What lenders want to see
Your tax return is your payslip. Lenders average your income across the years you show, and many add back items such as depreciation and one-off write-offs. A typical full-documentation application for a bank includes:
- Personal tax returns for the last two years, and your ATO notices of assessment
- Business, company or trust tax returns if you trade through one
- Business financial statements: profit and loss, and balance sheet
- Your ABN, and evidence of how long you have held it
- Recent bank statements, business and personal
St.George asks that you have been self-employed "for more than 2 full financial years". Aussie notes lenders generally want returns no more than 18 months old, so lodge before you apply.
How lenders work out self-employed income
Most lenders take your last two years of tax returns and calculate an average, Loan Market's guide explains, but the method is not the same everywhere. Some lenders use only the lower of the two years. Many add back expenses that reduced your taxable income without being an ongoing cost, which, depending on the lender, can include:
- Depreciation, for example on vehicles or equipment
- Extra superannuation contributions above the compulsory amount
- One-off asset write-offs
- Interest on business loans that will be paid out or that the lender counts elsewhere
A worked example. Say your taxable income was $92,000 two years ago and $118,000 last year, and last year included an $8,000 depreciation claim the lender adds back.
| Lender's method | Income it counts |
|---|---|
| Average of two years, with add-back | ($92,000 + $126,000) / 2 = $109,000 |
| Average of two years, no add-back | ($92,000 + $118,000) / 2 = $105,000 |
| Lower of the two years | $92,000 |
The same business can therefore be assessed at anything from $92,000 to $109,000, a gap of $17,000 a year in counted income. That is why the lender you choose matters more for self-employed borrowers than for salaried ones, and why a broker who knows each lender's policy can be useful. Mortgage broker or bank.
Documents by business structure
Westpac's list shows how the paperwork grows with the structure you trade through:
| You trade as | What Westpac asks for |
|---|---|
| Sole trader | Personal tax returns for the last two years, and your latest ATO notice of assessment |
| Partnership | Personal returns and each year's notice of assessment, plus the partnership's returns and financial statements |
| Company | Personal returns and notices of assessment, plus the company's returns and financial statements |
| Trust | Personal returns and notices of assessment, plus the trust's returns and financial statements |
If you are a director paid a wage by your own company, the lender looks at both your personal income and the company's profit, because the company's position is what pays you. Trust distributions count only if they are regular and documented in the trust's returns.
Fast-track options with a bigger deposit
Some banks shorten the paperwork if you have a 20 per cent deposit. Westpac and St.George both describe a Fast Track assessment using only your last two years of personal ATO notices of assessment, without business financials. St.George also assesses some borrowers on one year's income. Westpac's Fast Track criteria are that you:
- have a 20 per cent deposit saved
- can provide the last two years of personal notices of assessment from the ATO
- pay yourself a salary from the business, or receive distributions from your partnership or trust
- will not need to rely on any other income to afford the repayments
If you cannot show two years: low doc and alt doc
Low doc loans are for borrowers who cannot provide the usual tax documents. Instead of returns they accept evidence such as:
| Evidence | Example of what a lender asks for |
|---|---|
| Income declaration | A signed declaration of your usual income (Westpac's description of low doc) |
| Business Activity Statements | The last 12 months (Westpac's description), or 6 months (Pepper Money's Alt Doc) |
| Business bank statements | 6 months (Pepper Money's Alt Doc) |
| Accountant's letter | Confirming your income (Pepper Money, eligibility criteria apply) |
| ABN and GST registration | Usually two years; Pepper Money's Alt Doc accepts six months |
Westpac and St.George say they do not offer low doc loans. Aussie notes low doc loans "may have higher interest rates, stricter lending criteria, or require larger deposits". Lenders still have to check you can afford the loan; low doc means different documents, not no checks.
Full doc, fast track or low doc: side by side
| Full documentation | Fast track (some banks) | Low doc or alt doc | |
|---|---|---|---|
| Income evidence | Two years of personal and business returns, notices of assessment, financials | Two years of personal notices of assessment | Income declaration, BAS, business bank statements or an accountant's letter |
| Deposit | From 5 per cent, with LMI below 20 per cent | 20 per cent (Westpac and St.George) | Usually larger; Westpac notes a lower loan-to-value ratio |
| Rate | The lender's standard rates | The lender's standard rates | Often higher |
| Who offers it | Most lenders | Some major banks | Mainly non-bank lenders; Westpac and St.George do not |
If you can qualify for full documentation, it usually gives you the most lenders to choose from and the lowest rates. Low doc is a way in, not a destination: many borrowers refinance to a full doc loan once they have two years of returns.
Why self-employed applications stall
Most delays and declines come back to the same few things, so check them before you apply:
- Income that fell. Lenders that average two years may still ask why the latest year is lower, and some use only the lower year. A short letter from your accountant explaining a one-off dip can help.
- Returns not yet lodged or assessed. A draft return is not a notice of assessment, and most banks want the assessed figures.
