Business owners are not a fringe group in lending. The ABS reported more than 2.7 million Australian businesses in 2024 to 2025, with 437,150 new businesses started during the year. That matters because many borrowers earn through sole trader income, companies, partnerships or trusts, not clean fortnightly payslips.
For many of us, the hard part is proving the money in the format a lender will accept. This is where self-employed home loans become less about the headline rate and more about timing, evidence and lender fit.
The 1 Year Financials Reality For Australian Borrowers
The Difference Between New Business And Short Paper Trail
A borrower with one year of financials is not always a new operator. A builder may have worked in the same trade for ten years, then moved from PAYG employment into a company.
Lenders care about that distinction. One year of financials can work better when the borrower has industry continuity and the income story makes sense. It becomes harder when the business is new, income has spiked without explanation or tax lodgements are late.
ASIC’s responsible lending guidance explains part of the caution. Credit providers must make reasonable inquiries, verify the borrower’s financial situation and assess whether the loan is not unsuitable. That makes “trust me” income a dead end.
The 80 Per Cent LVR Line
The practical line in many self-employed applications is 80 per cent loan to value ratio. At or below 80 per cent LVR, the lender has a larger equity buffer and the file may avoid lenders mortgage insurance. Above 80 per cent, the loan can trigger LMI and extra scrutiny, especially when income relies on one year of accounts.
NAB says it may use a single year’s financial statements to explore lending opportunities where LVR is 80 per cent or less. Westpac also promotes a 1 year assessment option, while its standard two year assessment may apply where the borrower needs LMI, has a more complex structure or wants to use income from more than one self-employed business.
A 20 per cent deposit does not guarantee approval, but it can move the application from “policy exception” to “policy pathway”.
The Evidence Lenders Actually Accept
Tax Returns, Notices Of Assessment And Business Financials
The strongest full doc file usually starts with lodged tax returns and ATO Notices of Assessment. The ATO states that if you carried on a business, what you lodge depends on your structure. Sole traders include business income in the individual return, while companies, partnerships and trusts have separate reporting requirements.
For lenders, the Notice of Assessment matters because it proves the return has moved beyond a draft. A profit and loss statement may show a good year, but a lodged tax return and NOA carry more weight.
Most mainstream lenders still like two years because they can test consistency. If one year is lower, many will use the lower figure or average the two.
BAS, Bank Statements And Accountant Letters
When tax returns are not ready, alternative evidence may help, but it is not magic paper. Pepper Money says its Alt Doc pathway can involve evidence of ABN and GST registration for at least six months, a declaration of financial position and one supporting option such as six months of business bank statements, six months of lodged BAS or an accountant’s letter. Liberty says low doc residential applications may use bank statements, BAS or a completed accountant’s declaration.
That is why “low doc” should not be read as “no doc”. A lender still wants enough evidence to verify income and repayments. Useful documents often include:
- Latest personal tax return and ATO Notice of Assessment.
- Latest business tax return if the structure requires it.
- Profit and loss statement and balance sheet.
- Lodged BAS, usually for recent quarters.
- Six months of business bank statements.
- Accountant letter explaining income, ownership, add backs or one off items.
- Details of ATO debts, business loans, leases and credit cards.
- ABN, ACN and GST registration details.
Add Backs And Business Debts
A self-employed file can look weaker than the real cash flow because tax accounts are built for tax, not borrowing capacity. Lenders may consider add backs such as depreciation, one off expenses, interest on debts being refinanced or private use motor vehicle costs. Westpac notes that applicants should have documents ready for proof of expenses such as depreciation, asset write offs and business liabilities.
Business debts can reduce borrowing power even when they sit outside the personal home loan. A company credit card, equipment finance, ATO payment plan or overdraft may still be considered.
Major Bank And Specialist Lender Policy Signals
Big Four Pathways With 1 Year Evidence
The Australian market has shifted. ANZ says that, for most applications, it asks for one financial year of tax statements and, in some cases, business financial statements. It also has a streamlined option for company directors and shareholders who have paid themselves a regular company wage for at least six months.
Westpac says eligible borrowers may qualify for Fast Track or a 1 year assessment policy. Its 1 year assessment asks for the latest business and personal tax returns, the latest personal ATO Notice of Assessment and the latest business liabilities. CBA says simplified verification may use recent evidence such as a personal tax return and NOA, but standard verification can still require deeper records.
