If you have just become self-employed, it is common to feel stuck when a lender asks for two years of tax returns that simply do not exist yet. The good news is that no tax returns yet does not always mean “no home loan”, it usually means the lender needs a different way to verify your income and confirm the loan is not unsuitable.
In this guide, we will walk you through how newly self-employed home loans are commonly assessed in Australia, what “alternative documentation” can look like, and the practical steps that may improve your chances of approval without rushing your paperwork.
In the early stages, speaking with mortgage brokers in Sydney can help you understand which lenders may be more flexible for your structure and time trading, and which documents are likely to be required based on today’s responsible lending rules. Responsible lending obligations sit under Australia’s consumer credit laws and are administered by ASIC.
Why Lenders Usually Want Tax Returns In The First Place
For a self-employed home loan in Australia, tax returns and Notices of Assessment are a standard way lenders validate taxable income over time. It helps them see consistency, add-backs, and whether earnings are sustainable, not just high in one strong month.
That said, not every lender assesses new self-employed applicants the same way. Some lenders may consider shorter trading histories when there is strong supporting evidence, while others may require a full two financial years regardless of the story.
That is the “why”. Next, let’s look at what you can do when your returns are not ready yet.
One key point to keep in mind is that lenders still need to verify your situation and meet responsible lending obligations, even if you use alternative documents.
Option 1: Full-Doc Assessment Using One Lodged Year, Or An Interim Year
If you are close to having one financial year lodged, this can be one of the more straightforward pathways.
Some lenders may accept one year of financials plus additional current-year evidence, depending on your industry, your experience before going self-employed, and how stable the income looks. Others may still require two years.
Common supporting items lenders may request alongside a lodged year can include year-to-date figures from your accountant, business bank statements, and evidence of ongoing work or contracts. (Documentation varies by lender and by business structure.)
This approach tends to work best when your income is steady and clearly evidenced, and your tax position is up to date or close to it.
Option 2: Alt-Doc Or Low-Doc Style Assessment Using Bas Or Bank Statements
If your tax returns are not lodged yet, some lenders may offer alt-doc (alternative documentation) or low-doc options, where income is supported by documents like BAS and bank statements, rather than completed tax returns.
This is often where newly self-employed borrowers start exploring options, but it is important to understand the trade-offs.
What lenders may accept as “alternative documentation”
Depending on lender policy and your structure, supporting documents may include:
- BAS (Business Activity Statements) if you are reporting GST and other obligations through the ATO
- Business bank statements for home loans that show turnover and regular inflows
- An accountant letter or declaration, in some lender frameworks
- Evidence that you are actively trading, such as invoices and contracts, in some cases (policy-dependent)
BAS is commonly used in home loan assessment because it is an official ATO reporting document for many businesses.
Typical constraints to expect with this pathway
Alt-doc and low-doc style loans can come with tighter settings. For example, some lenders may cap lending at lower LVRs (often around 80% in many low-doc settings), and pricing can be higher due to risk settings.
Not every lender offers these products, and product availability can change. Where available, the documentation and servicing approach can be very different between lenders.
This option can be workable, but it needs careful packaging so the evidence tells a consistent story.
Option 3: Use Your Pre-Self-Employment History To Support The Story
If you have moved from PAYG into contracting or a similar role, some lenders may place weight on your industry continuity and prior employment history, especially when your current income pattern resembles your prior role.
This does not replace income verification, but it can help explain:
- why the business is likely to continue
- why current income may be seen as sustainable
- why the “time trading” risk may be lower than a brand-new industry switch
This is a packaging exercise as much as a numbers exercise. It is also where broker support can matter, because the same set of documents can be interpreted differently depending on how they are presented and which lender is selected.
At Unconditional Finance, this is typically the stage where we map your structure, time trading, and document availability against lender policy so you do not waste time applying to the wrong place.
Option 4: A Stronger Deposit To Reduce Policy Friction
When documents are limited, a bigger deposit can sometimes make the overall risk profile easier for a lender to accept.
A lower loan-to-value ratio (LVR) may reduce reliance on edge-case policy and may also expand the number of lenders that can consider the deal. It can also change whether LMI is payable, depending on the lender and product.
