Getting a Home Loan For Self-Employed
Myths, Tips, and What It Really Takes
“I can’t get a loan because I’m self-employed.”
I hear this a lot, and while it can be trickier to navigate, it’s definitely not impossible. In fact, being self-employed can actually give you more control over your financial position and how to obtain finance if you know what you are up against.
Let’s break down some common myths, tips, and lending options for self-employed borrowers.
The Upside of Being Self-Employed
There’s a lot to love about being your own boss, flexibility, creativity, and control. You decide:
When and how you work.
How much you charge and how you get paid.
How your business is structured (sole trader, company, trust).
What you can claim, how you manage your cash flow and how you manage tax.
But while these perks give you freedom, they also make lenders ask one simple question:
What’s your income? Followed up by: Prove it. Then by how sustainable is it?
That’s the real difference. Lenders don’t see self-employed borrowers as risky; they just need more proof that your income is sustainable.
Myth #1: “It’s Harder to Get a Loan When You’re Self-Employed”
Not true.
If you were employed earning $90,000 per annum, versus being self-employed and earning $90,000 per annum. There is no difference in the loan assessment for most lenders.
The only real difference is time and documentation. Most traditional lenders want:
Two years of financials (tax returns, profit and loss statements).
They’ll usually average the two years and some will take the most recent year.
And the good news, a few lenders are happy with just one year of financials in isolation. These are all known as full-doc loans.
So the “harder” part isn’t qualification, it’s preparation and proving your income. More about this later.
Myth #2: “The Bank Will Use My Business Turnover”
This one trips up a lot of business owners.
“I earn $200,000 per annum *in revenue **COUGH**”... That’s very different to your net come.
If your business brings in $200,000 in revenue, but your tax return shows a net income of $70,000, the bank uses that $70,000.
Why? Because that’s your taxable income — after expenses. It best represents how much you actually earn, and have available for your living expenses, commitments and new mortgage.
The challenge for many is that deductions (while great for reducing tax) lower your borrowing capacity. And for many business owners, they tend to over claim their expenses to save on tax. Overclaiming reduces your taxable income, and available income to use for lenders.
Understanding Add-Backs
Now don’t get discouraged - Here’s where things get interesting.
Lenders know not every expense is recurring or impactful on cashflow. Some items can be “added back” to your income to give a more accurate picture:
Depreciation
One-off equipment purchases
Interest or lease costs being refinanced
Instant tax write-offs
For example, if your taxable income is $70,000 but you had $10,000 in depreciation, your assessable income could be $80,000 for lending purposes.
Low-Doc & Alt-Doc Home Loans
If your business is newer or your financials aren’t quite ready, there are still options.
Low-doc loans (or alternative documentation loans) require less paperwork.
You might only need:
3–6 months of business bank statements,
BAS statements, or
An accountant’s declaration confirming your income.
These can be ideal if you don’t have the supporting documentation to support a full-doc loan. Yes, rates are slightly higher, usually only 0.5–0.75% more than standard loans, but competition in this space has grown significantly, making it a viable short-term stepping stone.
Structuring Smart: Paying Yourself a Wage
Here’s a tip I often give clients — if you operate through a company, consider paying yourself a consistent salary.
Some lenders will assess this just like PAYG income, even though you’re still self-employed. It can make the assessment process simpler and faster.
The Cash Job Trap
Let’s talk about the elephant in the room.
Doing cash work doesn’t make that income invisible, it still counts as taxable income (and yes, it should be declared).
Declaring all income helps you in two ways:
You stay compliant with the ATO.
You show lenders a true picture of your earnings, improving your borrowing power.
Sure, it may mean a bit more tax upfront, but it moves you closer to your property goals.
Planning Ahead: Building Your Borrowing Power
If you’re self-employed and want to buy a home, here’s the simple three-step roadmap:
Understand what it takes — know how much income and evidence you’ll need to qualify.
Assess where you’re at — review your current setup with your accountant and broker.
Start aligning your finances — structure your business and income around your long-term goals.
Because once you know your direction, you can start working towards it, and it’s amazing how your finances begin to follow suit.
Final Thoughts
Being self-employed shouldn’t stop you from owning a home.
With a bit of planning, the right structure, and a broker who understands business and lending, you can position yourself perfectly to secure finance, and use your self-employment as an advantage, not a setback.
Ready to turn your self-employment into an advantage? Reach out today. Use the contact form, or book a meeting and let’s map out your path to home ownership.
