If so, you may be wondering how to make it happen—especially if your bank has already said no.
Getting a home loan as a self-employed person can feel more challenging than for someone on a salary, but it’s far from impossible. With the right strategy, preparation, and guidance, you can achieve your homeownership goals.
In this post, we’ll walk you through the key steps to securing a home loan as a self-employed person, share insights from years of experience, and provide practical tips to help you succeed.
Why Is It More Challenging for Self-Employed Borrowers?
Being self-employed has many perks—you’re your own boss, doing work you’re passionate about, and shaping your future. However, when it comes to home loans, there are a few unique hurdles:
- Variable Income: Lenders prefer stability, and self-employed income often fluctuates.
- Tax Minimization: Many self-employed people work with accountants to minimize taxable income, which can inadvertently reduce the income lenders assess for loan approval.
- Documentation Requirements: Unlike salaried employees, self-employed borrowers must provide detailed financial records to prove their income and business stability.
Most lenders offering the most competitive rates (fully documented loans) require two years’ tax returns, along with corresponding financial statements if you operate as a company.
Despite these challenges, self-employed borrowers can absolutely qualify for home loans with the right approach.
5 Tips to Increase Your Chances of Home Loan Approval
- Build a Strong Credit Profile: A good credit score demonstrates reliability and can offset concerns about fluctuating income.
- Collaborate with Your Accountant: Discuss your borrowing goals so they can help you present income appropriately in your financials.
- Work with a Knowledgeable Mortgage Broker: Seek a broker who specializes in self-employed borrowers and understands their unique needs.
- Plan Ahead: Consult with your broker well in advance to understand what’s possible and what documentation will be required.
- Stay Organized: Have your financial documentation ready—tax returns, business financials, bank statements, and any additional records your broker recommends.
What’s the Process for Self-Employed Home Loans?
While the steps are similar to those for salaried borrowers, self-employed applicants benefit from additional preparation. Here’s a roadmap:
- Early Conversations: Talk to your mortgage broker and accountant at least 1–2 years before you plan to apply.
- Gather Documentation: Compile tax returns (individual and company), financial statements, BAS statements, and bank statements.
- Open Communication: Authorize your broker and accountant to collaborate. This ensures your financials are aligned with lender expectations.
- Secure Pre-Approval: This step gives you a clear borrowing limit before you start house hunting.
- Find Your Dream Home: Once you have pre-approval, you’re ready to shop for the perfect property.
- Submit Your Application: With the documentation in place, your broker will guide you through the application process.
Ready to Make Your Dream a Reality?
Getting a home loan as a self-employed person is a journey, but you don’t have to navigate it alone. With proper planning and expert guidance, you can overcome the challenges and secure the financing you need to achieve your homeownership goals.
Let’s Chat!
If you’re self-employed and considering a home loan, reach out to us today. We’ll work with you to understand your unique situation, explore your options, and create a clear path to success.
