Self-Employed and Buying Your First Home: What Lenders Actually Assess
There is no separate home loan for self-employed buyers, and no first home buyer scheme that shuts you out. What changes is which number a lender uses. It is not your turnover, and the returns that set it were lodged long before you started looking at properties.
The short answer
Yes, a self-employed first home buyer can get a home loan, and can use the same government schemes as anyone else. What differs is how income is proved. A lender will not assess you on what your business invoices. It will assess you on net profit after deductions, usually taken from two years of lodged tax returns, with certain expenses added back. That figure, not your turnover, sets your borrowing capacity. The First Home Guarantee itself has no income test at all, but the lender still runs its own serviceability assessment, and those are two separate gates.
Which income figure a lender actually uses
For an employee, income assessment takes about a minute. Two payslips and the lender knows what lands in the account every fortnight. For a self-employed applicant it is a different exercise, and the only evidence a lender will accept as a starting point is what you told the Australian Taxation Office.
A sole trader turning over $260,000 who deducts down to a taxable profit of $58,000 is a $58,000 borrower in the eyes of most lenders, not a $260,000 one.
That is the sentence most self-employed first home buyers find out too late. Your accountant is doing their job when they reduce your taxable income. Your lender is doing its job when it uses the reduced figure. Both are correct, and the two jobs pull against each other.
Which line gets read depends on your structure
A sole trader is assessed on net profit from the business schedule. A company director is usually assessed on salary or wages plus their share of company net profit after tax, and sometimes on dividends and directors fees as well. A partnership or trust distribution is traced through to the individual. What these have in common is that they all sit at the bottom of the page, after every deduction has been taken.
The assessment is then smoothed. Most lenders average the last two financial years. Where the most recent year is lower than the year before, many use the lower of the two rather than the average, on the view that a declining business is a risk worth pricing for. Where the most recent year is much higher, some cap the increase they will recognise, on the view that one strong year is not yet a pattern.
None of this is uniform. Assessment policy is set by each lender and it varies more on self-employed income than on almost anything else. Two lenders can read the same two returns and produce borrowing capacities that differ by a six-figure sum. That gap is the practical reason to have someone comparing, rather than applying at one bank and accepting the answer.
The serviceability buffer sits on top of whatever figure they land on
Whatever income a lender assesses, it then tests your repayments at a rate at least three percentage points above the actual loan rate. That is APRA guidance in Prudential Practice Guide APG 223, and it applies to every regulated lender in the country. It is the main reason borrowing capacity feels smaller than your income suggests it should, and it applies to employees and self-employed borrowers alike.
This is not a small or unusual group of borrowers. The Australian Bureau of Statistics counted 848,300 sole proprietors among actively trading Australian businesses at 30 June 2026, up 3.1 per cent over the year, and non-employing businesses grew faster than any other size band at 4.8 per cent (ABS, Counts of Australian Businesses, July 2022 to June 2026, released 18 August 2026). Add contractors operating through companies and trusts and the number is larger again.
Add-backs, and what gets put back onto your profit
Not every deduction reduces the money actually available to you, and lenders recognise that. An add-back is an expense that lowered taxable income without lowering your cash position, or one that will not recur. Lenders differ on which they accept and how much evidence they want, but these categories are commonly considered.
- Depreciation. A paper expense. No money left the account in the year it was claimed, so most lenders add it back in full.
- Additional superannuation contributions. Contributions above the compulsory minimum are usually treated as discretionary and added back. Compulsory contributions are not.
- Interest on debt being paid out. If a business loan is being refinanced or discharged as part of the transaction, the interest on it is not a future cost.
- One-off and non-recurring expenses. A single large purchase, a legal matter, a relocation. Expect to be asked to prove it will not repeat.
- Net profit retained in a company. Where you control the company, profit left in it can often be counted as available to you rather than treated as gone.
- Motor vehicle and home office claims. Sometimes partially added back where the underlying cost would be incurred regardless of the business.
What matters more than the list is that whoever prepares your application knows which lender accepts which items, and asks your accountant for the right supporting evidence up front. An add-back a lender will not verify is not an add-back. This is ordinary work rather than anything clever, and it is the difference between a file assessed on $58,000 and the same file assessed on $79,000.
Whether any of this is worth changing in your own tax planning is a question for your accountant, not for a broker. We can tell you what a given set of numbers will support. We cannot tell you how to structure your affairs, and anyone offering to is offering advice they are not licensed to give.
Does the First Home Guarantee have an income test?
No. Since the scheme was expanded, the governing instrument contains no income threshold and no cap on the number of guarantees that may be issued. For a self-employed buyer whose taxable income is modest by design, removing the income test was material. It changed nothing about serviceability, which is where the real constraint sits.
