Getting a Home Loan When You're Self-Employed: What Lenders Actually Want

If you're self-employed, you've probably heard that getting a home loan is harder than it is for someone on a salary. There's some truth to that — the process is different, and there are a few more hoops to jump through. But "different" doesn't mean "impossible," and it definitely doesn't mean you need to settle for a bad deal.

The key is understanding what lenders actually want to see, and putting your application together in a way that presents your business and your finances clearly.

The Biggest Misconception: "I Need Two Full Years of Tax Returns"

This is the one we hear most often, and it's not entirely accurate. While many lenders do want to see two years of financial history, it's not a blanket rule. Some lenders will consider applications with just one year of tax returns, or with alternative documentation like BAS statements and an accountant's letter.

The lending landscape for self-employed borrowers has more flexibility than most people realise. The trick is knowing which lenders have policies that suit your situation — and that's where working with a broker who understands business finances makes a real difference.

What Lenders Actually Look At

Every lender has slightly different criteria, but here are the main things they're assessing when you're self-employed:

ABN and Business Registration

Most lenders want to see that your ABN has been active for at least two years. Some will accept one year, particularly if you were previously employed in the same industry. The length of your ABN registration signals stability to the lender.

Tax Returns and Financial Statements

Your individual and business tax returns are the primary way lenders verify your income. They'll typically look at the last one to two years to understand your earning pattern.

For sole traders, this means your individual tax return. For companies or trusts, lenders will also want to see business financials — profit and loss statements, balance sheets, and company tax returns.

One thing that catches a lot of business owners off guard: lenders assess your taxable income, not your gross revenue. If your accountant has (quite rightly) been minimising your taxable income through deductions and depreciation, your on-paper income might look lower than what you actually take home. This is one of the most common sticking points for self-employed applicants.

BAS Statements

Your Business Activity Statements show the ATO your reported income on a quarterly (or monthly) basis. Some lenders use BAS as a primary income verification method, which can work in your favour if your most recent BAS shows stronger income than your last tax return.

Accountant's Letter or Declaration

Some lenders accept a letter from your accountant confirming your income. This can be particularly useful if your latest tax return hasn't been lodged yet or if your income has increased significantly since the last return.

GST Registration

If your business turnover is above the GST threshold, lenders generally expect to see GST registration. It's a credibility signal that your business is operating at a certain level.

Full-Doc vs Low-Doc Loans

You'll come across these terms when researching self-employed lending, so here's what they mean in practice:

Full-Doc (Full Documentation)

This is the standard pathway. You provide the full set of financial documents — tax returns, financials, BAS, and so on. Full-doc loans typically offer the best rates and the widest range of products because the lender has a complete picture of your finances.

If your paperwork is up to date and your income is clearly documented, this is usually the best route.

Low-Doc (Low Documentation)

Low-doc loans are designed for self-employed borrowers who can't provide the full suite of standard documents — perhaps because your tax returns are behind, your business structure is complex, or your income doesn't show up neatly in the usual paperwork.

Instead of full tax returns, you might verify your income through BAS statements, an accountant's declaration, or business bank statements.

The trade-off is that low-doc loans often come with slightly higher interest rates and may require a larger deposit (typically 20% or more). But for many self-employed borrowers, they're a practical and perfectly reasonable option — especially as a stepping stone. Once your financials catch up, you can always look at refinancing to a more competitive full-doc product later.

Practical Tips to Strengthen Your Application

Get Your Tax Returns Up to Date

If your returns are overdue, get them lodged before you apply. Lenders see outstanding tax returns as a red flag, and it limits your options significantly. Talk to your accountant early and let them know you're planning to apply for a loan — they can prioritise getting your financials current.

Talk to Your Accountant About the Balance

There's always a tension between minimising tax and maximising borrowing capacity. You don't need to stop claiming legitimate deductions, but it's worth having a conversation with your accountant about what your financials will look like to a lender. Sometimes small adjustments in how things are structured can make a big difference to your application.

Keep Business and Personal Finances Separate

Lenders want to see clean, organised finances. If your business income and personal spending are mixed together in one account, it creates confusion and makes it harder for the lender to assess your position. Separate accounts make everything clearer.

Save a Solid Deposit

A deposit of 20% or more removes the need for Lenders Mortgage Insurance and opens up a much wider range of lenders and products. If you can get there, it significantly strengthens your position. If 20% isn't realistic right now, that's okay — there are still options, but a bigger deposit always helps.

Document Everything

Keep your BAS lodgements current. Save your business bank statements. Keep a record of any contracts or recurring income. The more organised your financial life is, the smoother the application process will be.

Why a Broker Makes a Bigger Difference When You're Self-Employed

For a PAYG employee with a steady salary, most lenders will assess the application in a fairly similar way. But for self-employed borrowers, the differences between lenders can be enormous.

One lender might decline your application while another approves it — not because your finances are any different, but because their policies around self-employed income are different. Some lenders are more flexible with ABN age, some are better with trust structures, some give more favourable treatment to BAS income, and some have dedicated self-employed products.

Liam, one of our directors at Calm Finance Co., came from a commercial banking background before moving into broking. He spends most of his time working with business owners, self-employed professionals, and people with non-standard income structures. He understands how business financials work — not just from a lending perspective, but from a business owner's perspective. That means he can read your financials the way a lender will, anticipate potential sticking points, and match you with a lender whose policies work in your favour.

Self-Employed Doesn't Mean Second-Class

Running your own business takes grit, discipline, and financial nous. The lending process should recognise that — and with the right preparation and the right broker, it does.

If you're self-employed and thinking about buying a home, refinancing, or investing, a conversation with someone who understands your world is the best place to start.

Book a free consultation with Liam at Calm Finance Co., call us, or drop into 622 Sturt Street, Ballarat Central. He'll take a look at your situation, talk you through your options, and give you a clear path forward — no jargon, no runaround.