Home Loans for Self-Employed Borrowers

How do lenders assess self-employed income?

Lenders do not all assess self-employed income the same way. Most take your last two years of personal tax returns and Notices of Assessment and average them, but a meaningful number will use the most recent year alone, or apply add-backs — adding back non-recurring expenses, depreciation, interest and one-off costs to reach a higher usable income. Which method applies depends on the lender, your structure (sole trader, partnership, company or trust), how long you have been trading, and whether income is stable, growing or declining.

Because each lender applies a different formula to the same set of figures, two lenders can return very different borrowing capacities for the identical borrower. WRA models your income the way each target lender does before we choose where to apply, so we present your numbers through the policy that produces the strongest, most defensible assessment.

Can I get a mortgage with one year of financials?

Yes. A number of lenders will assess a self-employed borrower with just one year of full financials, particularly where the business is established and income is consistent or trending up. This matters for newer business owners who simply do not yet have two years of returns, or for borrowers whose most recent year is genuinely representative of current earnings.

Where one-year financials are used, lenders typically look for a clear business history (often ABN/GST registration for 12–24 months), recent BAS, and a sensible explanation of how the income was earned. WRA identifies the lenders that accept one year up front, so you are not filtered out by a policy that defaults to a two-year average.

Do I need two years of tax returns?

Not always. Two years of lodged tax returns and Notices of Assessment is the most common full-doc requirement, but it is not universal. Some lenders accept one year, some accept alternative documentation (BAS, an accountant’s letter, business bank statements), and some will consider a strong upward trend with supporting commentary. The right lender depends on how long you have been trading, your income trajectory and your structure.

Can lenders use BAS statements?

Yes. For low-doc and alternative-document applications, many lenders accept BAS statements — often the most recent two to four quarters — as evidence of ongoing business activity and turnover, alongside an accountant’s letter or business bank statements. BAS-based assessment suits borrowers whose latest full financials are not yet finalised, or whose tax return understates current trading strength.

BAS alone rarely sets the income figure — it is usually paired with an accountant’s declaration or business bank statements so the lender can confirm the declared income is reasonable and sustained.

Can an accountant’s letter be accepted?

In many cases, yes. For full-doc self-employed applicants, some lenders accept an accountant’s letter in place of a Notice of Assessment, provided it is from a registered tax agent and supports the declared income. For low-doc applications, an accountant’s declaration is often a core document. Lender policy on this varies considerably, so WRA confirms the exact documentation each target lender accepts before you apply, to avoid a decline on a paperwork technicality.

How is company profit treated?

When you trade through a company, lenders may use your personal taxable income, the company net profit, director drawings, or a combination. Some add back non-recurring expenses, depreciation and interest to reach a higher usable figure. The treatment of retained profits — profit left in the company rather than paid to you — is where lenders diverge most.

Some lenders include retained earnings as part of your serviceability income; others look only at what you have drawn personally. Where the business is healthy and retained profits are significant, choosing a lender that counts them can materially increase your borrowing capacity.

Can retained profits be considered?

Yes, by some lenders. Retained profits sitting in a company can be recognised as income for serviceability where the lender’s policy allows it and the business financials support it. Other lenders exclude retained earnings entirely. WRA runs both calculations and targets lenders whose policy recognises retained earnings where that strengthens your position.

What if my income increased significantly this year?

A sharply increasing income can work in your favour — or against you, depending on the lender. Some average two years and pull your capacity down; others use the most recent year; others accept a clear upward trend with supporting explanation and evidence (new contracts, growing turnover, BAS).

Where your latest year is strongest, WRA targets lenders that use the most recent financials and prepares the explanation and evidence that supports using the higher figure rather than a two-year average.

Can trust distributions be used?

Yes, where they are consistent, documented and received by you as a beneficiary. Lenders generally want to see a history of distributions (often two years), evidence the trust has the profit to support them, and confirmation they are likely to continue. Discretionary trust distributions are treated more cautiously than fixed entitlements, and some lenders discount or exclude them. WRA presents trust income through the lenders whose policy best accommodates your structure.

What documents will I need?

For a full-doc self-employed application, expect to provide:

• Personal tax returns and Notices of Assessment (usually last two years, one year with some lenders)
• Company/trust tax returns and financial statements where applicable
• Recent BAS statements (often 2–4 quarters)
• Business and personal bank statements
• An accountant’s letter or declaration
• Identification (driver’s licence, passport, Medicare)
• Existing loan statements and liability details

For low-doc applications, BAS and an accountant’s letter may be enough. WRA confirms the exact list for your chosen lender up front so you gather documents once, not repeatedly.

What are low-doc alternatives?

Low-doc (alternative documentation) loans are designed for self-employed borrowers who cannot easily produce two years of full financials. Instead of tax returns, the lender relies on a combination of BAS, an accountant’s declaration and business bank statements to verify income.

Low-doc loans typically carry a slightly higher rate or a modest LVR adjustment, but they are a genuine path to approval for newer businesses, borrowers mid-way through financials, or those whose tax return does not reflect current earnings. WRA compares low-doc options against full-doc lenders so you see the trade-off in rate and terms before deciding.

What happens if my bank has already declined me?

A decline from one bank often reflects that bank’s policy, not your overall borrowability. Different lenders assess self-employed income differently — one may decline on a two-year-average rule while another approves using your most recent year. The decline reason matters: it tells us which policy lever to target with a different lender.

WRA reviews the decline reason, re-runs your income through lenders whose policy fits, and re-presents the application. A decline is a routing problem, not a final answer.

How WRA approaches self-employed borrowers

Before we choose a lender, we work through the factors that determine which policy fits your situation. This is what WRA looks at:

Once we have that picture, we model your borrowing capacity across the lenders whose policy matches, and apply where the assessment is strongest — not where a single bank’s default rule happens to land.

Self-employed case studies

Anonymised, representative examples. Individual outcomes vary. Approval depends on lender policy, serviceability, credit assessment, security and individual circumstances.