How to Get a Home Loan as a Self-Employed Borrower

If you're self-employed and hoping to buy a home, you've likely heard that getting a mortgage is more challenging than it is for salaried workers. While lenders do apply stricter criteria to self-employed applicants, it’s entirely possible to secure a home loan with the right preparation and documentation.

In this guide, we’ll explore how self-employed home loans work, the documents you’ll need, and the steps you can take to strengthen your application.

Why Is It More Challenging for Self-Employed Borrowers?

Lenders tend to view self-employed borrowers as higher risk. Unlike salaried employees with predictable pay, your income may fluctuate from month to month. On top of that, business expenses can reduce your taxable income, making it appear that you earn less than you actually do. Because of these factors, lenders usually require more comprehensive documentation to assess your ability to repay a loan.

Understanding Loan Types for Self-Employed Applicants

If you're running your own business or freelancing, there are two main types of home loans available to you: full-doc and low-doc loans.

A full-doc loan is the standard option and is best suited for borrowers who can provide at least two years of financial records, including tax returns and profit-and-loss statements. These loans typically offer the most competitive interest rates and may allow you to borrow with a smaller deposit, sometimes as little as 5–10%.

Low-doc loans, on the other hand, are designed for those who may not have two full years of tax returns but can verify income through alternative methods such as business bank statements, BAS, or an accountant’s letter. These loans usually require a larger deposit (often 20% or more) and tend to come with higher interest rates.

If you have the necessary documentation, full-doc loans generally offer more options and better pricing. But if your records are limited, low-doc options are still available through specialist lenders.

Are You Eligible for a Home Loan?

To be eligible, you’ll generally need to have been self-employed for at least one to two years. Lenders also look for a good credit score, a stable or growing income, and a minimum deposit of between 5% and 20%, depending on the loan product. If you’re not sure where you stand, speaking with a mortgage broker is a great first step, they can assess your situation and match you with lenders who understand self-employed finances.

What Documents Will You Need?

Self-employed applicants should be prepared to provide more documentation than PAYG borrowers. If you're applying for a full-doc loan, you'll typically need two years of personal and business tax returns, profit-and-loss statements, bank statements for both business and personal accounts, and proof of GST registration if applicable.

For low-doc loans, the requirements vary but often include 12 months of business bank statements, recent BAS statements, or a letter from your accountant confirming your income. The more thorough your records, the stronger your application and the more lenders you’ll have access to.

How to Improve Your Chances of Approval

The key to a strong application is preparation. Keeping your personal and business finances clearly separated makes it easier for lenders to assess your income. Reducing personal and business debts before applying can also boost your borrowing power, as can demonstrating consistent or growing income over the past year or two.

Saving a larger deposit (ideally 20%) will improve your approval odds and help you avoid Lenders Mortgage Insurance (LMI). If you can’t save that much, some lenders still offer options with smaller deposits, particularly if you have strong documentation.

Finally, working with a mortgage broker who understands the nuances of self-employed lending can significantly increase your chances of success. Brokers can identify lenders who are more flexible with business owners and help you present your finances in the best possible light.

Choosing the Right Lender

Not all banks approach self-employed borrowers the same way. Some lenders offer home loans specifically tailored to business owners, while others may have stricter credit policies. This is where a broker becomes especially valuable, they can compare lenders, explain loan features, and help you structure your application for the highest chance of approval.

Final Thoughts

Getting a home loan as a self-employed borrower might involve more steps, but it’s absolutely within reach. By maintaining solid financial records, keeping your income steady, and partnering with a broker who knows the market, you can navigate the lending process with confidence.

How We Can Help

As mortgage brokers, we specialise in helping self-employed borrowers access competitive home loan solutions. We’ll assess your borrowing power, find lenders that suit your needs, and guide you through every step of the process, from document gathering to loan approval. If you’re ready to explore your options, get in touch with us today. We’re here to make the process easy and stress-free.