Getting home loans for self-employed Australians in 2025 isn’t as straightforward as it is for those in regular PAYG jobs, but it’s achievable with the right strategy. If you’re a freelancer, contractor, or small business owner, understanding how lenders view your income and business structure can significantly improve your chances of approval.
More Australians are turning to self-employment than ever before, with over 1.6 million self-employed individuals contributing to 62.5% of the nation’s small businesses in 2023-2024. Recognising this trend, lenders have adjusted their policies to support non-traditional earners. In this guide, we’ll break down how home loans for self-employed applicants work, the key documents you’ll need, how lenders assess your income, and what steps you can take to secure approval.
Why Home Loans for Self-Employed Borrowers Are More Complex
Self-employed individuals face additional scrutiny from lenders because of income variability and complexity in verifying ongoing earnings. Let’s look at what makes the process more challenging:
- Irregular income: Since income often fluctuates due to seasonal trends, economic conditions, or client variability, lenders are cautious about assuming stable repayment ability.
- Tax minimisation: Many self-employed people legally reduce their taxable income through deductions, but this can result in underrepresenting their real income on paper.
- Documentation requirements: Lenders typically require a more extensive paper trail to validate income. This includes profit and loss statements, tax returns, and possibly even business plans.
- Short business tenure: If you’ve recently transitioned into self-employment, your financial track record may be seen as too short to accurately judge long-term stability.
- Industry-specific risk: Lenders analyse the risk associated with certain industries. For example, hospitality may be flagged as a volatile sector due to economic sensitivity.
Despite these factors, many lenders now offer flexible solutions for self-employed applicants with alternate forms of income verification.
Types of Home Loans for Self-Employed Australians
Self-employed borrowers in 2025 typically have access to three primary home loan types. The type you choose depends on your documentation and how long you’ve been in business.
Full-Doc Loans
These are ideal for self-employed individuals who can provide two years or more of full financial documentation. To apply, you’ll typically need:
- Personal and business tax returns: These returns help the lender assess your income over time and whether your business is financially sustainable.
- Notice of Assessments (NOAs): Documents that confirm your tax returns were submitted and accepted by the ATO.
- Business financial statements: Profit and loss statements show the financial health of your operations, while balance sheets help demonstrate your assets versus liabilities.
- BAS statements: Business Activity Statements reveal revenue trends and allow the lender to confirm your declared income.
- Accountant’s letter: An independent verification from your accountant can add credibility to your application, particularly if your income includes non-cash add-backs.
Full-doc loans offer competitive interest rates and high LVRs (up to 95% with Lenders Mortgage Insurance).
Low-Doc Loans
If you haven’t completed recent tax returns or can’t provide the full range of financials, low-doc loans may be your best option. These loans require:
- ABN registration: Your business must be officially registered for a minimum time (usually 12 months) to qualify.
- BAS statements: These documents show how much GST you’ve paid and collected, indicating business activity and revenue.
- Accountant declaration: An accountant’s confirmation of your stated income helps validate your loan application without full documentation.
- Bank statements: These must reflect consistent business income deposits that support your declared earnings.
Expect slightly higher interest rates and more conservative LVRs, usually capped at 80%. LMI may apply even at lower LVRs.
Alt-Doc Loans
These loans sit between full-doc and low-doc options. They use more flexible documentation methods, including:
- Business contracts or invoices: These serve as proof of ongoing work and income, especially useful for service providers.
- Bank statements and deposit history: Typically covering a 6–12 month period, they help demonstrate consistency of cash flow.
- Accountant’s letter or BAS: Depending on the lender’s criteria, you may still need one of these documents to support income declarations.
Alt-doc loans are popular with borrowers who are financially sound but don’t have the full range of paperwork required by traditional lenders.
How Lenders Assess Self-Employed Income
Understanding how income is assessed is critical. Lenders generally assess income using one of several standard approaches:
| Assessment Method | Description | Best Suited For |
| Most Recent Year | Income based solely on the most recent year’s tax return | Businesses with growing profits |
| Two-Year Average | Combines income from the last two years and divides it | Stable, consistent businesses |
| Lowest of Two Years | Uses the lower income figure of the two years | Conservative lenders or volatile earnings |
| Weighted Average | Places more emphasis on the recent year’s income | Firms with rising earnings trend |
Lenders may also apply add-backs to increase the borrower’s assessed income:
- Depreciation: As a non-cash expense, it’s often added back to net income when determining serviceability.
