Edited: 17th April 2026
TL;DR
- Lenders assess self-employed borrowers on taxable income from two years of tax returns and financial statements — aggressive tax minimisation strategies that reduce taxable income will proportionally reduce assessed borrowing capacity, making advance coordination between your accountant and broker essential.
- Add-backs — including depreciation, one-off business expenses, and additional super contributions — can be added back to your declared income by experienced brokers to increase your assessable earnings, potentially making a significant difference to your borrowing capacity.
- Having less than two years of self-employment history does not automatically disqualify you — some lenders accept BAS statements, bank statements, and an accountant’s letter as alternative income evidence, though these applications typically require a larger deposit.
- Engaging a broker before attending open homes is particularly important for self-employed buyers — pre-approval clarifies realistic borrowing capacity, identifies which lenders suit your income structure, and prevents unnecessary credit enquiries from applications to lenders whose policies do not fit your profile.
Are you self-employed and dreaming of owning a home in Melbourne? You’ve worked hard to build your business—and you deserve a place to call your own. While securing a mortgage as a self-employed buyer can feel more complex than it does for salaried workers, it’s absolutely achievable with the right preparation and the right people in your corner. In fact, as of 2024, 15% of the Australian workforce is self-employed, and lenders have evolved to meet this growing demand. That’s where Sherna Advisory comes in—here to simplify the process and guide you every step of the way.
Am I Considered Self-Employed by a Lender?
Before diving into the steps, it’s worth confirming whether you’re classified as “self-employed” in the eyes of a lender. You’re typically considered self-employed if you are a sole trader, business owner, partner in a business, tradie running your own operation, or someone who works from home without a PAYG employer. If you control your hours, manage your own clients, and contribute most of your operating capital—you’re likely in this category. This matters because the documentation you’ll need differs from that of a regular salary earner.
1. Get Your Financials in Order
As someone who is self-employed, your income might not look as predictable on paper as a salaried worker’s. That’s okay. What lenders need to see is that your income is steady, your business is viable, and you can reliably service a loan.
Most lenders will ask for two years of tax returns, ATO notices of assessment, and accountant-prepared financial statements including profit and loss statements and a balance sheet. If you operate as a sole trader, your personal tax returns plus your ATO notice of assessment are usually sufficient. If you operate through a company, trust, or partnership, you’ll also need business or entity returns.
Having your financials lodged on time is critical. Lenders need current documents—outstanding tax lodgements can delay or derail an application entirely. If you’re unsure about your Business Activity Statement (BAS) obligations, you can review the official ATO guidance on Business Activity Statements (BAS). It’s also worth including any tax-deductible expenses in your application, such as depreciation, interest on business loans, one-off equipment purchases, and family trust distributions. Flagging these clearly helps lenders understand your true financial position.
What if you’ve been in business for less than two years? Some lenders will accept alternative documents like BAS statements, recent bank statements, and a letter from your accountant confirming consistent income. Lenders understand that new businesses often face higher start-up costs—equipment, marketing, fit-outs—which can temporarily reduce net income. Providing context around these one-time expenses can make a significant difference to how your application is assessed.
Tip: Work with an accountant who specialises in self-employed clients. They’ll not only keep your records clean but can advise on what lenders look for—and help you avoid tax strategies that could inadvertently reduce your assessable income and borrowing power.
2. Be Careful with Tax Minimisation Strategies
Many small business owners legitimately minimise taxable income through deductions. While smart tax planning, this can reduce your borrowing capacity because lenders assess loans based on your declared taxable income.
Before applying, speak with both your accountant and a mortgage broker. Coordinated planning—even 12–24 months in advance—can significantly improve your borrowing power. Lenders typically average your income over two years, so consistency matters. If your most recent year is stronger, some lenders may consider using that figure with supporting documentation.
3. Maximise Your Borrowing Power with Add-Backs
When working with an experienced broker, you may benefit from “add-backs”—business expenses lenders can add back to your income to increase your assessable earnings.
Common add-backs include depreciation, additional super contributions above the compulsory rate, one-off business expenses, and interest on business loans. This is where specialist guidance matters. An experienced broker in self-employed home loans knows how to structure your application to maximise borrowing capacity within lender policy.
