Self-employed and buying your first home? What you need to know

If you're self-employed and dreaming of buying your first home, you've probably wondered whether getting a home loan will be harder than it is for someone with a regular salary.

The good news? Being self-employed doesn't stop you from getting into the property market. While lenders may ask for different documentation, there are a range of loan options available and, in many cases, getting approved can be more achievable than people think.

One of the biggest myths we hear is that self-employed borrowers need at least two years of financials before a lender will consider them. While some lenders do have this requirement, others may accept applications with less trading history, depending on your circumstances.

Full Doc Home Loans

If you've been running your business for a while and have your financial records up to date, a full documentation (full doc) home loan may be an option. Lenders will generally ask for documents such as:

• Personal and business tax returns

• Notices of Assessment

• Profit and loss statements

• Business balance sheets

• Payslips, if you're a company director paying yourself a salary.

Because lenders can clearly verify your income, full doc loans often provide access to some of the most competitive interest rates available.

Alternative Documentation (Alt Doc) Loans

If your tax returns don't reflect your current income, or you're still building your financial history, an alt doc loan may be worth considering.

Instead of relying solely on tax returns, some lenders may accept:

• Business Activity Statements (BAS)

• Business bank statements

• An accountant's declaration.

Alt doc loans can be particularly helpful for self-employed first home buyers who have a strong business but don't yet have the traditional documentation required by major banks.

While interest rates and fees can sometimes be higher than a full doc loan, they can provide a valuable pathway into home ownership sooner.

What if you've been self-employed for less than two years?

While many major banks prefer two years of ABN history, there are lenders who may consider borrowers with as little as 12 months in business. In some cases, six months may be enough.

A strong application can make a significant difference. Factors such as a genuine savings history, a larger deposit, stable business income, industry experience and a good credit record can all help strengthen your position.

How to improved your chances of buying your first home?

If purchasing your first property is one of your goals, there are a few things you can do now to put yourself in a stronger position.

• Keep your financial records organised: Up-to-date bookkeeping and financial statements make it easier for lenders to understand your income

• Separate business and personal accounts: Clear financial records help demonstrate the health of your business and simplify the application process

• Focus on building your deposit: The more you can contribute upfront, the more lending options may become available

• Manage existing debts carefully: Credit cards, personal loans and other commitments can impact borrowing capacity, so it's worth reviewing these before applying.

  
  

Reach out to your broker - we've seen it all before!

Not all lenders assess self-employed borrowers the same way. Some have policies specifically designed for business owners and newer businesses. That's where working with a mortgage broker can make a real difference.

We can help you understand how much you may be able to borrow, identify lenders that suit your circumstances, explain any first home buyer incentives available and guide you through the entire process.

Book an appointment and let's have a chat about your personal situation.