Can I get a home loan if I’m self-employed?

It’s entirely possible for Australians to get home loans as self-employed borrowers, but it may take a little bit of extra preparation.
Ava Crawford
Written by
Ava Crawford
Imogen Baxter
Reviewed by
Imogen Baxter
Last updated
May 17, 2024
0 minute read
Table of contents
couple sitting on the couch one the computer looking for a home loan while working for themselves

When looking to get a new home in Australia, you may find many of the home loan application process daunting if you’re self-employed. Many lenders will request evidence of regular income, which usually comes in the form of payslips, which can be harder to present for self-employed people like freelancers or business owners.

It’s entirely possible for Australians to get home loans as self-employed borrowers, but it may take a little bit of extra preparation. Let’s dive into just how that works.

How do I get a home loan if I’m self-employed?

Most of the time, applying for a home loan as a self-employed person works very similarly to most other home loan applications — if you have the necessary documentation to back up your financial situation.

You’ll choose the home loan you’re interested in and decide on your loan amount - based on your borrowing power, either on your own or via a mortgage broker. This is where you will look for the interest rate and loan features that suit your needs, checking the comparison rate for a more accurate idea of the interest rate you will pay with fees factored in.

At a point in your home loan application, you must demonstrate your income. For sole traders and small business owners, this is not as straightforward as presenting a payslip.

Lending criteria may be slightly stricter for self-employed borrowers and those with their own businesses. This is because lenders may see self-employed people as having a higher risk of making their loan repayments.

What supporting documents do I need for a self-employed home loan?

Depending on the lender, the financial statements and documentation required of you will differ.

Like anyone looking to get a home loan, you will need:

  • A credit check (this is how your lender will determine creditworthiness and will consider your whole credit history, including any liabilities and credit card or personal loan debts).
  • Bank statements (this functions as evidence of genuine savings).
  • Record of any assets (any investments or investment properties, vehicles, existing property value, etc.).

Beyond that, when you’re self-employed, a few more things you will need that fall under the banner of “income”. These may include:

  • Last two years of personal tax returns. Your lender will view to ensure they are complete with notices of assessment and a check for abnormalities.
  • Last two years of company tax returns (mainly you are a small business owner).
  • Last two years of other financial statements and business activity statements (including loss statements, profit statements, and any other relevant documentation from the past two financial years).
  • ABN and GST registration date with the Australian Tax Office (ATO).

Along with any add-backs, these will be used to work out your income, separate from your taxable income. This is essentially aiming to create a record of consistent earnings, which makes you a less risky prospect to a lender.

Low-doc home loans

Low-doc home loans (or low-documentation home loans) are another loan type that self-employed borrowers might use as they don’t require the same large amount of documentation of a regular owner-occupier home loan product.

These can be helpful if you have only been a sole trader for a short period or don’t have the documentation to demonstrate your taxable income.

However, low-doc home loans come with some significant considerations to remember.

Low-doc home loans are not allowed by every lender, but some may. There may make it easier for many self-employed people to get home loans.

However, low-doc home loans can have significantly higher interest rates than comparable variable-rate or fixed-rate home loans. This is because they are considered relatively high risk by lenders.

There may also be a higher barrier to lenders mortgage insurance (LMI) for those on low-doc home loans. LMI is a charge on borrowers, traditionally those who have a deposit on their new home of below 20%. With low-doc home loans, the barrier for LMI can be as high as 40%. This means that you may need to start your loan for your first home with a loan-to-value ratio (LVR) of 60% if you’re looking to avoid LMI payments.


What is an add-back?

When working out your income, lenders will use “add backs” to work out your income instead of your taxable income. This is the actual income you can use to make to make loan repayments.

Things that are included as add-backs are:

  • Depreciation
  • Additional superannuation contributions
  • One-off expenses (these may need an accountant’s letter as evidence)
  • Interest expenses (particularly on any business loans)
  • Asset write-offs
Can I get a home loan if I become self-employed?

Since most self-employed home loans will usually require you to provide two years of financial records and evidence of your ABN and PAYG tax contributions, this can be hard to do if you have recently started your own business or registered as a sole trader. In this case, you may still be able to apply for a low-doc home loan, or in certain cases, there may be relaxed loan eligibility requirements if you have been able to demonstrate a history of consistent income and cash flow that has not been significantly interrupted by the switch to self-employment.

Are there specific home loans for self-employed home buyers?

Some lenders and mortgage brokers offer specific avenues for self-employed home buyers, usually offering dedicated calculators and partnerships with home loans whose lending criteria allow for self-employed people. That said, these will function almost entirely the same as other home loans.

This article is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation, or needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS), or other offer documents before making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).
Prepared by OwnHome Services Pty Ltd ACN 664 492 059. This information does not take your personal objectives, circumstances or needs into account. Always read the disclosure documents for products and services before deciding on a product or service, and consider seeking independent legal, financial, taxation or other advice for your unique circumstances.

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