Self Employed

Are you self-employed but not sure if you're qualified for a home loan? Lenders have a different way of assessing the income of self-employed applicants. As a self-employed person, you can be classified as a full-doc applicant or a low-doc applicant.


A full-doc applicant will have had their ABN for the last two years with their income registered for GST. Income required to service the loan will be based on the income declared in the two years’ tax returns. If the difference in income in the last 2 years is greater than 20 percent, then most lenders will consider the smaller of the two and if the difference is less than 20 per cent, then assessment of income will be based on the average of the last two years. There are a couple of lenders who will do the assessment based on the most recent tax return as long as the loan amount is 80 per cent of the value of the property. Whatever your situation, a mortgage broker will help you maximise the loan amount you can borrow. A mortgage broker understands tax returns and each lender’s credit policy. It is their job to find the lender that is most suitable to your financial situation and will help you get the most competitive home loan with the right lender.


Other ways to maximise your borrowing amount is through add-backs. How does this work? Business expenses such as interest and depreciation or those one-off expenses that are not recurring expenses can be added back to your income. Income determines how much you can borrow so the more add backs, the bigger the income and the higher the loan amount. This becomes critical especially when you are a couple of thousands away from the loan amount required for you to purchase your dream home.

Related content