How Long Do You Need to Be Self-Employed to Get a Loan?

Key takeaways

• Two years is standard; one year is possible with the right background.
• Same-industry experience before going out on your own carries real weight.
• An accountant's declaration states current income - it does not replace returns everywhere.
• ABN and GST registration age matters separately from trading history.

How many years do lenders actually want?

Two years of lodged personal tax returns with the matching ATO notices of assessment is the mainstream full doc requirement, because the standard assessment averages two years of income. Below that, you are looking at a smaller pool of lenders and usually a different product.

The one-year exception is real but conditional. Lenders offering it generally want to see that you were employed in the same industry immediately beforehand, that the business is established rather than starting, and that the single year is strong and supported by current trading. A tradesperson who spent eight years employed and then contracted for twelve months is a very different proposition from a career change into a new field.

Separately, lenders look at how long your ABN and GST registration have existed. A longer registration widens the pool of lenders willing to look, and it is one of the few things you cannot accelerate once you need the loan.

What an accountant's declaration does

An accountant's declaration is a signed statement from your accountant confirming your income, used where lodged returns do not exist or do not reflect current trading. It is a low doc verification method, not a shortcut to a full doc loan.

Two things about it are commonly misunderstood. First, your accountant has to be willing to sign it, and a good one will not state an income they cannot support - so the declaration is only as available as your records are clean. Second, most lenders will not accept it alone; they want it alongside BAS or business bank statements, so that the declared figure is corroborated by something independent.

It also has a cost and a timeline. Accountants charge for it and are busiest at exactly the times of year you are most likely to need one, which is worth factoring into a settlement timetable.

What to do if you are short of the history

If you are twelve to twenty-four months in, you have real options, and the right one depends on how urgently you need to buy.

1. Lodge everything that can be lodged. An unlodged year is the single biggest self-inflicted obstacle.
2. Wait for the second return if you can. A few months of patience can move you from low doc to full doc pricing, which is worth more than most rate negotiations.
3. Use a low doc loan as a bridge and refinance to full doc once two years exist. That is a well-worn path, not a failure.
4. Bring a larger deposit. A lower LVR widens the lender pool considerably when history is short.
5. Keep the accounts clean for six months before applying - no dishonours, no unarranged overdrafts.

Read how lenders assess self-employed income for the add-backs that can lift your assessed income, and the low doc guide for what verification looks like when returns are not available.

Frequently asked questions

Can I get a home loan with one year of tax returns?

Some lenders allow it, typically where you were employed in the same industry immediately before, the business is established and the year is strong. Expect a smaller lender pool and a lower maximum LVR than a two-year application.

What is an accountant's declaration?

A signed statement from your accountant confirming your income, used as low doc verification where lodged returns are unavailable or understate current trading. Most lenders require it alongside BAS or bank statements rather than on its own.

Does my ABN age matter?

Yes, and separately from trading history. Many lenders set a minimum ABN and GST registration period, and a longer registration widens the pool willing to consider you.

Related reading

• Self-Employed Home Loans: How Lenders Assess Income
• Low Doc Home Loan Guide for the Self-Employed
• Negative Equity: What It Means and What to Do

Sources

• Prudential Practice Guide APG 223 — APRA
• Business activity statements — Australian Taxation Office