- A short trading history. An ABN held for less than two years rules out most bank loans, even if you worked in the same industry as an employee before.
- Tax debts or overdue lodgements. Lenders ask about money owed to the ATO, and a debt or a payment plan changes their numbers.
- Mixed business and personal spending. Statements that are hard to read slow the assessment and make add-backs harder to prove.
- Too many applications. Each full application can leave a credit enquiry on your file; pre-approval with one lender is a better test of where you stand.
Why your taxable income matters
Minimising tax lowers the income a lender can count. Westpac suggests talking to your accountant before you apply, because tax strategies common for business owners "may make it more difficult" to get a loan. If you plan to buy in the next year or two, that conversation matters.
Self-employed buyers and the government schemes
Being self-employed does not rule you out of the first home schemes. The 5% Deposit Scheme has had no income cap since 1 October 2025, so the question is only whether a participating lender will approve your loan. Help to Buy tests taxable income for the previous financial year: $103,000 or less for a single applicant, $165,000 for joint applicants. A business owner whose taxable income sits under those limits may qualify, but the lender still has to be satisfied you can repay the smaller loan.
Getting ready in the year before you apply
- Talk to your accountant first. Westpac warns that when you minimise tax, "your taxable income may appear lower, which may make it more difficult for you to get a home loan". A year with fewer deductions can lift your borrowing power more than it costs in tax.
- Lodge early. Lenders want recent returns and notices of assessment; a return lodged in October is more useful than one lodged next May.
- Keep business and personal money apart. Separate accounts make bank statements easier to read and add-backs easier to prove.
- Keep BAS and tax up to date. Overdue lodgements raise questions, and low doc lenders rely on your BAS.
- Cut credit limits you do not use. Lenders count the limit on a credit card, not the balance.
- Save more than the minimum. A 20 per cent deposit opens the fast-track options and avoids lenders mortgage insurance.
Steps
- Lodge your returnsGet the last two years lodged and assessed; most lenders do not accept draft returns.
- Gather the documentsReturns, notices of assessment, financials, BAS and bank statements.
- Get pre-approvalSelf-employed applications often take longer to assess than salaried ones. Allow extra time
- Compare full doc and low docIf you qualify for full doc, it usually gives the widest choice of loans and rates.
Common questions
Can I get a home loan with one year of tax returns?
Some lenders assess one year's income; St.George describes a one-year option. Many want two.
Can I get a home loan with a new ABN?
Most banks want an ABN held for two years. Some non-bank lenders consider six to twelve months, usually as a low doc or alt doc loan.
Can I get a home loan if I just went self-employed?
It is harder but not always impossible. Most banks want two years of trading, but some lenders consider a shorter history, especially if you work in the same field you were employed in before. Expect to need a larger deposit or a low doc loan, and plan to refinance once you have two years of returns.
Can I use BAS instead of tax returns?
Not with most banks, which want tax returns and notices of assessment. Low doc and alt doc lenders do accept BAS: Westpac describes low doc loans as usually needing the last 12 months of BAS, and Pepper Money's Alt Doc asks for six months. Expect a larger deposit or a higher rate in return.
Do I need an accountant's letter?
Only for some loans. A full doc bank loan relies on your returns and notices of assessment. Some alt doc lenders, including Pepper Money, accept an accountant's letter confirming your income, subject to their own criteria, and a letter can also help explain a one-off dip in income to any lender.
Do I need a bigger deposit if I am self-employed?
Not for a full doc loan, where the usual deposit rules and LMI apply. You do need 20 per cent for the fast-track options some banks offer, and low doc lenders usually limit how much of the value they will lend.
How long does a self-employed loan take to approve?
Usually longer than for a salaried borrower, because the lender reads business returns and statements as well as personal ones. Having every document ready before you apply is the biggest thing you control.
What are the best self-employed home loans?
There is no single best one, and we cannot recommend a lender. Compare full doc loans first, on the comparison rate and fees, because they offer the widest choice. If you need a low doc loan, compare the rate, the maximum loan-to-value ratio and any risk fee, and check the lender is licensed on ASIC's register.
Are self-employed home loans different in NSW?
The lending rules are national, so lenders assess a self-employed borrower in NSW the same way as anywhere else. What differs by state is stamp duty and the state first home buyer concessions.
Do self-employed borrowers pay higher rates?
Not on a full-doc loan at most banks, which offer the same loans to self-employed borrowers. Low doc loans usually cost more.
Sources
- Westpac, Self-employed home loans: what to know and how to apply
- St.George, Self-employed home loans (Fast Track, one-year and two-year assessment)
- Pepper Money, Low Doc and Alt Doc home loan options
- Loan Market, How do lenders calculate my income? (two-year averaging, lowest-year policies, add-backs)
- Aussie, Applying for a home loan? Here's what tax returns you'll need, 29 May 2026
General information only, not credit or financial advice. We are not a lender or a broker and hold no Australian Credit Licence. Rates shown are RBA market averages, not offers.