(And how choosing the right approach can dramatically change your path to home ownership)
Being self-employed gives you freedom, flexibility, and control, but when it comes to getting a home loan, it can also make things a lot more complicated.
Unlike PAYG borrowers, where lenders simply check a few recent payslips, business owners often have income that looks “messy” on paper. You might reinvest profits, delay invoicing for tax timing, or pay yourself irregularly. The result? Your borrowing capacity can look wildly different depending on which documents your lender uses to assess your borrowing capacity.
The good news: there’s more than one way to show your income, and understanding the options can be the difference between a “computer says no” and getting the home you’ve worked for.
Lodged Tax Returns
This is the most common approach. Lenders review your most recently lodged tax returns (usually for the last two years) and base their assessment on the taxable income declared.
When it works best:
If your business has had steady growth and your most recent tax returns accurately reflect that success.
When it doesn’t:
At the start of the new financial year when you haven’t lodged yet, or if you’ve minimised taxable income to reinvest in your business. In both cases, lenders may underestimate your true position.
Director’s Wages
Some business owners pay themselves a consistent salary or wage through the company. This can make your income look just like a PAYG employee’s, which many lenders love.
When it works best:
If you’ve structured your business to pay a regular wage and your payslips, group certificates, and bank credits align neatly.
When it doesn’t:
If you leave profits in the business for growth or security. Those retained earnings often don’t count, even if they reflect genuine income you could access.
BAS Statements
For many growing businesses, BAS statements tell a more current story than old tax returns. Lenders can use your last two quarters (or six months) of BAS to calculate annualised turnover and project income.
When it works best:
If your business has been performing strongly in recent months and you want to capture that momentum.
When it doesn’t:
If recent revenue spikes aren’t sustainable or if expenses have increased behind the scenes. Overstating income can lead to borrowing more than what’s comfortable.
Accountant’s Letter
An often-overlooked option, but powerful when used correctly. Some lenders will accept a letter from your accountant verifying your income based on their professional knowledge of your business.
When it works best:
If you’re behind on tax lodgements or have a complex structure where traditional documents don’t show the full picture.
When it doesn’t:
Every lender has their own requirements for the letter, and using the wrong wording or format can limit which banks will consider it.
Why it matters
To show just how different outcomes can be, one of our recent clients — let’s call him Phillip — ran a successful business but hadn’t yet finalised his latest tax returns.
When assessed using tax returns, his borrowing power came in around $775,000.
Using Director’s Wages, it increased to $1.2 million.
With BAS statements, it jumped again to $1.33 million.
And with an Accountant’s Letter, lenders assessed him at $2.28 million.
The numbers speak for themselves. By matching the documentation to how the business actually performed, Phillip was able to buy a home for his family 12 months earlier than he thought possible.
The takeaway
For self-employed borrowers, there’s no “one-size-fits-all” approach. Each lender looks at income differently, and the right documentation can make or break your borrowing power.
Before you apply, take the time to understand which method best reflects your current situation. A smart strategy can mean thousands more in borrowing capacity and months shaved off your homeownership timeline.