For borrowers comparing self-employed home loans, the point is not that every bank says yes. The point is that one bank’s no may be another bank’s document request. Empower Money can help borrowers map that difference before submitting a file that leaves footprints on their credit report.
Specialist Alt Doc Options
Specialist lenders become relevant when the borrower has real income but not the clean evidence a major bank wants. Pepper Money’s full doc option can use one or two years of tax returns and NOAs, while its Alt Doc option can use BAS, business bank statements or an accountant’s letter. Liberty lists low doc residential loans with a maximum LVR of 85 per cent and alternative verification.
Specialist loans may carry higher rates or fees, so the decision should not be made with rose coloured glasses. The trade off can work when the borrower needs to buy now, has strong cash flow and expects to refinance after a second year of financials.
The Preparation Checklist Before Applying
The Five Step File Review
Before applying, we would look at the file the way a credit assessor will see it.
- Confirm all personal and business tax lodgements are complete, or identify exactly what is missing.
- Match declared income against BAS, bank deposits and accounting reports.
- Separate recurring income from one off jobs, asset sales or temporary spikes.
- List every personal and business liability, including ATO payment plans.
- Test the loan at the lender’s assessment rate, not only the advertised rate.
APRA confirmed in 2025 that the mortgage serviceability buffer remained at 3 percentage points. That means lenders generally test whether borrowers can handle repayments at a rate above the actual product rate. MoneySmart also warns that calculator results are estimates and do not guarantee eligibility.
The Timing Decision
Apply sooner when the latest year is lodged, income is stable, the LVR is 80 per cent or lower and the business bank statements support the declared income. Consider waiting when the latest tax return is nearly ready, income has risen sharply and the current file would force a conservative assessment.
Home Guarantee Scheme borrowers need careful timing. Housing Australia says First Home Guarantee income is assessed using taxable income shown in the relevant ATO Notice of Assessment, with caps of $125,000 for individuals and $200,000 for joint applicants.
This is where Empower Money should act less like a form filler and more like a traffic controller. The aim is not merely to lodge. The aim is to lodge with the lender most likely to accept the evidence in front of them.
FAQ
Can I Get Approved With Only 1 Year Of Financials?
Yes, it is possible, especially with a strong deposit, clean credit, lodged tax evidence and stable business income. Approval depends on lender policy and the full application.
Do Major Banks Accept 1 Year Financials?
Some do in specific cases. NAB, Westpac and ANZ all publish pathways that may use one year of evidence, but conditions apply.
Is Low Doc The Same As No Doc?
No. Low doc or alt doc lending still requires income verification. Common evidence includes BAS, business bank statements and accountant declarations.
Does An 80 Per Cent LVR Improve My Chances?
Often, yes. It can reduce lender risk, avoid LMI and open more policy options for self-employed borrowers with shorter income history.
Will A Lender Use My Latest Higher Income?
Sometimes. If the latest year is much higher, the lender may average income, use the lower year or ask for evidence that growth is sustainable.
Can A Broker Help Before My Tax Return Is Lodged?
Yes. Empower Money can review whether BAS, bank statements or an accountant letter may support the file, or whether waiting for the tax return is smarter.
Are Self-Employed Home Loans More Expensive?
Not always. Full doc loans through major banks can use standard products and rates. Specialist alt doc loans may cost more, so the refinance plan matters.
Sources
https://www.abs.gov.au/media-centre/media-releases/7-facts-about-australian-businesses
https://asic.gov.au/regulatory-resources/credit/responsible-lending/
https://www.nab.com.au/personal/home-loans/self-employed-home-loan
https://www.pepper.com.au/home-loans/self-employed
https://www.westpac.com.au/personal-banking/home-loans/self-employed/
https://www.anz.com.au/personal/home-loans/buying-home/home-loans-business-owners/
https://www.commbank.com.au/home-loans/self-employed-home-loans.html
https://www.liberty.com.au/home-loans/low-doc-home-loans
https://www.apra.gov.au/news-and-publications/apra-announces-update-on-macroprudential-settings
https://moneysmart.gov.au/home-loans/mortgage-calculator
https://www.housingaustralia.gov.au/home-guarantee-scheme/first-home-guarantee
