Key Takeaways
- Most lenders require 2 years of self-employment history with tax returns
- Different lenders calculate self-employed income differently - choice matters
- Add-backs (depreciation, one-off expenses) can significantly increase borrowing power
- Low-doc loans available for 1+ year ABN with alternative verification
- Company and trust structures require specific documentation
- Strategic tax planning can help future borrowing capacity
Being self-employed shouldn't mean you can't get a home loan, but it does require different documentation and lender selection. The good news is that many lenders actively seek self-employed borrowers - you just need to present your application correctly.
At Mortgage & Finance Advisory, we specialise in helping self-employed Australians secure home loans. We know which lenders assess income most favourably and how to present your application for the best outcome.
How Lenders Assess Self-Employed Income
Unlike PAYG employees with payslips, self-employed income assessment requires more analysis. Lenders typically use one of these methods:
- Two-year average: Average of last two years taxable income
- Most recent year: Some lenders use just the latest year if it's higher
- Add-back method: Adding back depreciation, interest, and one-off expenses
Documents You'll Need
- Two years of personal tax returns with ATO notices of assessment
- Two years of business financials (if company or trust)
- Recent business activity statements (BAS)
- Accountant's letter confirming business details
- ATO portal access may speed verification
Pro Tip: If you're planning to buy in the next 1-2 years, discuss with your accountant. Sometimes slightly different tax structures can significantly increase borrowing capacity without materially affecting tax outcomes.
Client Success
A Geelong sole trader was told by their bank they could only borrow $420,000. By using a lender with favourable add-back policies (adding back vehicle depreciation and home office expenses), we secured approval for $580,000 - enabling them to buy their preferred property.
Frequently Asked Questions
Most lenders average your last two years of taxable income from tax returns. Some add back certain expenses like depreciation. Different lenders calculate this differently, which is why borrowing capacity can vary by $100,000+ between lenders.
Most lenders require 2 years of self-employment history with matching tax returns. Some accept 1 year for strong applications with prior industry experience. Low-doc options may accept 6-12 months ABN registration.
Tax minimisation strategies can reduce borrowing capacity. However, add-back policies and alternative lenders can help. We assess your full situation and find the best approach.
Self-Employed? Let's Find Your Best Option
We specialise in self-employed home loans across all business structures.
