Home Loans for Self-Employed

What Home Loans Are Available for Self-Employed Australians?

There are several home loan options available for self-employed borrowers, which we explain below. Consider which is the best for your situation, and if you need some free advice, speak to the experts at EE Mortgages.

Standard Home Loans

Standard home loans are available to self-employed borrowers who can provide complete financial documentation to prove their income and financial stability. Self-employed individuals applying for a standard home loan typically need to supply two years of tax returns, business financial statements, and Notices of Assessment from the Australian Taxation Office (ATO). These documents demonstrate consistent income and the ability to service the loan, which helps lenders assess the borrower’s creditworthiness.

For self-employed Australians with well-organised financial records and stable income, they will be able to access competitive interest rates and terms, similar to loans for salaried workers. However, meeting the documentation requirements can be challenging for businesses with fluctuating income or irregular financial reporting. For those who can meet the criteria, standard (or full documentation) home loans remain the best option, as they come with lower interest rates and fewer restrictions.

To get started with your home loan or to discuss if this is the best option, contact Eden Emerald Mortgages. Our experienced team can provide tailored advice, help you calculate your borrowing power, and guide you through the application process, increasing your chances of loan approval.

Low Doc Loans

Low Doc loans are designed for self-employed borrowers who may not have access to the full range of financial documentation required for a Full Doc loan. Instead of traditional income verification, Low Doc loans rely on alternative evidence such as BAS (Business Activity Statements), bank statements, or an accountant’s declaration to assess the borrower’s financial position. These loans are particularly helpful for those with fluctuating income or recently established businesses.

While Low Doc loans provide more flexibility, they often come with higher interest rates and stricter terms to offset the perceived risk for lenders. Borrowers may also need a larger deposit, typically around 20% or more, to secure the loan. Despite these trade-offs, Low Doc loans remain a practical solution for self-employed Australians who cannot meet the stringent requirements of a standard (Full Doc) home loan but still wish to buy a property.

To speak to an expert about whether Low Doc Loans are right for you, and how to apply, speak to our team at EE Mortgages today.

Home Loans from Specialist Lenders

Specialist lenders cater to borrowers who fall outside traditional lending criteria, including self-employed individuals with unconventional income streams, poor credit history, or insufficient documentation. These lenders offer tailored loan products designed to meet the needs of borrowers who might struggle to secure approval from major banks. Specialist lenders are also more likely to consider personal circumstances, such as a recent business start-up or variable cash flow, when assessing applications.

While loans from specialist lenders often come with higher interest rates and fees, they provide crucial access to financing for borrowers in unique situations. They also offer greater flexibility in repayment terms and loan structures. For self-employed Australians who face challenges securing a Full Doc or even a Low Doc loan, working with a specialist lender can open doors to home ownership or property investment. It is best to speak to a mortgage broker who can access a range of specialist lenders. The experts at Eden Emerald Mortgages offer a highly personalised service, and will work with you to find the best specialist lender for your situation.

What Documents are Required?

When applying for a home loan as a self-employed individual, lenders typically require comprehensive documentation to assess your income, financial stability, and ability to repay the loan. The exact requirements may vary depending on whether you're applying for a Full Doc or Low Doc loan, but the following are commonly requested:

How Much Can I Borrow?

The amount you can borrow for a home loan depends on various factors, including your income, expenses, credit history, and the type of loan you are applying for. Lenders assess borrowing capacity based on financial documentation, such as tax returns, business profit and loss statements, and bank records. Self-employed borrowers typically face stricter scrutiny compared to salaried workers, as lenders need to account for fluctuating income and potential business-related risks. Generally, self-employed borrowers can expect to borrow between 80% and 95% of the property value, depending on the strength of their application and whether they are willing to pay Lenders Mortgage Insurance (LMI).

Lenders also consider additional income sources, such as rental income, dividends, or superannuation, to determine borrowing power. For borrowers with limited documentation, Low Doc loans may be an option, but these often come with stricter terms, higher interest rates, or lower borrowing limits. Using a borrowing power calculator can help you estimate how much you may be eligible to borrow based on your current financial situation. To get a more accurate idea of how much you can borrow, speak to a trusted broker like EE Mortgages, who will assist you throughout the home loan process, maximise your borrowing capacity and identify the most suitable loan options for your situation.

What If I am Recently Self-Employed?

If you are recently self-employed, securing a home loan can be more challenging, but it is still possible with the right preparation. Lenders typically prefer to see at least two years of consistent income from your business to assess financial stability. However, some lenders may consider applications from borrowers with less than two years of self-employment if they can provide alternative evidence of income and business success. Documents such as recent Business Activity Statements (BAS), bank statements, or an accountant’s declaration can help demonstrate your earning capacity and financial health.

Additionally, your borrowing capacity may be influenced by factors like a strong credit history, savings, or additional income streams, such as rental income or a partner's income. If your business is new, lenders may assess the viability of your business by reviewing your industry experience or prior income in a similar role. In cases where Full Doc loans are not an option, Low Doc loans from specialist lenders might be a more accessible alternative. Consulting a mortgage broker is highly recommended, as they can help you identify lenders who are more flexible with recently self-employed applicants and guide you through the process of presenting a strong application.

We Help Self-Employed Borrowers With Their Home Loans

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Since Eden Emerald Mortgages began operations in 2007 we have helped thousands of Australians secure a mortgage. See what some of our satisfied customers say about us below.