Those are two separate gates and they get confused constantly. Housing Australia decides whether you are eligible for the guarantee. The lender decides, separately, whether it will lend you the money. Passing the first does nothing for the second, and a self-employed applicant who sails through eligibility can still fall short on assessed income.
Scheme conditions that catch self-employed buyers
The conditions below sit in the Housing Australia Investment Mandate Direction 2018, Part 5A, checked against the compilation in force on 18 July 2026. They apply to every applicant, but they catch self-employed buyers more often than anyone else.
| Situation | What the instrument requires |
|---|---|
| Deposit above 20 per cent | Rules you out. The loan to value ratio must exceed 80 per cent and be no more than 95 per cent. A business owner who has been saving hard and lands at a 21 per cent deposit cannot use the scheme at all. |
| Interest only repayments | Not permitted. The loan terms must require scheduled repayments of principal for the full period of the agreement. Self-employed buyers who want interest only for cash flow flexibility have to choose between that and the scheme. |
| More than two borrowers | Not permitted. No more than two borrowers under the loan agreement, whatever the relationship between them. |
| Renting it out | Not permitted. The property must be owner-occupied. Running your business from home is a different question and is generally fine, but the property cannot be tenanted. |
| Loan term and price | No more than 30 years, and the property value must sit under the price cap for its area. Caps differ by state and by whether the address counts as capital city, regional centre or other, and those are defined terms with boundaries that are not obvious. |
There is one more, and it matters most for a self-employed file. The loan has to be written by a participating lender. That panel is narrower than the full market, so a borrower whose income profile suits a lender outside the panel faces a genuine trade-off between the scheme benefit and the lender that would read their returns most favourably. Sometimes the scheme wins. Sometimes it does not, and it is worth doing that arithmetic properly rather than assuming the scheme is always the better result.
What is still being stated wrongly about the scheme
The instrument governing the Home Guarantee Scheme was amended five times in the ten months to July 2026. A lot of published guidance has not kept up, including guidance published this year. If you are checking your own eligibility against something you read elsewhere, these are the errors worth knowing about.
| What is often stated | What the instrument says |
|---|---|
| Income caps of $125,000 single and $200,000 combined | Removed. The words taxable income do not appear anywhere in the scheme provisions. |
| Permanent residents are not eligible | Eligibility requires an applicant to be at least 18 and either an Australian citizen or a permanent resident. |
| Couples must be married or de facto to apply together | There is no relationship test in the instrument. The only limit is a maximum of two borrowers. |
| The Regional First Home Buyer Guarantee is available | That stream is closed and further guarantees cannot be issued under it. |
There is one more point worth knowing, and it surprises people most. Eligibility is not strictly a first home buyer test. It is a ten year non-ownership test. Someone who owned a home eleven years ago, sold it, and has been renting since can qualify. Plenty of self-employed people who bought early, sold during a lean patch and have been building a business since fall into exactly that category and have written themselves off without checking.
Given how often the instrument changes, treat any figure you read anywhere, including here, as needing a date against it. Confirm the current position with Housing Australia, a participating lender, or us before planning around it.
How long you need to have been self-employed
The two year rule is a convention rather than a law, and the exceptions are more common than most people realise.
Two full financial years of returns is the standard. It is what most lenders ask for and what most policies are built around. If you have it and your income has been steady or rising, there is nothing unusual about your application.
One year is workable with some lenders. A number will assess on a single full year of returns where the business is established, the trading history is verifiable, and the income is consistent with what you earned before you went out on your own. Moving from an employed role into contracting in the same field is the clearest version of this, and it is treated more sympathetically than a genuine start-up.
Under a year is difficult but not automatically over. Where the ABN is new, some lenders will look at business activity statements, business bank statements, contracts in place, or an accountant’s letter. Requirements differ, and this is territory where which lender you approach first matters a great deal.
Alternative documentation lending, sometimes called low doc, is a separate route again and uses evidence such as BAS and an accountant’s declaration in place of returns. It is worth understanding, though it is not usually the first option for an owner-occupied first purchase and it generally does not combine with the guarantee scheme. Our low doc lending page covers how that documentation route works.
If your position is closer to the edge, a guarantor arrangement is sometimes what makes the file work, and a pre-approval before you go to an open home tells you where you actually stand rather than where you hope you do.
Why the return you lodge two years early decides it
By the time most self-employed buyers think about a home loan, the evidence has already been filed. This is the one thing on this page worth acting on early.
The assessment window opens before you do
A lender assessing you in 2028 will most often be reading the returns for the 2026 and 2027 financial years. Those were lodged when buying a house was an idea rather than a plan, and by the time the application is in front of someone, they cannot be changed.
