Current at September 2026. Lender policy on self-employed income changes often; we confirm which lenders fit before an application goes anywhere.
The short version
Being self-employed does not make you a bad borrower, it makes you an unusual one. Lenders want to see that your income is real, stable and likely to continue. “Two years of financials” is the standard way to prove it, but it is not the only way, and the right lender depends on how your business earns and how your accountant reports it.
What “two years of financials” means
For a full-doc application most lenders ask for two years of personal tax returns and notices of assessment, plus the business returns and financial statements (profit and loss, balance sheet) if you trade through a company or trust. Some accept one year if the business has been running longer. They then take either the lower year, the average, or the most recent year with the growth capped at about 20%, depending on the lender. That choice alone can move your borrowing power by six figures.
What income do lenders add back?
Deductions that reduced your taxable income without reducing actual cash: depreciation, one-off expenses, and in some cases superannuation above the compulsory rate or interest on debt being refinanced. Each lender keeps its own list, which is why one set of returns produces several different answers.
Good news for business owners: several expenses that reduce your taxable income get added back for lending purposes. Commonly depreciation, interest on business loans being refinanced, one-off expenses, and superannuation above the compulsory rate. Some lenders also add back the instant asset write-off. This is where an accountant who understands lending, and a broker who reads the returns properly, earn their keep.
If your returns are not ready or do not reflect the business
Alt-doc (sometimes called low-doc) loans exist for exactly this. Instead of tax returns, the lender accepts a combination of: an accountant’s letter confirming income, the last 12 months of business activity statements, and 6 to 12 months of business bank statements. The trade-offs are a slightly higher rate and usually a lower maximum LVR (often 80%). For a tradie or café owner whose last return is 18 months old, alt-doc is often the difference between buying now and waiting another year.
Can contractors and ABN holders get a home loan?
Usually yes. A contractor with a long-standing arrangement and a single payer can sometimes be assessed close to a PAYG employee. ABN and gig income generally needs trading history alongside returns, and the length of time you have held the ABN carries real weight.
PAYG contractors on an ABN are assessed somewhere between employees and business owners. Lenders look at the length of the current contract, the industry, and continuity of income. Two years in the same field, even across several contracts, is usually enough. Ride-share and platform income is accepted by a smaller set of lenders and is usually discounted.
Things that quietly hurt an application
- A large tax debt or a payment arrangement with the ATO
- Income that swings more than 20% between years without an explanation
- Business and personal spending mixed in one account
- Recently changed structure (sole trader to company) so the “two years” restarts
- Undeclared cash income. It cannot be counted and it makes the declared figures look worse
What should you prepare before applying?
Two years of tax returns and notices of assessment, up-to-date BAS statements, business and personal bank statements, and a list of add-backs your accountant can support. A tidy, complete file is the difference between a quick approval and a month of back and forth.
- Lodge the most recent return, even if tax is owing
- Separate business and personal banking at least three months out
- Ask your accountant for a one-page summary of add-backs
- Clear or arrange any ATO debt
- Have the last four BAS statements to hand
Where Lend Dreams fits
We read your returns the way a credit assessor does, work out which lenders’ income policy suits your numbers, and tell you whether full-doc or alt-doc gets you the better result. Kumar’s own background is business and IT, and a good share of our clients in Geelong and Melbourne’s west run their own show. More on self-employed home loans, or book a chat.
Sources: Australian Taxation Office on business income and the instant asset write-off; Moneysmart on home loan documentation.
Common questions
Do I really need two years of financials for a home loan?
Most lenders want two years of tax returns and notices of assessment, but not all of them. Some accept one year for an established business, and low-doc options assess income from BAS statements or an accountant declaration instead. The trade-off is usually rate or deposit size.
What income do lenders add back for self-employed applicants?
Add-backs are non-cash or one-off deductions that reduce taxable income without reducing real cash flow: depreciation, one-off expenses, and sometimes superannuation above the compulsory rate or interest on debts being refinanced. Every lender keeps its own list, which is why the same return reads differently.
Can I get a home loan as a contractor or with an ABN?
Often yes. Contractors on a long-standing arrangement with one payer are sometimes assessed much like PAYG employees. ABN holders and gig-economy income usually need trading history alongside returns, and how long you have held the ABN can matter as much as the income itself.
Want this checked against your own numbers?
A free 15-minute chat with a local Lend Dreams broker. No obligation, no jargon, and we tell you if the answer is “not yet”.