Home / Self-employed home loans

Guide · Self-employed

Self-employed home loans: how the bank actually reads your financials

Bayley Clarke · Mortgage broker on the road · Last checked 6 September 2026 · 8 min read

The one question behind every self-employed rule

A lender is agreeing to be paid back out of your income for up to thirty years. With an employee it reads a payslip and moves on. With you it has to go and find your real, durable income somewhere inside a set of financials that were written for a completely different reader.

That's the whole tension in one line. Your accountant is paid to get your taxable income down: expenses, depreciation, the ute, the interest write-off, the structure of the business. The bank gets paid back out of profit, so it wants to see as much of it as possible. Same business, two sides. Neither of them is wrong. But nobody tells you that the return which saved you tax in June is the document that sets your borrowing power in September.

Every self-employed lending rule is the bank asking one question of your numbers: how much of this is real, and how much of it keeps arriving? Which years it reads, what it adds back, how it treats a company you own, whether a fresh ABN resets your clock. All the same question in different outfits. Once you see that, the rest of this page is easy to walk.

The three things lenders do to your financials

1. They pick which years to read. Two years of tax returns and financials is still the general rule of thumb. The two year lenders look at both and either take the lowest, or the average if the latest year is higher. Run that on a growing business. Year one $80k, year two $120k, illustrative numbers. 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. Then there's a growing group of lenders that use your latest year on its own, which is more reflective of where the business is at. That path nearly always comes with strings: an ABN that's been registered for 18 months to two years, a loan capped at 80% of the property value, sometimes the income shaded to 90%.

2. They add some things back, and not others. The bank starts at the net profit on the return, the number your accountant worked hard to make small. Then it adds back the items that reduced your taxable income without reducing your cash: depreciation, interest on business loans that are already counted as your debts, genuine one-off costs, and super you paid yourself above the compulsory rate. A genuine expense stays off. The wages, the rent, the materials, the software, they're gone for good. And the add-backs have caps that differ by lender, which is where the number starts to move.

3. They read the structure. A sole trader is the simple case: your personal return and the notice of assessment, and at some lenders no separate business financials at all. A company is the entity's return and financials plus your personal return, read together. Because you own it, the wage you pay yourself and the profit left in the company both count, provided you hold enough of the shares, and half is the common line. A trust is distributions, and the bank wants to see that you're the one they land with and that they'll keep landing. And if the entity has only just been born, because you've moved from sole trader to a company, some lenders read that as a brand new business and some read it as the same business growing up.

The paperwork follows the structure. Returns, notices of assessment and financials for whichever entities earn the money, and sometimes a run of BAS statements to show the current year is tracking. If the latest return isn't lodged yet, the lenders generally keep using the previous one until the tax office actually expects the new one. And when there are no usable returns at all, there's a separate lane: alt doc, where income is verified through BAS, business bank statements or an accountant's declaration. Fewer lenders, a higher rate, a lower cap on how much of the property you can borrow. The big banks have mostly walked away from it, so it's broker-only territory now.

Same financials, different lender, different answer

Here's the bit no calculator shows you: every lender sets those dials itself. One year or two, average or latest, what to add back and how much, what counts as owning the company, whether a new ABN starts the clock again. Same rules of thumb, wildly different settings. And the spreads aren't small.

Take the growing business above. On identical returns, a lowest-year lender sees $80k and a latest-year lender sees $120k. That's a $40k gap in assessed income before anyone has talked about a rate, and it's easily the difference between the house you want and the one you're offered. Or take a tradie with $30k of depreciation on the ute and the tools sitting on top of $100k of profit. A lender that adds depreciation back in full reads $130k. A lender that caps the add-back at 20% of profit reads $120k. Illustrative numbers, not a quote, but that's a five figure swing from one line of policy.

Company owners get a fork of their own. Say the company made $90k of profit after paying you a $30k wage. Read properly, that's $120k of income to you. But a few lenders run a wages-only shortcut for directors: less paperwork, faster, and it sees $30k and nothing else. Great if the wage alone carries the loan, a trap if it doesn't. And if you want the company itself to be the borrower rather than you, the field narrows again: around a third of the panel won't lend to a company at all, and most of the rest cap the loan lower and drop the features you'd expect, offset and redraw among them.

Then timing. Restructured from sole trader to company last year? At least one lender's latest-year path requires every entity in the picture to have two full financial years behind it, so a fresh company fails on day one no matter how strong the sole trader history was. Plenty of others take an accountant's letter confirming it's a continuation and count your history from the original ABN. And the lodgement window runs the other way: last year's return generally stays your "latest year" until around March, at many lenders until May, and then the new one has to be lodged, not drafted. Apply a month either side of that date and the same file can be a yes or a wait.

Which is why "will you lend to the self-employed" is the wrong question. Nearly everyone will. There's only how each lender reads your financials, and a branch can only ever tell you its own answer. Nobody in that building is going to mention that the lender down the road would have used your latest year and added the depreciation back in full.

The questions, one by one

Each of these has its own full answer, with the lender-by-lender pattern underneath it. Find your situation and go down a level.

What to bring, and the question to ask

Less than you'd think. Sole trader: your last two personal tax returns and the notices of assessment. Company or trust: the entity's returns and financials for the same two years, plus your personal return. Latest year not lodged? The BAS statements and a few months of business bank statements show me where the year is tracking. That's the whole list for most people, and it's ten minutes of digging.

Then the question to ask isn't "what's your rate" and it isn't "do you lend to self-employed people". They nearly all do. The question is "how do you read my financials": which year, average or latest, what you add back and how much, what you do with my wage and my profit, and whether a fresh company resets my clock. Those settings move how much you can borrow further than anything else on the application, and the question only becomes useful when someone can see across a whole panel of lenders at once. That's what a mortgage broker for the self-employed is actually for.

Related reading

Got a question this page didn't answer? Send it to me and it goes on the list.