By Jason Given · 2026-08-16 · 7 min read
PAYG employees provide 2 payslips and a lender can calculate borrowing capacity in minutes. The income is predictable, documented, and easy to verify. Self-employed borrowers do not have that luxury.
If you run your own business - whether you are a sole trader, contractor, freelancer, or operating through a company or trust - you need to provide tax returns, business financials, and sometimes accountant letters. The documentation requirements are more involved, and the assessment process takes longer.
More importantly, lenders assess self-employed income in different ways. One lender might average your last two years of taxable income. Another might use the most recent year. A third might allow add-backs for depreciation and one-off expenses. The difference in borrowing capacity between lenders can be $100,000 or more - on the same income, from the same person.
This is why using a broker (not your bank) is critical when you are self-employed. Your bank applies one set of policies. A broker like Lendology compares policies across 60+ lenders to find the one that works best for your specific income structure.
Self-employed lending requires more paperwork than PAYG. Here is the standard documentation most lenders will ask for:
Not every lender requires every item on this list. And if you do not have all of these documents, there may still be options available through low-doc lending. Lendology will tell you exactly what you need based on which lender we recommend for your situation.
This is where lender selection makes the biggest difference to your borrowing capacity. Different lenders use different methods to calculate self-employed income, and the gap between them can be significant.
Most lenders average your last 2 years of taxable income. If you earned $80,000 one year and $100,000 the next, your assessed income would be $90,000.
If your income is trending upward, some lenders use the most recent year only. In the example above, that means being assessed on $100,000 instead of $90,000 - which could mean tens of thousands more in borrowing capacity.
If your income is trending downward, most lenders use the lower figure or the average. This is where self-employed borrowers often get caught - a dip in one year can reduce your borrowing power even if the business is healthy overall.
Add-backs are another important factor. Some lenders allow depreciation, interest, and one-off expenses to be added back to your income for assessment purposes. A lender that allows generous add-backs can assess your income $20,000-$40,000 higher than one that does not.
The difference between lender policies can mean $50,000-$100,000+ in borrowing capacity. Lendology maps your income to every available lender policy to find your maximum borrowing position.
When you apply matters almost as much as which lender you apply with. Getting the timing right can meaningfully improve your outcome.
Lodge your tax returns before applying. Lenders need them, and outdated returns slow things down. If your most recent tax return has not been lodged, some lenders will not even accept your application.
Apply after a strong income year if possible. Since lenders average or use the most recent year, applying when your latest return shows higher income gives you the best borrowing position.
Avoid applying mid-financial year when you have no returns for the current period. Some lenders require the most recent financial year to be lodged, and if it is not available, your application may stall.
If you have just started a new business (less than 2 years), talk to Lendology first. Some lenders have pathways for newer businesses, including those that accept 1 year of trading history with strong BAS turnover.
There are two broad categories of self-employed home loans, and they differ significantly in rates, terms, and requirements.
Full-doc means you provide 2 years of tax returns and financials. You get standard interest rates - the same as any PAYG borrower. You can borrow up to 95% LVR with lenders mortgage insurance. This is the goal for every self-employed application, because it gives you the best rate and the most flexible loan terms.
Low-doc means you self-declare your income, verified by BAS statements or an accountant's letter rather than full tax returns. Low-doc loans carry higher rates - typically 0.5-1.5% above standard variable rates. Maximum LVR is usually capped at 80%, meaning you need a larger deposit. Low-doc is not a shortcut - it is a pathway for borrowers who genuinely cannot provide full documentation.
Lendology's approach is to always try to structure a full-doc application first, because it saves you money on rate and gives you better loan terms. We only recommend low-doc when it is genuinely the best option for your circumstances.
The First Home Guarantee is one of the most valuable programs available to first home buyers in Australia - and yes, it is available to self-employed borrowers.
The scheme allows you to buy with just a 5% deposit and pay no lenders mortgage insurance (LMI). The government guarantees the remaining 15%, so you avoid the LMI premium that would otherwise cost thousands of dollars.
Eligibility is based on taxable income - under $125,000 for singles or $200,000 for couples. Your self-employment income is assessed the same way as for the home loan itself, using your tax returns. Property price caps apply based on location.
There are limited places available per financial year, so applying early gives you the best chance. Lendology manages the entire application process - from checking your eligibility to submitting to a participating lender that works well with self-employed income.
Most lenders require at least 2 years of self-employment history with 2 years of tax returns. Some lenders accept 1 year if your income is strong and stable. A small number of lenders offer low-doc loans for self-employed borrowers with less than 1 year of history, though these typically have higher rates. Lendology identifies the right lender for your specific timeframe.
Yes, but lenders use your taxable income from your tax returns - not your gross revenue. If you have structured your business to minimise taxable income (which is common and legitimate), your borrowing capacity may be lower than you expect. Some lenders are more generous in how they calculate self-employed income. Lendology knows which ones.
Not necessarily. If you have a full-doc application (2 years of tax returns and financials), most lenders offer the same rates as PAYG borrowers. Low-doc loans (where you provide less documentation) do carry higher rates - typically 0.5-1.5% above standard variable. Lendology aims to get you into a full-doc product wherever possible.
Yes. The First Home Guarantee is available to self-employed borrowers. Eligibility is based on taxable income (under $125,000 single or $200,000 couple) and property price caps. Your self-employment income is assessed the same way as for the home loan itself - using tax returns.
Self-employed? Let us find your best lender.
Book a chat. We specialise in self-employed lending and know which lenders work best for your income type.