Getting a Self Employed Home Loan

Are you looking around for a self employed home loan? Calling the shots, building something you’re proud of, and enjoying the freedom to work on your own terms are some of the perks of being self-employed.

But when it comes to buying a home, you may have heard that it’s a tougher road for self-employed Aussies.

Is it unachievable? Absolutely not. Every year, thousands of Australians in similar situations successfully secure a mortgage.

Getting a home loan when you’re self-employed is just a different process that takes preparation and understanding how lenders assess your finances.

What Does a Self Employed Home Loan Mean?

Just to clear things up, there are different types of home loans, but there isn’t a specific loan product called a “self-employed home loan” in Australia. It simply refers to how lenders evaluate self-employed applicants for a standard home loan.

When you are a salaried employee, verifying income is simple, as you just need to hand over payslips and tax documents.

But if you are self-employed, your income can fluctuate from month to month or even season to season. You may also have multiple income streams or income that’s harder to verify. 

So, lenders often require extra paperwork to understand how much you earn and whether you can afford the loan.

Home loans catered to self-employed Aussies are designed to give entrepreneurs, freelancers, and business owners the same opportunity for homeownership as traditional employees. It just comes with a few extra (or different) steps to get approved.

Who Is Considered Self-Employed in Australia?

In Australia, you’re considered self-employed if you work for yourself rather than an employer who pays you a regular wage or salary (PAYG). This includes:

• Sole Trader: You run your own business as an individual.

• Business Partner: You share ownership and responsibility for a business with one or more people.

• Company Director: You own at least 20-25% of a private limited company. Even if you pay yourself a salary, lenders will consider company finances as well as personal finances.

• Freelancer/Contractor: You work independently with multiple clients.

Basically, if your income is directly tied to the profitability of your business, you are classified as self-employed.

Regularly lodging a business activity statement (BAS), having an Australian business number (ABN), and managing your own tax affairs are all key indicators of self-employment for lenders.

Recent Self-Employed Mortgage Changes [2025]

Recently, the process for self-employed borrowers to access home loans in Australia has become more flexible.

• Many lenders now accept just one year of income records instead of the traditional two years, making it easier and faster for self-employed individuals to apply.

• There is also more recognition of alternative income sources, such as director fees, dividends, or contract payments. These changes help those with fluctuating income or who have only recently started their business have a better chance of approval.

Regulatory bodies like APRA still ensure that lenders assess repayment ability carefully, including an interest rate buffer. That’s to say, self-employed borrowers still face higher scrutiny than salaried applicants.

Lenders have tightened lending criteria across the board, particularly for self-employed borrowers, and also carefully assess cash flow and business performance, especially for investment properties or complex income streams.

Self Employed Home Loans: Challenges Borrowers Face

• Inconsistent income: Unlike salaried workers, your earnings might vary due to seasonal demand or other business expenses. Lenders prefer consistent and predictable income patterns, so these fluctuations make them nervous.

• Limited financial history: If you’ve only been self-employed for a short period (less than two years), it will be harder for lenders to assess the sustainability of your business.

• Aggressive tax minimisation:  Many small business owners reduce their taxable income by claiming legitimate business expenses. This makes your income appear lower to the lender, which reduces your borrowing capacity.

• Higher documentation burden: Self-employed applicants need to provide tax returns, profit and loss returns, BAS, and business bank statements, all of which are time-consuming. Any missing or inconsistent records can delay your application.

• Higher deposits and interest rates: Some lenders ask for larger deposits or charge slightly higher rates for self-employed home loans because they perceive greater risk.

• Limited lender options: Some traditional banks can be hesitant with self-employed applications. So, borrowers might need to go through specialist or non-bank lenders, often with slightly higher interest rates.

Suitable Home Loans for Self Employed Borrowers

Full Doc Home Loans

These are standard home loans suitable for self-employed borrowers with 1–2 years of tax returns, BAS, and business financial statements. You’ll get access to the most competitive rates with this option.

Low Doc Home Loans

Low documentation loans are designed for those who can't provide the usual paperwork, such as recently self-employed individuals or those with irregular income.

So, instead of full tax returns, lenders accept alternative income verification (e.g., accountant’s letter, BAS, bank statements, etc.)

Note: Low doc loans come with higher interest rates and larger deposit requirements.

Line of Credit Loans

For self-employed borrowers, a Line of Credit gives the freedom to access funds whenever needed. It’s especially  useful if your income fluctuates or your business has seasonal ups and downs. 

You can draw from the credit limit to manage expenses, then repay and reuse the funds as your cash flow allows. It’s a smart way to manage both your business operations and home loan repayments.

Variable Rate Loans

A variable loan provides flexibility and the potential to benefit from changing interest rates. When rates fall, your repayments may reduce, helping you save over time. 

These loans also allow for extra repayments and often include redraw options, giving you more control over your finances.

