Self-Employed Home Loans: What Business Owners Need to Know

The short answer

Being self-employed doesn’t have to stand in the way of a home loan, but it does make choosing the right lender more important. Each lender looks at business income, structures and paperwork differently.

We covered how self-employed income is assessed in our What income counts lesson. This lesson covers everything else business owners need to know.

Your business structure

The documents a lender needs depend on how your business is set up. Typically:

Structure	Documents usually needed
Sole trader	Personal tax returns and notices of assessment
Partnership	Personal and partnership tax returns
Company	Company tax returns and financial statements, plus your personal tax returns
Trust	Trust tax returns and financial statements, plus your personal tax returns

If your business structure is more complex, such as a company acting as trustee for a trust, expect to provide documents for each entity.

How long you’ve been trading

• Most lenders: want two years of trading history, with two years of tax returns.
• Some lenders: can accept one year, especially if you’ve been in the same industry before.
• Specialist lenders: may consider a shorter history, usually with more conditions or a higher rate.

If you’ve recently moved from employee to self-employed in the same field, let us know. Your previous experience can count in your favour.

Low-doc options

If your tax returns aren’t up to date, or don’t reflect your current income, a low-doc loan may help. Instead of full tax returns, the lender assesses you on documents like:

• BAS statements: showing your recent business turnover.
• An accountant’s letter: confirming your income.
• Business bank statements
• A declaration of your income

Low-doc loans usually come with higher rates and lower maximum LVRs, and often need your ABN and GST registration to have been in place for a period. They can be a stepping stone, with a refinance to a standard loan once your tax returns catch up.

Company profits and add-backs

If you run a company, the salary you pay yourself may not reflect what the business really earns. Some lenders can look beyond your wage:

• Company profits: some lenders can count the company’s profits, not just what you pay yourself.
• How those profits are taxed in the assessment: most lenders add company profits onto your personal income and tax them at your higher personal tax rates. Some lenders apply the lower company tax rate instead, which leaves more income in the assessment and can lift your borrowing power.
• Add-backs: items like depreciation, interest on business loans and genuine one-off expenses can be added back to your income.

This is where choosing the right lender can make a big difference to your borrowing power.

ATO debts and payment plans

Many business owners carry a tax debt at some point. It doesn’t automatically rule you out:

• Payment plans: an ATO payment plan that’s up to date is often acceptable to lenders.
• Refinancing tax debt: in some cases, a lender may allow you to pay out a tax debt as part of your loan.
• Be upfront: lenders often find tax debts through your documents or credit checks. Telling us early lets us find the right lender and present it properly.

Business debts and personal guarantees

Lenders look at the whole picture, including debts held by your business:

• Business loans and equipment finance: repayments are usually factored into your assessment.
• Personal guarantees: if you’ve personally guaranteed a business loan, some lenders will count it against your borrowing power.

Having a clear list of your business debts and guarantees ready helps avoid surprises.

Working with your accountant

Up-to-date financials make everything faster. Before you apply, check that your latest tax returns are lodged, your notices of assessment are available, and your financial statements are finalised. If they’re not ready yet, let us know, as low-doc or latest-year options may still work.

You have an accountant for your books

You wouldn’t run your business’s books without an accountant. Your home loan deserves a specialist too, especially when your income doesn’t fit the standard boxes.

That’s what we’re here for. With access to over 40 lenders, our team of lending specialists understands business owners, so you can focus on the most important part: running your business and living your life.

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General information only. This article does not consider your objectives, financial situation or needs and is not credit, financial or tax advice. Lender requirements vary. Seek advice from a licensed credit adviser and your accountant before acting. Insight Property Finance.