Buying a home when your income comes from an ABN

21 September 2026 5 minute read Alen Slewa

I speak to a lot of people who have been told, or have simply assumed, that working for themselves puts a home loan out of reach. It doesn’t. Lenders write loans for sole traders, contractors and company directors every day of the week.

What catches people out is subtler, and it is worth understanding before you apply, because by the time you have applied it is largely too late to change.

The thing that saves you tax is the thing that shrinks your borrowing power

A good accountant’s job is to make your taxable income as low as the law allows. A lender’s job is to lend against your taxable income. Those two objectives point in opposite directions.

So you can have a business turning over $400,000, a healthy bank balance and no debt, and still be assessed on the $85,000 that landed on your tax return. The money was real. It just isn’t where the lender looks.

This is the single biggest reason self-employed applications come back smaller than people expect. It is not a judgement about you or your business.

What a lender will actually ask for

If you trade as a sole trader, expect to be asked for your last two individual tax returns and the matching ATO notices of assessment. The notice matters as much as the return, because it is the ATO confirming the figure rather than you declaring it.

If you trade through a company or a trust, add two years of business tax returns and financial statements — a profit and loss and a balance sheet — on top of your personal returns.

Most lenders want to see two years of trading under the same ABN. Some will look at one year where everything else is strong, and a smaller number will consider less again. That flexibility exists, but it is not the starting point.

Two years does not mean an average of two years

This is the part that surprises people most.

Where your two years differ, many lenders will take the lower of the two rather than the average. Where the most recent year is dramatically better, a common approach is to cap the figure at around 120% of the earlier year, or to average the two, rather than accept the latest year in full.

The logic is that one strong year might be an outlier. The effect is that your best year often does not count as your income.

If your business has grown sharply, this is worth raising early. Which lender you approach matters more in this scenario than in almost any other.

Add-backs are where the work is

Lenders do not simply read the net profit line. They add certain items back, on the basis that those costs either aren’t real cash leaving the business, or won’t continue.

Depending on the lender, that can include depreciation, additional voluntary super contributions, genuinely one-off expenses, interest on debt you are refinancing, and net profit retained inside the company rather than drawn out.

No two lenders use the same list. I have seen the same set of financials produce materially different assessed incomes at different lenders, purely on add-back policy.

Your accountant prepares the financials. Working out which lender’s add-back policy best fits those financials is my job, and it is most of the value I add on a self-employed application.

You are assessed at a rate higher than the one you will pay

One more structural point. Regulated lenders must assess your ability to repay at a rate at least three percentage points above the actual rate on the loan, and APRA has left that buffer at three points at each review.

With variable rates where they currently sit, that means being tested at a rate starting with an eight or a nine.

That gap between what you can comfortably afford and what you formally qualify for is deliberate, and it applies to everyone. It is not something being done to you because you are self-employed.

If the full documentation isn’t there

Where two years of returns don’t exist — a newer business, a recent restructure, returns not yet lodged — there are lenders who will assess you on business activity statements, trading bank statements, or an accountant’s declaration instead.

These are real options and I use them. They are not free ones. Expect a higher interest rate, a lower maximum loan against the property’s value, and a declaration about your own income that you are signing your name to.

I treat this as the route for people who need it, not the default for anyone who finds gathering paperwork inconvenient.

What to do twelve months out

If you know a purchase is coming, a few things genuinely help.

1. Lodge on time. An outstanding return is one of the quickest ways to stall an application, and it is entirely within your control.
2. Keep business and personal spending apart. An assessor reading a statement full of mixed transactions will take longer and ask more questions.
3. Hold off on new business debt. A vehicle or equipment commitment taken on three months before you apply reduces your borrowing power at the worst possible moment.
4. Talk to a broker before your accountant finalises the year, not after. This is the one most people miss. Once a return is lodged, the figures are the figures. Beforehand, there is a conversation to be had about how the year is presented — within the rules, and with your accountant in the room.
5. Don’t apply to lender after lender to see who says yes. Every application leaves a credit enquiry on your file, and those enquiries stay there for five years. A trail of them reads poorly to the next lender who looks.

The short version

Self-employed lending is not harder because lenders distrust business owners. It is harder because your income has to be reconstructed from documents rather than read off a payslip, and because different lenders reconstruct it differently.

That is a solvable problem, and it is solved well before you find a property you want.

If a purchase is on the horizon, the useful conversation is the early one. Get in touch and we can work out what your income looks like through a lender’s eyes while there is still time to do something about it.