The trade-off is real, and it is yours to make
Reducing taxable income saves tax now and reduces assessed income later. Neither outcome is wrong. What is wrong is making the choice without knowing there was one. Your accountant is the person to have that conversation with, and the time to have it is before lodgement rather than after. We are not suggesting anyone pay more tax than they owe. We are saying the decision has a second consequence most people discover eighteen months too late.
Two things that reset the clock without anyone noticing
Unlodged returns stop applications more often than low income does. Lenders want the most recent year on file, and where you are behind, your tax position can show up on the file as well. Getting current removes a blocker that has nothing to do with how much you earn.
The second is structure. Moving from sole trader to a company, adding a trust, or changing your ABN can mean a lender treats you as having a shorter trading history than you really have. Continuity of the same business is what most policies look for, and there are ways to demonstrate it if you plan for the question.
Read Intellect Finance’s Google reviews
Rather than ask you to take our word for it, here are Intellect Finance’s actual Google reviews, pulled live from our Google Business Profile. Read them the way you would read any broker’s reviews, and look for the practical detail rather than the stars.
These reviews reflect other borrowers’ experiences. They are not a promise of any particular outcome for your loan, which will always depend on your own circumstances and the lender’s assessment.
What to have ready
None of this is required to have a first conversation. Having it makes the first answer accurate rather than approximate.
- Two years of personal tax returns and notices of assessment. Both documents. The notice of assessment is what confirms the return was lodged and accepted.
- Business financials for the same period. Profit and loss and balance sheet where you trade through a company, trust or partnership.
- ABN and GST registration dates. These establish trading history. Where the business predates the current structure, bring evidence of that too.
- Recent business activity statements. Usually the last four quarters. They show current trading rather than the position as at the last return.
- A list of what the business owes. Equipment finance, overdrafts, trade facilities, tax payment plans. Better disclosed early than discovered late.
- Your deposit and where it came from. Savings history, a gift, or funds held in the business. Each is treated differently and the source needs evidencing.
How Intellect Finance handles a self-employed first home file
We read your returns before you apply anywhere, work out which add-backs your lenders will actually verify, and compare across a panel of more than 100 lenders to find the ones whose self-employed policy fits your structure rather than fighting it. We tell you plainly if the First Home Guarantee is the wrong route for your file, and we will say so if you are better off waiting for one more return. Intellect Finance has been based in central Penrith since 2005, works with clients Australia-wide, and holds Australian Credit Licence 390611. The service is free to you on every loan type, with the lender paying a commission on settlement. For the full scheme detail, see our first home buyer loans page.
Frequently Asked
Self-employed first home buyer FAQs
The questions business owners ask us most often.
Can I use my business turnover instead of my net profit?
No. Turnover is not income to you. Lenders assess the profit that flows through to you personally after business expenses, with certain items added back. This is the most common misunderstanding among self-employed first home buyers, and it is worth resolving before you start looking at properties.
Do self-employed borrowers pay more than employees?
Not because of employment type on its own. Where a self-employed borrower ends up on different terms, it is usually the documentation route taken or the loan to value ratio, rather than a penalty for working for yourself. A full documentation application with two years of returns is assessed on the same footing as any other at most lenders.
My last year was much better than the year before. Will a lender use it?
Sometimes, and sometimes only in part. Many lenders average the two years. Some use the most recent year where it is higher but cap how much of the increase they recognise. A minority use it in full where the improvement is explained and supported. Which lender you approach makes a material difference here.
I have not lodged last year’s return yet. Does that stop me?
Usually, at least for now. Most lenders want the most recent financial year on file before assessing a self-employed application, though there can be a window after the end of the financial year where the prior year is still accepted. Getting lodgement current is usually the thing that unblocks it.
Can I use the First Home Guarantee if I am self-employed?
Yes. Nothing in the governing instrument excludes self-employed buyers, and since the scheme was expanded there is no income test at all. You still need to satisfy the lender’s serviceability assessment separately, and the loan must be written by a participating lender.
Does a tax debt or payment plan rule me out?
Not automatically, though it needs to be disclosed and explained. A payment plan being met is viewed differently from one in default. Lenders vary considerably in how they treat this, and it is one of the situations where knowing the policy before the application matters most.
Can I still qualify if I owned a home years ago?
Possibly. The scheme test is not strictly a first home buyer test. It asks whether you have held a freehold interest in Australian real property, or certain lease or company title interests, in the last ten years. Someone who owned a home eleven years ago and has rented since can qualify.
Does Best Interests Duty apply, and what does Intellect Finance charge?
It applies. A home loan for a property you will live in is regulated consumer credit under the National Consumer Credit Protection Act, so brokers must act in your best interests and give priority to your interests where they conflict with ours.
We charge you nothing. No arrangement fee on any loan type, and no clawback fee if you discharge early. Lenders pay a commission on settlement, disclosed to you in writing before any work begins.