4. Talk to a Broker Before You Start Shopping
It’s tempting to attend open homes before getting pre-approval—but for self-employed buyers especially, this can lead to disappointment. Engaging early with a Melbourne mortgage broker gives you clarity around what you can borrow, what documents you’ll need, and what steps to take before applying.
Asset finance, car loans, credit cards, HECS debt, and other liabilities all impact borrowing capacity. A broker can help you understand whether restructuring or paying down certain debts will strengthen your position.
5. Explore All Your Loan Options—Including Specialist Lenders
The lending landscape has evolved considerably. Many mainstream lenders offer competitive products for business owners—provided documentation requirements are met.
However, not all lenders assess self-employed applications equally. Some are stricter, while others are more flexible. Working with a broker experienced in self-employed lending solutions ensures you’re matched with the right lender for your circumstances.
Low doc home loans: Some lenders accept alternative documentation such as ABN registration (usually 2+ years) and 12 months of BAS statements instead of full tax returns. These loans may require a larger deposit and sometimes carry higher rates, so professional advice is essential.
6. Save for a Larger Deposit
A 20% deposit reduces your loan-to-value ratio (LVR), avoids Lenders Mortgage Insurance (LMI), and strengthens your application. While smaller deposit options exist, they often come with stricter criteria.
7. Choose the Right Loan Structure for Your Future
Your loan structure should align with your business growth plans, income stability, and long-term goals. Variable-rate loans with offset accounts can offer flexibility for fluctuating income, while fixed-rate portions provide stability.
8. Stay Organised and Maintain Good Records
Keeping accurate tax returns, BAS statements, ATO notices of assessment, and updated financials readily available ensures a smoother loan approval process.
Ready to Take the Next Step?
Owning a home in Melbourne as a self-employed person is absolutely achievable with the right planning and support.
At Sherna Advisory, we specialise in self-employed home loans and understand how to position your application for success. Whether you’re planning ahead or ready to apply, our team is here to guide you with clear, strategic advice tailored to business owners.
Get in touch today for a no-obligation conversation about your situation—and take the next step toward homeownership with confidence.
FAQS On Self-Employed Home Buying
1. Can I Get a Mortgage if I’ve Been Self-Employed for Less Than Two Years?
Yes, you can still get a mortgage if you’ve been self-employed for less than two years. Lenders typically prefer at least two years of financial records, but there are options available. You can provide alternative documentation like Business Activity Statements (BAS), bank statements, or a letter from your accountant to demonstrate consistent income. Some lenders also offer low-documentation (low-doc) loans tailored for self-employed borrowers with shorter business histories.
2. How Do Lenders Assess My Income as a Self-Employed Applicant?
Lenders assess your income by reviewing your personal and business tax returns, profit and loss statements, and other financial documents. They may also consider add-backs, such as depreciation or one-off expenses, to adjust your income upward. The goal is to present a stable and reliable income over the past two years. If your income fluctuates, lenders may average it over a couple of years to get a more accurate picture of your earning potential.
3. What Can I Do to Improve My Chances of Getting a Home Loan as a Self-Employed Borrower?
To improve your chances of getting a home loan, ensure your financial records are accurate, complete, and well-organised. Work with an accountant who specialises in self-employment to prepare your documents. Save for a larger deposit, ideally 20% or more, to avoid Lenders Mortgage Insurance (LMI) and improve your loan-to-value ratio (LVR). Engaging a mortgage broker early in the process can also help you find lenders who are more flexible with self-employed applicants.
4. Are Interest Rates Higher for Self-Employed Borrowers?
Not always. While some lenders might charge higher rates for self-employed people, many offer competitive rates similar to those for salaried workers. Your interest rate will depend on things like your financial health, credit score, deposit amount, and the lender’s rules. Working with a mortgage broker can help you compare different loans and find the best rate for you.
5. What Documents Will I Need to Provide as a Self-Employed Applicant?
As a self-employed applicant, you’ll need to provide several key documents, including:
- Two years of personal and business tax returns
- Profit and loss statements
- Business Activity Statements (BAS)
- Bank statements (both personal and business)
- A letter from your accountant verifying your income and business operations. If you’ve been self-employed for less than two years, alternative documentation like BAS, bank statements, and an accountant’s letter can be used to verify your income.