The short answer
Most lenders want two years of financials if you’re self-employed, but one year can work. How LVR, LMI and ABN age change the answer.
Most lenders want two financial years of figures if you’re self-employed. That’s the standard way they normalise your income. But one year’s financials can still work with some lenders, especially if you’re borrowing 80% or less of the property’s value.
The two-year standard
Self-employed income goes up and down, so lenders like two years of history to see the trend. They usually ask for two years of tax returns and financial statements, plus notices of assessment from the ATO.
When one year can be enough
Plenty of business owners only have one year of completed financials. That can still be okay. It depends on:
The lender. Policies differ widely, so lender choice matters most.
Your LVR. At 80% or below, you’re not in lenders mortgage insurance territory, so there’s no second approval from the mortgage insurer.
How long your ABN has been running. Some lenders ask for around 18 months; a few will consider less.
What lenders look at
Lenders look at your business’s taxable income and may add back some costs that don’t affect your ability to repay. Common examples are depreciation and one-off expenses. How they treat each item varies, so accountant-prepared financials make a big difference.
Worked example
Say you started your business 20 months ago and have one year of lodged financials. You’re buying a $750,000 home with a $150,000 deposit, which is 80% LVR. Some lenders would decline you for not having two years. Others will assess you on the one year, because you’re under 80% LVR and your ABN is over 18 months old.
Before you apply
Get your latest financials and tax return lodged.
Keep your ABN registration details and BAS statements ready.
Aim for a deposit of 20% if you only have one year of figures.
Ask your accountant and broker to talk to each other before you apply.
FAQs
Can I get a home loan with one year of self-employed income?
Sometimes. It depends on the lender, your LVR and how long your ABN has run.
Do lenders use my business’s income or what I pay myself?
They look at both, depending on your business structure.
Will paying less tax reduce what I can borrow?
It can. Lower taxable income means lower assessable income, so plan ahead.
Related: Business Owner Home Loans · How to Pay Yourself as a Business Owner · Borrowing Power Calculator
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.
Gav is the person you want in your corner when it comes to property finance. After years in banking and motor trade finance, he joined Elephant early and never looked back. He's passionate about combining property and finance to help clients achieve their goals through tailored financial structuring, and he's very serious about snacks at meetings.
