If you work for yourself, you've probably felt it: the bank that's happy to take your business account suddenly gets nervous when you ask for a home loan. It's frustrating, because it's rarely about whether you can afford the loan — it's about how your income is structured and read. The good news is that self-employed borrowers get approved every single day. You just need the right approach.
Why banks make it harder for the self-employed
Lenders like predictable, salaried income they can verify with two payslips. Business income is lumpier and is reported after expenses, so on paper your taxable income can look smaller than the money actually running through your life. Add a recent ABN, a single slow year, or returns you haven't lodged yet, and a major bank's automated assessment often just says no.
The documents that usually do the heavy lifting
Depending on the lender and how long you've been trading, your income can typically be evidenced by:
- Your last one or two years of tax returns and ATO notices of assessment;
- BAS statements and business bank statements;
- An accountant's letter or declaration confirming your income; and
- Company or trust financials, if you trade through a structure.
"Add-backs": the income banks forget you have
This is where a broker earns their keep. Several expenses that reduce your taxable income can often be "added back" to show your real borrowing capacity, including:
- Depreciation;
- One-off or non-recurring expenses;
- Additional (voluntary) superannuation contributions; and
- Interest on debts that have since been paid out.
Two lenders can look at the exact same tax return and arrive at very different "incomes" — because they treat add-backs differently. Knowing which lender reads you most generously is often the whole ball game.
What is a low-doc (alt-doc) loan?
If your business is up to date but your tax returns aren't lodged yet, a low-doc (or alt-doc) loan lets you verify income with alternatives like BAS, business bank statements or an accountant's declaration instead of full returns. Rates, deposit requirements and policies vary by lender, so it's about matching you to the right one — not just taking the first option.
How to give yourself the best shot
- Keep your tax up to date. Lodged, current returns open the most doors.
- Keep business and personal banking tidy. Clean statements make assessment faster.
- Don't apply scattergun. Each rejected application can leave a mark on your credit file. Aim to apply once, to the right lender.
- Talk to a broker before you apply — so the application is packaged correctly the first time.
