodge on time.
Company structures: Income retained in a company may not count unless lenders can see it in financial statements.
ATO debts: An ATO payment plan is acceptable to some lenders; overdue tax debt is a red flag.
How to prepare
- Get your tax returns lodged and up to date.
- Keep business and personal finances separate.
- Reduce personal debts and credit limits.
- Talk to your accountant about how your income will look on paper.
- Use a broker who knows which lenders treat business income generously.
Frequently asked questions
Can I get a home loan with one year of tax returns?
Some lenders accept one year, especially if you were in the same industry before.
Do lenders count my company's profit?
Some do, if you own the company and the profit is shown in the financial statements.
Can I use the 5% Deposit Scheme if self-employed?
Yes, if you meet eligibility and a participating lender approves your income.
Self-employed and ready to buy or refinance? Call Finfident on 02 6416 2142, or Call, Text or WhatsApp 0424 545 654. We'll find a lender that understands how your business works.
Want to know if this applies to you?
Talk it through with a Finfident broker. It's free and there's no obligation.
