Home loans for the self-employed: how lenders read your income

Most lenders want to see your last two years of tax returns and the matching notices of assessment (the tax office's statement of what you earned and owe for the year). The question that catches people out is which two years count as “the last two”.

Lenders want your figures to be recent. Some stop accepting a return once it's more than about 18 months past the end of the financial year it covers. Others set a date each year, somewhere between late February and mid-May, after which they want last financial year's return.

The tax office's dates don't line up with that. If you lodge your own return, it's due on 31 October. But if you use a registered tax agent, your return may not be due until 15 May the following year.

Source: Australian Taxation Office, "Lodge with a registered tax agent" (updated 24 April 2026) and the registered agent lodgment program 2026-27 for individuals and trusts (updated 1 July 2026), read 28 October 2026.

What that means for a 2025-26 return

Take a sole trader whose 2025-26 return (the year ended 30 June 2026) is with their tax agent, due 15 May 2027. Their latest lodged return is for 2024-25.

So in the first half of the year, a buyer whose return isn't lodged yet can find some lenders asking for that return. Those lenders aren't saying no; they're waiting for the paperwork. Ask a broker which lenders can use the returns you have now. Some lenders will also look at more recent figures, such as your business activity statements, in the meantime.

If your latest year was stronger than the one before, it can be worth asking your accountant to prepare it early, since some lenders will accept a return that's been prepared but not yet lodged. If your income is about the same each year, there's usually no need to rush.

Most lenders want you to have held your ABN (Australian Business Number) and been trading for at least two years. A few accept 18 months, or a single year's return when you're borrowing less of the home's value. Some will consider twelve months if you did the same kind of work as an employee before you went out on your own, so an electrician who goes from a wage to their own ABN isn't starting from scratch. With twelve months on your ABN, a clean credit history and enough deposit, a loan can go ahead much like any other, though often at a higher rate, which is why some people choose to wait until they reach two years. Specialist lenders go further, sometimes to under a year, usually at a higher rate and a lower LVR (loan-to-value ratio, the loan as a share of the home's value).

If you've gone from an employee to subcontracting in the same line of work, lenders still assess you as self-employed, but some will set the two-year ABN rule aside altogether.

Our tool asks whether your ABN has been registered for two years or more. If it hasn't, lenders that need two years are shown greyed out with the reason, and lenders that may consider it stay in your list, with conditions a broker can confirm with you. Our guide to how long you need to be employed explains why lenders ask about time in work at all.

Lenders start from your taxable income: the figure on your tax return after your business expenses and deductions. For most sole traders, that's the number on your notice of assessment. Our FAQ on how lenders decide what you can borrow covers what they weigh it against.

If your income went up, or down

Lenders look at two years, and what they do with them depends on which way your income moved.

• If your latest year was lower, many lenders use the lower year, and a couple average the two.
• If your latest year was higher, many lenders won't simply take it. They average it with the year before, or cap how much of the rise they count.
• Plenty of other lenders use your latest year on its own, whichever way it moved.

So at many lenders a strong year helps less than it looks, and a weak year counts in full. If your income has jumped, a broker can point you to the lenders that will use your latest year on its own.

Add-backs: costs a lender can count back in

Some of what reduces your taxable income doesn't really come out of your pocket each year. Lenders know this, so many add some of it back. These are called add-backs. The common ones are:

• Depreciation: the tax write-down on equipment or vehicles you already own. Often capped, and the cap differs from lender to lender.
• Interest on business loans that your new home loan will pay off.
• Super contributions above the compulsory amount.
• One-off costs that won't happen again, which your accountant confirms in writing.

Ordinary running costs, like materials, fuel, rent and staff wages, aren't added back. And lenders differ on what they accept, so the same return can be read differently from one lender to the next.

Lower tax, lower borrowing

The flip side: every deduction that lowers your tax also lowers the income a lender starts from, and add-backs only win back some of it. If you're planning to buy in the next year or two, tell your accountant, so you can talk it through together. That's a conversation for your accountant, not tax advice from us.

If you trade through a company or a trust, lenders look at more than one thing. They look at what you pay yourself, such as a director's wage or a trust distribution, and some will also count profit kept in the business, depending on how much of it you own. They'll usually want the company's or trust's tax returns as well as your own.

If you've moved from a sole trader to a company, lenders generally treat it as the same business, so your trading history carries over, as long as no new directors have joined. A sole trader who becomes the only director of their own company is fine.

If your own company pays you a regular wage, some lenders can assess it more like a salary, with fewer documents, once you've been paid that way for a while.

Our tool doesn't ask how your business is set up. Enter your taxable income from your most recent personal tax return, and a broker can work through the company or trust side with you.

If you're employed and also earn money from an ABN on the side, lenders can count both, and they'll usually want to see the business income on your tax returns. In our tool, enter your wage as normal and use the “Also have self-employed or business income?” field for the rest. The tool doesn't ask how long your side business has traded; a broker will.

If you don't have two years of returns, or your latest isn't lodged yet, some specialist lenders offer low doc (also called alt doc) loans. Instead of tax returns, you sign a declaration of your income and back it up with one of: a letter from your accountant, recent business activity statements (BAS, the regular goods and services tax (GST) report your business lodges with the tax office) or business bank statements. These loans usually lend a smaller share of the home's value than a standard loan, at a higher rate, so you'll usually need a bigger deposit too. Our FAQ on how much deposit you need explains why it matters.

If your business's GST turnover is $75,000 a year or more, you must be registered for GST, and low doc lenders usually want to see you've been registered for a while. Below that turnover, they generally don't ask for it.

Source: Australian Taxation Office, "Registering for GST" (updated 14 September 2026), read 28 October 2026.

An unpaid tax debt doesn't automatically rule you out, but it narrows the lenders who'll help. Some lenders won't lend to pay off a tax debt. If you're on a payment plan with the tax office, lenders may count the plan's repayments as a monthly cost, like any other debt. Some specialist lenders will roll a tax debt into the loan if you can explain how it happened.

This is an illustration, not a quote.

Sam: Sam is an electrician in Geelong. He's run his own business as a sole trader for five years, and he's buying his first home on his own.

Taxable income (sole trader, latest tax return)

$110,000 a year

ABN registered

More than two years

People on the loan

1, no dependants

Living expenses

$2,800 a month

Other debts

None

Home price

$650,000

Loan

$520,000, owner-occupied, 30 years (an LVR of 80%)

What moved the figure

• Your last two years of personal tax returns and notices of assessment.
• If you trade through a company or trust: its last two years of tax returns and financial statements.
• Your recent business activity statements, especially if your latest return is more than a few months old.
• Your ABN, and your GST registration if you have one.
• If you owe the tax office anything: a statement of the balance and any payment plan.
• Statements for any other debts, including credit cards and car loans.