Guarantor Loans

If you have a family member who is willing to use the equity in their property as security, a guarantor loan can reduce your risk in the eyes of the lender and help you avoid paying lenders mortgage insurance (LMI).

Self Employed Home Loan Minimum Deposit

For self-employed borrowers, the minimum deposit generally depends on the loan type and your risk profile.

• Full Doc Loans: Usually 10–20% of the property value.

• Low Doc Loans: Usually 20–30% of the property value.

First home buyer schemes and incentives may allow smaller deposits if you meet the criteria.

Note: A higher deposit improves your approval odds and can also help you avoid paying LMI, which will save you thousands over the entire loan term.

How Do Lenders Assess Self-Employed Applications?

Lenders look at your entire financial background rather than just your income figures.

• Income consistency: Do you earn a stable amount each year?

• Business viability: Is your business profitable and sustainable?

• Debt-to-income ratio: Can you comfortably afford repayments?

• Credit history: Any mortgage defaults, late payments, or bankruptcies?

How Do Lenders Verify Income for Self Employed Home Loans?

• Tax Returns: Usually 1–2 years of personal and business tax returns (ATO Notice of Assessment).

• Business Activity Statements (BAS): It confirms business income, GST, and PAYG contributions

• Profit & Loss Statements: These are prepared by an accountant and show business revenue, expenses, and net profit.

• Bank Statements: 3–6 months of personal and business bank statements to show regular deposits from clients or business earnings.

• Accountant’s Declaration: This is a letter from your accountant confirming your income, business stability, and how long you’ve been self-employed.

• Other Documents (Optional): Director fees or dividends for company owners, rental income if applicable, contracts with clients to prove future income

Lenders combine all this to calculate your “assessable income”, which is often lower than your actual cash flow because they deduct business expenses and tax. This helps them make sure you can comfortably afford repayments, even if interest rates rise.

Self Employed Mortgage: Documents Required

Proof of Identity

• Passport, driver’s license, or birth certificate

• Medicare card (sometimes optional)

Proof of Self-Employment

• ABN registration or business registration

• Partnership or company documents (if applicable)

• Business license (if applicable)

Income Verification

• Personal and business tax returns (usually last 1–2 years)

• Business Activity Statements (BAS)

• Profit & Loss statements (prepared by an accountant)

• Bank statements (personal and business, usually last 3–6 months)

• Accountant’s declaration confirming income and business stability

Asset & Liability Documents

• Details of existing debts or loans

• Details of any assets (other properties, investments, etc.)

Improving Chances of Getting Approved for a Self Employed Home Loan in Australia

• Keep your business financials clean: Separate business and personal accounts to make your income easier to verify.

• Reduce unnecessary deductions: Claim legitimate expenses, but avoid overclaiming if you plan to apply for a mortgage soon.

• Save a larger deposit: A 20% deposit shows financial discipline and reduces lender risk.

• Maintain good credit habits: Pay bills and credit cards on time to improve your credit score.

• Work with a mortgage broker: An experienced broker can match you with lenders who understand self-employed income structures.

Having a broker will help you go through the complexities of a self employed home loan smoothly. They can help you in the home loan process from start to finish.

Here at Koalify, we help self-employed Aussies dreaming of a home to search, curate, and get a mortgage that suits your needs and goals.

The best part is that our service is free of cost to you—zero hidden fees, consultation charges, or commissions whatsoever!

And driven by ASIC’s Best Interests Duty, we guarantee to find you the most suitable home loan that fits your unique needs and goals. 

With our extensive panel of 30+ top lenders and 2,000+ mortgage solutions in Australia, you can unlock opportunities that you might miss otherwise. 

Interested? Contact us to get your dedicated mortgage advisor today!

Self Employed Home Loans: Common Mistakes to Avoid

• Underreporting income: It lowers your taxable income but also reduces your borrowing capacity.

• Incomplete documentation: Missing financial statements delay approval.

• Applying with too many lenders at once: Multiple credit checks can affect your credit score.

• Ignoring your business cash flow: Lenders may ask to see consistent inflows in your bank statements.

Conclusion

Being self-employed doesn't really make homeownership impossible. Instead, it just slightly changes the rules of the game.

While it does take more patience and preparation, the entire process can be smooth if you have a stable self-employment history with proper documentation that proves it.

Having a mortgage broker makes this easier for you, as they can handle the process from start to finish.

We help self-employed Aussies dreaming of a home to search, curate, and get a mortgage that suits your needs and goals.

The best part is that our service is free of cost to you—zero hidden fees, consultation charges, or commissions whatsoever!

And driven by ASIC’s Best Interests Duty, we guarantee to find you the most suitable home loan that fits your unique needs and goals. 

With our extensive panel of 30+ top lenders and 2,000+ mortgage solutions in Australia, you can unlock opportunities that you might miss otherwise. 

Contact us to get your dedicated mortgage advisor today!

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