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I'm self-employed. How many years of financials do I need, and which ones count?

Bayley Clarke · Mortgage broker on the road · Last checked 3 September 2026 · 4 min read

The one minute version. The rest of this page is the detail underneath it.

The two year rule, and what it does to a growing business

You're going to want two years of tax returns and financials if you're self-employed, because that is still the general rule of thumb for a lot of banks. They look at the last two years and either take the lowest of the two, or the average of the two if the latest year is higher.

Run that on a business that's growing. Year one you made $80k, year two you made $120k. An averaging lender assesses you on $100k. A lowest-year lender assesses you on $80k. The $120k you actually earned last year never makes it into the calculation, and your borrowing capacity gets set by the year you'd rather forget.

Some two year lenders soften this with a cap instead of an average: they'll use the latest year as long as it's not more than a set percentage above the prior one, and cap it there if it is. Better than the average, still not the real number.

The one year path, and its conditions

A lot of businesses continue to grow year after year, and that latest year figure is ultimately going to be a lot stronger. So a lot of banks nowadays will just look at your latest year of tax returns and financials when they figure out how much you can borrow. It's more reflective of where the business is at.

The one year path almost always comes with strings, and the strings differ by lender. The common ones: your ABN needs to have been registered for a minimum period, often 18 months to two years, even though only one return is used. The loan is usually capped at 80% of the property value, so it's not a low deposit path. Some lenders shade the income, using 90% of the latest year rather than all of it. Some require a single self-employed income source. And a few have a professionals-only version for accountants, lawyers, medicos and engineers with a shorter trading history.

One lender's policy is worth knowing as a pattern: most recent year, no averaging at any loan size, provided the ABN has 18 months behind it. That's the cleanest version of the one year path on the market, and it's the one I reach for when the latest year is the strong one.

Which financials actually count

For a sole trader, it's your personal tax return and the notice of assessment. Some lenders don't even ask for separate business financials at that level. For a company or trust, it's the entity's tax return and financial statements plus your personal return, and the bank reads them together. The wage you pay yourself and the profit left in the company both count.

On top of the headline profit, most lenders add back items that reduced your taxable income without reducing your cash: depreciation, interest on business loans that are already counted as debts, one-off costs, and super you paid yourself above the compulsory rate. Where they differ is on the caps. Some allow depreciation in full. Some cap it at 20% or 25% of profit. For a tradie with a ute and a trailer of tools, that cap can move the number by a lot.

And if the returns aren't there yet, there's a separate lane: alt doc, where income is verified through BAS statements, business bank statements or an accountant's declaration instead of full financials. The big banks have mostly walked away from it, so it's broker-only territory now, with higher rates and lower loan to value caps as the trade.