Your three paths to a self-employed home loan
| Path | Documents | Best for |
|---|---|---|
| Full doc | Two years of tax returns and notices of assessment (some lenders accept one) | Established businesses with up-to-date returns that show the income |
| Alt doc / low doc | BAS, business bank statements or an accountant's declaration | Returns behind, or recent income higher than the returns show |
| Specialist with credit issues | Either of the above, plus an explanation of credit events | Business owners with defaults, judgements or tax debt |
More on the alternatives: low doc home loans and alt doc home loans.
How long do you need to be self-employed?
Two years is the textbook answer, but plenty of lenders go shorter:
- 12 months ABN: a common minimum for alt doc lending.
- 6 months ABN: some specialist lenders, particularly if you worked in the same field as an employee first.
- Day-one contractors: a few lenders treat a contractor on a long-term contract in their usual profession much like an employee.
Contracting rather than running a business? See home loans for casuals and contractors.
How lenders work out a business owner's income
On full doc loans, lenders usually start with your taxable income and add back certain non-cash or one-off items, such as depreciation and some interest costs. Some average two years; others use the latest year if income has grown. On alt doc loans, they work from your BAS turnover or bank deposits, often applying a percentage to estimate income.
Self-employed and in a tight spot
Business owners are more likely than most to have a tax debt, a business-related judgement or a run of late payments from a slow season. Specialist lenders understand that. See home loans with an ATO debt and refinancing when you're behind.
Common add-backs on full doc loans
When assessing a self-employed borrower's tax returns, many lenders add back items that reduced your taxable income but didn't take cash out of the business. Policies vary, but common add-backs include:
- Depreciation and amortisation.
- Interest on loans that will be refinanced or paid out.
- One-off, non-recurring expenses, with evidence.
- Additional super contributions above the compulsory amount.
Add-backs can make a big difference to borrowing power, which is why choosing a lender whose policy suits your numbers matters.
A worked example
An electrician switched from wages to his own ABN nine months ago, doing the same work for some of the same builders. His income is higher than before, but he has no business tax return yet. A specialist lender accepts six months of ABN history in the same industry, uses his BAS and business bank statements, and approves his refinance with a debt consolidation for his ute loan.
Company and trust structures
If you trade through a company or trust, lenders may want company or trust returns as well as your personal return, or an accountant's letter explaining how income flows to you. Alt doc lenders can be more flexible when the structure is complex or returns are behind.
What you’ll need
- Photo ID
- ABN and GST registration details
- Tax returns and notices of assessment, or BAS and business bank statements
- Accountant's details
- Personal bank statements
- Loan statements if refinancing
- Details of business and personal debts
Who it usually suits
- ABN active, ideally 12 months or more
- Income that supports the repayments
- A deposit or equity
- Clean or explainable credit
- Australian citizen or permanent resident
