Home loans for self-employed borrowers are, for the most part, the same loans everyone else gets. What changes is how a lender assesses your income, and that one difference is where most applications either sail through or stall.
The short version: lenders lend on the income your paperwork proves, not the income your business actually brings in. Get the paperwork sorted well before you apply and the process looks a lot like any other home loan. Leave it until you’ve found a property, and you may end up borrowing less than you hoped.
Timing matters more than usual right now. The Reserve Bank lifted the cash rate to 4.60 per cent on 29 September 2026, its fourth increase this year, and that flows straight into the rate lenders use to test your repayments.
How do lenders assess self-employed income?
Lenders assess self-employed income mainly from your lodged tax returns and notices of assessment, usually covering the last two years. Many lenders average those two years, some will use the most recent year if income has grown, and most add back non-cash costs like depreciation. That figure is then stress-tested at your loan rate plus three percentage points.
That three-point stress test is APRA’s serviceability buffer, and it applies to every bank. With the average new owner-occupier rate expected to sit around 6.5 per cent after this week’s rise, you’re being tested at roughly 9.5 per cent.
Since 1 February 2026, banks can only write 20 per cent of their new home loans to borrowers whose total debt is six or more times their gross income. That’s a limit on the bank’s overall lending, not a personal cap on you. Still, a lender sitting close to its limit may offer a smaller loan or take longer to decide.
Time in business counts, too. Most banks like to see two years under an active ABN. Where your history is shorter, specialist self-employed loans may accept around 12 months of trading, particularly if you did the same kind of work as an employee before going out on your own.
The tax trade-off nobody mentions at tax time.
Your accountant’s job is to keep your taxable income as low as the law allows. A lender’s job is to lend against that very same number. The two goals pull in opposite directions.
Take a hypothetical sole trader whose business clears $150,000 before tax, but whose return shows $95,000 after legitimate deductions. On the six-times-income measure alone, that’s the difference between about $900,000 and $570,000 of total debt before the bank counts the loan as high DTI. Add-backs can close part of that gap. They rarely close all of it.
Tip: This isn’t about paying more tax than you need to. It’s about talking to your accountant a year or two before you buy, so you both know how your return will read to a lender.
Which type of lender suits your situation?
| Major banks | Smaller banks and credit unions | Non-bank specialist lenders | |
| Typical income evidence | Two years of tax returns and NOAs | Tax returns; some accept the latest year only | Tax returns, or BAS, bank statements and an accountant’s declaration (low doc) |
| Trading history usually preferred | 2 years | 1-2 years | Can be around 12 months |
| Policy flexibility | Lower, more rule-based | Moderate | Highest |
| Pricing | Often sharpest for straightforward files | Often competitive | Usually higher, priced to the risk |
| APRA DTI limit applies | Yes | Yes (if an authorised deposit-taking institution) | No, but responsible lending laws still apply |
The instinct is to walk into the bank that holds your business account. But if your file doesn’t match that bank’s rules, the decline stays on your credit file as an enquiry, and a string of enquiries in a short period makes the next lender more cautious. Selecting the lender type before you apply, rather than after a knock-back, tends to save both time and credit score.
What makes the best home loans for self-employed borrowers?
The best home loans for self-employed borrowers are those matched to how your income is documented, rather than the loan with the lowest advertised rate. A slightly higher rate from a lender that accepts your latest year’s income can beat a cheaper loan you can’t get approved for. Flexible features also matter when business cash flow is uneven.
Comparison tables that rank the best home loans in Australia assume steady payslips. They say little about which lender will accept an accountant’s declaration. A few features tend to earn their keep for business owners:
- An offset account. Parking the money you’ve set aside for BAS and income tax in an offset can reduce interest until the ATO payment falls due. Check with your accountant first, as mixing business and personal funds can create headaches.
- A clear exit plan. If you start on a low-doc or non-bank loan, the goal is often to refinance to a standard home loan once two years of returns are lodged and the rate gap is worth closing.
Can you get self-employed home loans with bad credit?
Home loans for self-employed people with bad credit are often still possible, mainly through non-bank specialist lenders that look at the reason behind a credit issue instead of declining on the score alone. Expect a higher interest rate, a bigger deposit and more questions. A paid default with a clear explanation is treated differently from ongoing missed payments.
A default generally stays on your credit report for five years, even after it’s paid, while repayment history covers the last two years.
Tax debt is its own category for business owners. The ATO can report overdue business tax debts of more than $100,000 to credit bureaus once certain conditions are met. Many lenders will still consider an application where an ATO debt sits on an agreed payment plan, and some can refinance an ATO tax debt into the loan itself. If the problem is a stack of car loans and credit cards instead, consolidating those debts into one repayment can improve how your serviceability looks on paper.
Tip: Check your own credit report before a lender does. You can request a free copy every three months from Equifax, Experian and illion, and fix any errors before they show up in an application.
Deposits, LMI and the 5% deposit scheme in Melbourne
Self-employed first home buyers can use the Australian Government 5% Deposit Scheme on the same terms as employees. Since 1 October 2025, there’s no income cap and no limit on places, and the property price cap for Melbourne and Geelong is $950,000. A participating lender still has to approve your loan, and its normal self-employed income policy applies.
Outside the scheme, a deposit under 20 per cent usually means paying lenders mortgage insurance (LMI). Low doc loans often top out at a lower loan-to-value ratio, commonly around 80 per cent, so plan for a bigger deposit if that’s your likely pathway.
Stamp duty is the other number that shapes a mortgage in Melbourne. Eligible first home buyers in Victoria currently pay no duty on homes valued up to $600,000 and a reduced amount on homes up to $750,000. Those thresholds are a live issue ahead of the November 2026 state election, so confirm them with the State Revenue Office close to purchase.
A 12-month runway before you apply
If you’re working out how to get a home loan when you’re self-employed, start early. Here’s a rough sequence:
- Twelve months out: Talk to your accountant. Agree on how this year’s return will be prepared, knowing a lender will read it.
- Keep lodgements current. Late tax returns and BAS are a common reason files get pushed back.
- Separate business and personal accounts. Clean statements make low doc verification far simpler.
- Hold off on new finance. A new ute on finance or an extra credit card six months before applying reduces borrowing power, even if the business can easily afford it.
- Think about structure early. If you’re weighing up buying property in a company name or a trust, that decision changes which lenders and documents apply, so make it before you start house hunting.
- Get pre-approval before you bid. This matters most at auction, where Victorian contracts generally have no cooling-off period or finance clause.
Where a broker fits in
Self-employed files are where lender policy differences show up the most. Knowing which lender averages two years, which uses the latest year and which accepts an accountant’s declaration is most of the value a good mortgage broker in Melbourne brings.
The best home loans in Melbourne for a business owner are rarely found by applying at random and hoping. If you’re planning to buy or refinance in the next year, book a chat with the TMMC team to get expert advice.
This article is general information only and doesn’t take your personal circumstances into account. Speak with a licensed professional before making any financial decisions.