Getting a Mortgage When Self-Employed

The catch-22 of self-employment: you minimise your taxable income to cut the tax bill, then cannot show enough income to get a home loan. Lenders want two years of tax returns, the gross-to-net gap works against you, and "mortgage-ready" is a 1-2 year project, not a six-week one. Here is how it works and how to prepare.‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍

What lenders want — income evidence

The standard full-doc self-employed assessment:

two years of personal tax returns and ATO Notices of Assessment (your taxable income);
two years of business, company or trust returns and financials if you trade through an entity;
ABN history, BAS and business bank statements (3-12 months).

Lenders usually average the last two years (or use the lower year if income fell), and may "add back" non-cash deductions like depreciation for a truer serviceability picture. One-year or "low-doc / alt-doc" deals exist through specialist lenders and brokers (12 months' BAS plus bank statements and an accountant's declaration, sometimes a shorter ABN) — but at higher rates and a larger deposit.

The construction subbie complications

Four things work against a tradie:

The gross-to-net gap — you invoice $220k but show $90k taxable after tools, vehicle, fuel and insurances, and the bank can only lend against the $90k.
Lumpy, project-based income that makes lenders nervous without a consistent annual pattern.
Equipment finance on the balance sheet (utes, excavators) increases liabilities and reduces borrowing power.
Trading through a company or trust — money in your Pty Ltd or trust does not count as personal income unless it is clearly distributed (wages, directors' fees, dividends, distributions).

Broker tactics that help: choosing a lender on policy not just rate (ones that add back non-cash and accept contracting margins), cleaning up the entity structure so company profits visibly flow to you, documenting which equipment debt is paid out at settlement, and using contractor-friendly rules (some lenders treat a long-term contractor — 12-24 months, often ~48 weeks, with the same head contractor — more like a PAYG employee).

Deposit, LVR and pricing

Full-doc with strong financials can reach 90-95% LVR with LMI, though 80% is much easier for variable income.
Low-doc / alt-doc typically sits at 60-80% LVR with a 20%+ deposit.
The sweet spot is a 20% deposit (80% LVR), where mainstream lenders extend near-PAYG rates to a clean self-employed file.

Like-for-like (same income strength, LVR and credit), pricing is often similar to PAYG — the difference is more about how hard approval is than a headline self-employed loading.

Government schemes — the Home Guarantee Scheme

The Home Guarantee Scheme (Housing Australia) includes the self-employed (income-tested on your Notice of Assessment):

First Home Guarantee — as little as a 5% deposit, no LMI (the government guarantees part of the loan). (The scheme was significantly expanded around 1 October 2025 — the income and property-price caps changed, so confirm the current caps.)
Regional First Home Buyer Guarantee — similar, for regional buyers.
Family Home Guarantee — as little as a 2% deposit for eligible single parents.

A strong self-employed file benefits fully from the low-deposit feature — but the guarantee cannot fix a weak set of returns; you still meet the lender's self-employed credit criteria.

The 12-24 month prep

"Mortgage-ready" for a tradie is a 1-2 financial year project, not six weeks:

Plan tax with the loan in mind — work with your accountant before 30 June to balance tax minimisation against showing enough taxable income for the target loan over the relevant years.
Lodge returns early — the last two years lodged with NOAs issued, and no outstanding years, ATO payment plans or disputes when you apply.
Separate business and personal — a dedicated account and a regular wage or drawings.
Tidy the structure — show company or trust profits flowing to you via wages and dividends.
Manage debt and bank conduct — pay down high-interest consumer debt, clear or document equipment finance, and avoid overdraft dishonours, BNPL and gambling markers in the 6-12 months before applying.

Common mistakes

Maximising deductions for tax then being unable to show income for the loan.
Returns lodged late, so the latest assessed year is not available.
Mixed personal and business accounts that hide the true household cash flow.
Applying six weeks out instead of preparing over 1-2 financial years.

Know someone who needs this?

Share on WhatsApp