In short: Yes. Most lenders want two years of tax returns and notices of assessment, recent BAS and an ABN that has been registered for at least two years. Some will accept one year, and low doc loans are an option with less paperwork at a higher cost. The lender you choose matters, because each assesses self-employed income differently.

The life of a sole trader is filled with ups and downs.

For many, what makes self-employment so appealing is the ability to be your own boss. Unfortunately, it also means earning an irregular income and greater challenges when purchasing your next home.

But whilst applying for a home loan as a sole trader may be difficult, it’s certainly not impossible. With an understanding of where to search and how to prepare, sole traders can access a wide range of lenders and financial products that will help them achieve their property goals.

How to prepare for a home loan application as a sole trader

Since sole traders are self-employed, they will need to provide more documentation during their home loan application. In addition to the same financial information as other applicants, sole traders are expected to provide personal tax returns and ATO notices of assessment (usually two years), recent Business Activity Statements and business bank statements.

Implementing effective record-keeping practices in your personal and business life will make your home loan application process far more manageable. A systematic approach to recording all business transactions, bank statements, income, and other financial information will not only make your life easier but also enable you to demonstrate your earning capacity to the lender.

How much can a sole trader borrow?

Of course, your borrowing capacity will depend on your individual circumstances.

Firstly, the length of your self-employment is one of the key factors that a lender will consider. After all, it is a lender's job to assess your ability to repay a home loan over many years, and it’s your job as the borrower to demonstrate that you can do so.

Demonstrating the ability to earn a consistent profit will make a significant difference in a lender's confidence in your capacity to meet your loan obligations, particularly if you're self-employed. This principle applies to all borrowers, as long-term, stable employment is considered to be less risky than recently acquired employment.

Another key factor will be which lender you go to. Different banks have varying rules and criteria for assessing loan applications, and their perception of self-employment may differ as well. Some banks may view sole traders more favourably, while others may see self-employment as a risk and limit your borrowing power. Therefore, it's essential to research different lenders or consult with a mortgage broker before proceeding with your home loan application at a particular bank.

Can I still get a home loan if I’ve been a sole trader for less than two years?

If you’ve started your business within the last two years and don’t have multiple tax returns to show for it, you may find it difficult to achieve home loan approval with certain lenders.

As mentioned, each lender has their own criteria they use to assess each applicant's level of risk. In Australia, some lenders require your business to be registered for at least two years, whilst others may be more lenient.

If this scenario applies to you, there are a few things you can do.

Firstly, building a sizeable deposit will help demonstrate your capacity to save and meet your loan obligations. This can minimise your level of risk in the eyes of a lender and help you avoid paying expensive Lender’s Mortgage Insurance costs.

Having a spouse or co-contributor on your home loan application can also significantly increase your borrowing capacity and provide additional support for your overall application.

You should also use a mortgage broker to research how different lenders assess sole traders. Some lenders may consider offering you a low doc home loan as an alternative, which may help you get into the property market sooner.

What are low doc home loans?

If you've been in business for less than two years or can't provide sufficient financial documentation, your ideal financing option for buying a property might be a low doc home loan.

This type of home loan requires less documentation than other loans and allows you to provide alternative information as proof of your ability to repay the loan. However, whilst this may seem like a great solution, low doc home loans are not without their drawbacks.

In the absence of standard financial documentation, lenders will require additional incentives to offset the higher risk posed by the borrower. This usually results in higher costs associated with a low doc loan, along with stricter eligibility requirements.

Additionally, lenders may demand a larger deposit than that of a typical home loan, and you may be charged an increased premium on Lender's Mortgage Insurance if you cannot provide a 20% deposit.

Due to the higher costs associated with low doc home loans, it's crucial to weigh the advantages and disadvantages before making a decision. To learn more about these loans or obtain assistance with the application process, feel free to contact one of our mortgage brokers.

What documents does a sole trader need to provide in their home loan application?

When applying for a home loan, there are basic financial information requirements that all borrowers will need to provide. This documentation will include the following:

• Employment information

• Savings history

• Outstanding loans

• Existing assets

Since your business is your legal responsibility as a sole trader, you will also need to submit evidence showing your business's financial status. This documentation could include:

• Personal tax returns and ATO notices of assessment (sole traders report business income in their personal return)

• Recent Business Activity Statements

• Profit and loss statements prepared by your accountant

• Date of business registration

• ABN and GST information

Providing accurate and clear financial information will go a long way towards demonstrating your credibility as a borrower. Ultimately, lenders need to have confidence in your business's capability to generate profit and expand steadily, ensuring your ability to consistently repay your mortgage for many years to come.

If you’re thinking about getting a home loan as a sole trader or have questions about any of the topics discussed in this article, get in touch with our finance team today.

Frequently asked questions

How long do I need to be a sole trader to get a home loan?

Most lenders want two years of trading. Some accept 12 months of ABN registration, particularly if you worked in the same industry before going out on your own.

How do lenders work out a sole trader's income?

Usually from your last one or two tax returns, often averaging them. Some lenders add back items such as depreciation and one-off expenses.

Can sole traders use the 5% deposit scheme?

Yes, if you are an eligible first home buyer. The Australian Government 5% Deposit Scheme has no income cap since 1 October 2025, and the Melbourne price cap is $950,000.

Last updated: 25 October 2026.

General information only. This article does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and seek personal advice before acting. Elephant Financial Pty Ltd trading as Elephant Advisory is an authorised credit representative (ACR 487962) of Yellow Brick Road Aggregation Pty Ltd (formerly Vow Financial Pty Ltd) (ABN 66 138 789 161), Australian Credit Licence 390261.