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How to get a home loan while self-employed

Alex Ritchie avatar
Alex Ritchie
- 4 min read
How to get a home loan while self-employed

It used to be that when applying for a home loan, lenders would look poorly on applicants that didn’t have a steady full-time job and a regular salary going back many years. Nowadays, Australian lenders have shifted how they view borrowers due, in part, to the increase in self-employed borrowers. 

Home loan requirements have thankfully changed, making it easier for self-employed Australians to get a foot on the property ladder. This includes additional options for proving your income, especially if you’re a small business owner or self-employed, and don’t have payslips from an employer. 

Can self-employed people get home loans?

Suppose you’ve been self-employed for over a year. In that case, you can submit alternative or fewer documents to apply for an ‘alt-doc’ or ‘low-doc’ home loan, as long as you meet the lender’s criteria for borrowing. 

This home loan type was made specifically to help those with less documentation, such as a pay slip or evidence of a fixed income entering a bank account. Alt-doc or low-doc home loans may be a competitive choice to consider if you are self-employed. 

The table below offers a glance at the various documents you may need to present when applying for different home loans. Ideally, you would compare various lenders’ home loan requirements and opt for a lender offering a home loan that you can easily fulfil the application requirements.

Type of self-employed home loan 

Documents required

Full-doc (traditional) home loan

  • Two years’ tax returns and assessment notices
  • Financial statements
  • Bank statements

Alt-doc or low-doc home loan

  • Self-certified income declaration, or accountant’s statement
  • Business Activity Statement (BAS)
  • Proof of Australian Business Number (ABN) and GST registration
  • Bank statements

You can prove that you’re steadily self-employed by submitting your business activity statements (BAS) or similar financial information.  

However, a low-doc home loan usually comes with some unique terms: 

  • You may not be able to borrow as much as a ‘full doc’ home loan.
  • You'll probably have to pay a higher initial deposit.
  • Your loan interest rate will typically be higher.

Can you still apply for a traditional home loan if you’re self-employed?

If you're self-employed, you can still apply for a traditional home loan if you have all the necessary documents required by lenders. Keeping track of your earnings is always a priority, but it’s crucial when applying for a home loan as a self-employed individual. 

Traditional home loans are often referred to as a full-doc home loan, due to the number of documents needed to apply. These documents include your tax returns, profit-and-loss statements, and bank statements. However, since you’ll need to submit tax returns for the past two years, you may not qualify if you began self-employment less than two years ago. 

If you are not sure if you would qualify for a full-doc home loan, it may be worth speaking with a mortgage broker for more specific information for your financial situation. 

How to get approved for a home loan when self-employed?

Home loan applications are complicated enough without mentioning that lenders consider self-employed applicants more likely to face financial issues, hindering their ability to repay a home loan. At the same time, getting your home loan application rejected can negatively affect your credit score and, as a result, your chances of approval with a different lender.

To increase your chances of getting your application approved the first time around, you should carefully consider your circumstances as well as different lenders’ loan requirements. To assist with this, you could compare home loan offers online to see what the different requirements are across lenders.

A good first step towards getting a home loan if self-employed can be making sure you are documenting your business’s continued success and earnings. This will be helpful as it supports you as a self-employed borrower to prove your income and business stability.

Lenders may also be more optimistic about you as a borrower if you’ve previously worked in the same business area as an employee. From a lender’s perspective, this suggests you can return to regular employment if you don’t succeed with self-employment.

You can also look at your savings and consider if you can pay a larger deposit. This can also help you decide whether to apply for a low-doc home loan, but you need to make sure you can afford a higher interest rate. You should also check for any outstanding issues with your credit rating and try to resolve these before applying for a home loan.

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Product database updated 16 Jun, 2024

This article was reviewed by Personal Finance Editor Peter Terlato before it was published as part of RateCity's Fact Check process.