The honest bottom line
Being self-employed does not make a first home harder to finance. It makes the number harder to find. Your borrowing capacity was decided by two tax returns you have already lodged, and the useful work happens before those returns are filed rather than after, in a conversation with your accountant about what a deduction costs you on the other side.
On the First Home Guarantee, there is no income test to worry about, which removed the one barrier self-employed buyers used to hit hardest. What remains are the mechanical conditions: your deposit has to be under 20 per cent, the loan has to be principal and interest, there can be no more than two of you, and it has to be a participating lender. Check those against your own position before you plan around the scheme, and check the source rather than the summary, because the rules have moved five times in under a year.
Reviewed by Joseph Sukkar
Joe founded Intellect Finance in Penrith in 2005, after five years as a relationship manager at Arab Bank and Commonwealth Bank, and has more than 25 years in Australian finance. This article was written by Moufid, Head of Residential Lending at Intellect Finance, who works on self-employed and Western Sydney residential files, and was reviewed by Joe before publication. More about the team.
Sources
Australian Bureau of Statistics, Counts of Australian Businesses, including Entries and Exits, reference period July 2022 to June 2026, released 18 August 2026. abs.gov.au
Federal Register of Legislation, Housing Australia Investment Mandate Direction 2018, Part 5A, compilation in force 18 July 2026. legislation.gov.au
Australian Prudential Regulation Authority, Prudential Practice Guide APG 223 Residential Mortgage Lending, and APRA’s letter to authorised deposit-taking institutions on serviceability expectations. apra.gov.au
Housing Australia, Home Guarantee Scheme eligibility, participating lenders and the property price cap tool. housingaustralia.gov.au
Important disclosures, general advice warning and licensing
General information only. This article is general information only and does not constitute financial, credit, legal or tax advice. It does not take your personal or financial circumstances into account. Before acting on any information here, you should consider whether it is appropriate to your objectives, financial situation and needs.
Tax is for your accountant. Nothing here is tax advice and nothing should be read as a recommendation about how to structure your affairs, what to claim, or when to lodge. Those are decisions for a registered tax agent or accountant who knows your full position. Legal questions belong with a solicitor, and personal financial advice with a licensed financial adviser.
Nothing here is a guarantee. Loan approval, borrowing capacity, income assessment methods, add-back policies, trading history requirements, interest rates, loan to value ratios, valuations and timeframes are determined by individual lenders, not by us. They differ between lenders and change over time. Descriptions of common lender practice in this article are general observations and are not a statement of any particular lender’s policy. Any figure or example is illustrative and is not a quote, an offer, or a prediction of your outcome.
Government schemes. Eligibility for the Home Guarantee Scheme is determined by Housing Australia and by the participating lender, not by Intellect Finance. Scheme conditions, property price caps and deposit requirements are set out in the Housing Australia Investment Mandate Direction 2018 and are amended from time to time, sometimes at short notice. The conditions described here were checked against the version in force on 18 July 2026. That instrument was amended five times in the ten months to July 2026, so treat any figure you read anywhere, including here, as needing a date against it. Property price caps differ in every state and territory, and capital city and regional centre are defined terms with boundaries that are not obvious, so check your own address against the government’s property price cap tool before relying on a figure.
Best Interests Duty. A home loan for a property you will live in is regulated consumer credit under the National Consumer Credit Protection Act 2009. Best Interests Duty applies, so we must act in your best interests and give priority to your interests where they conflict with ours. Best Interests Duty does not apply to business or commercial lending.
What we charge you. Nothing, on any loan type. No arrangement fee, and no clawback recovery fee if a loan is discharged early. Lenders pay us a commission on settlement, which is disclosed to you in writing before any work begins. No broker can guarantee loan approval, and approval timeframes depend on the lender.
About the reviews shown. The reviews displayed on this page are genuine reviews published by clients on Intellect Finance’s Google Business Profile, shown live via a third-party reviews widget. They reflect those individuals’ own experiences and are not a promise of any particular outcome for your loan.
Intellect Finance Pty Ltd holds Australian Credit Licence 390611 and is a member of the MFAA and AFCA. Lending criteria, fees and terms apply. Article checked 2 September 2026.
Next Reads
More for first home buyers
Free 15-Minute Call
Tell us what your last two returns show.
Fifteen minutes on the phone and you will know what those numbers support, which lenders are likely to read your structure most favourably, and whether you are better off applying now or after one more year of trading. No credit check, no paperwork, no obligation. Based in central Penrith since 2005, working with clients Australia-wide. ACL 390611.
General information only, not financial or tax advice. No fee to you on any loan type, and no clawback fee. We are paid by the lender on settlement. No broker can guarantee loan approval.
Intellect Finance Pty Ltd | Australian Credit Licence 390611 | MFAA Member | AFCA Member