- Interest on refinanced debts: When refinancing, lenders may disregard previous interest expenses.
- Additional super contributions: Voluntary superannuation contributions can be added back, as they’re discretionary.
- One-off expenses: Extraordinary, non-recurring costs (e.g., equipment purchase) can often be excluded from ongoing expense calculations.
Experienced mortgage brokers, like our Mortgage Brokers Toowoomba, can help you identify these opportunities to boost serviceability.
Loan Eligibility Based on Business Tenure
How long you’ve been in business greatly influences your loan options.
Businesses Operating 2+ Years
- Wider lender access: Both banks and specialist lenders are more comfortable approving applicants with established income history.
- Higher LVRs (up to 95%): With appropriate documentation and LMI, you can borrow with a smaller deposit.
- Full-feature loan options: Including offset accounts, redraw facilities, fixed or variable rates.
- Fewer documentation hurdles: Your solid history may reduce the scrutiny around individual expenses.
Businesses Operating 1–2 Years
- Fewer lender options: Many major banks will hesitate, but some second-tier or specialist lenders may approve based on alternative income evidence.
- 80-90%LVR: Approval is possible with a strong case, especially if industry income is stable.
- Industry experience counts: Prior employment or management experience in the same field increases your credibility.
- Business stability is key: A reliable client base, consistent cash flow, and solid planning support your application.
Businesses Under 12 Months
- Specialist lenders only: These lenders are more flexible with eligibility criteria but may charge higher rates.
- Lower LVR (around 80%): You may need a bigger deposit or more equity.
- Demonstrated industry experience: Lenders will want to see that you’re not entirely new to your field.
- Business plan and projections: Forecasts and a clear growth path will be essential to show viability.
Strategies to Boost Chances of Loan Approval
To increase your chances of approval:
- Start early: Prepare documents 6–12 months before applying. Make sure all tax obligations are current and financial records are complete and accurate.
- Increase your deposit: Putting down 20% or more reduces lender risk and can qualify you for more favourable terms.
- Manage your credit score: Monitor your credit file for accuracy, avoid late payments, and minimise new credit applications.
- Maximise your income: Work with your accountant to find legitimate add-backs and improve net profit visibility.
- Use a mortgage broker: They’ll help match you with lenders who specialise in self-employed applicants and present your application effectively.
How Business Structure Affects Your Application
Your business structure determines how lenders assess your income and liabilities:
- Sole Traders: Treated as individuals, all income and expenses are personally declared. Lenders look directly at personal tax returns.
- Partnerships: Your portion of the partnership’s earnings will be used in income assessment.
- Companies: They evaluate your director’s salary, dividends, and company profits. Sometimes the company’s financials must also be provided.
- Trusts: Income distributions to beneficiaries must be clear. Lenders may request trust deeds and historical distribution records.
Having a mortgage broker who understands how these structures affect serviceability can make a significant difference.
What Unlocked Finance Can Do for You
At Unlocked Finance, we specialise in self-employed home mortgages. Whether you’re a freelancer, business owner, or gig economy worker, we tailor solutions that align with your unique needs.
Our team will:
- Carefully review your business and financials
- Find lenders that align with your financial profile and loan needs
- Help present your application to maximise your borrowing potential
- Provide ongoing support through the process
As Toowoomba-based mortgage brokers with national reach, we understand the local economy and what self-employed borrowers need to succeed. Our relationships with major banks and lenders mean we can negotiate favourable terms on your behalf.
Conclusion
Getting approved for a home loan when you’re self-employed doesn’t have to be difficult. With the right preparation, documentation, and lender strategy, you can unlock the door to property ownership in 2025. Understanding how lenders assess self-employed income and using a broker who knows the terrain can be the key difference between rejection and approval.
If you’re ready to explore your options for home loans for self-employed Australians, book a FREE consultation with one of our Toowoomba Mortgage Brokers for expert guidance.