This is not a guarantee, but in practice, it is one of the most controllable levers you have when your financial history is still building.
Option 5: First Home Buyer Schemes, And What They Do And Do Not Solve
Some eligible buyers may look at the Australian Government 5% Deposit Scheme, which includes the First Home Guarantee, to buy with a smaller deposit.
What it does not do is remove income verification. Even under a scheme, you still need to meet the participating lender’s credit assessment, evidence requirements, and responsible lending checks.
If you are self-employed and considering a scheme, it becomes even more important to confirm the lender’s current policy settings for time trading and acceptable documents.
The Common Friction Points That Slow Approvals
Newly self-employed applications often stall for predictable reasons. Knowing these early can save weeks.
BAS that does not match banking
If BAS turnover and bank deposits tell different stories, lenders may ask more questions. Clear separation of business and personal banking can help.
ATO obligations, payment plans, or overdue lodgements
Some lenders may be cautious if ATO reporting is behind, even if the business is profitable. BAS timing and lodgement patterns matter.
Add-backs that are not clearly evidenced
Some expenses can be added back depending on lender policy, but they usually need to be consistent and supported by your accountant’s figures and statements.
Business structure complexity
Sole trader, company, and trust structures can change which documents are needed and how income is assessed.
A Practical Checklist Before You Apply Without Tax Returns
If you want to keep momentum without guessing, aim to have most of the following ready. Not every lender needs all of it, but having it available gives you options.
Business basics
- ABN details and business registration information
- A clear description of what the business does and how you get paid
- Evidence of continuity if you moved from PAYG into the same line of work
Income evidence (policy-dependent)
- BAS, if applicable, showing reporting history
- Business bank statements showing consistent trading
- Accountant-prepared year-to-date figures, where available
- Invoices and contracts where relevant to your industry
Personal position
- Up to date personal bank statements and liabilities
- A clear deposit trail and evidence of savings behaviour
- A plan for buffers, because new self-employed income can fluctuate
This preparation makes it easier to match you to a lender that genuinely fits your current stage, rather than forcing a standard PAYG process onto a self-employed profile.
A Non-Rushed Way To Approach The Process
If you are newly self-employed, a sensible order often looks like this:
- Confirm where you sit on the timeline, less than 6 months, 6 to 12 months, close to one lodged year, or already at two years
- Choose the most realistic pathway, full-doc, near full-doc, or alt-doc based on what can be evidenced today
- Package documents to tell one consistent story, including income, expenses, business stability, and deposit position
- Apply selectively, because multiple enquiries and declined applications can create avoidable problems later
This sequencing is designed to reduce guesswork and keep your file clean.
The “first clean approval” mindset for new business owners
When you are newly self-employed, the goal is usually not to force an approval at any cost. It is to secure a clean, policy-aligned approval that matches what you can genuinely evidence today, with a structure you can live with as your business income grows and stabilises.
If you would like to see what options may be available for your situation, Unconditional Finance can help you compare lender policies for newly self-employed borrowers, check what documents you already have, and guide you through the next steps in a compliant, lender-neutral way.
Disclaimer: This information is general in nature and does not take into account your objectives, financial situation, or needs. Lending criteria, documentation requirements, and product availability vary by lender and may change without notice. You should consider getting independent financial, tax, or legal advice, and speak with a licensed credit professional before making decisions about a home loan.
Frequently Asked Questions (FAQs)
Some lenders may still consider an application even if your first BAS has not been lodged, but options can be limited. In these cases, lenders may rely more heavily on business bank statements, evidence of current contracts, or your employment history before becoming self-employed. Self-employed loan eligibility depends on how long you have been trading, your industry, and the lender’s internal policy at the time of application.
Not always. Higher interest rates are usually linked to the loan product type and risk profile rather than self-employment alone. If you qualify under a full-doc assessment with sufficient income evidence, some lenders may offer rates similar to PAYG borrowers. Alt-doc or low-doc products may attract higher pricing due to reduced income verification, but this varies by lender and market conditions.
Not necessarily, but it can affect lender confidence. Some lenders may accept applicants on an ATO payment plan if it is up to date and clearly documented, while others may require outstanding obligations to be reduced or cleared before approval. How GST liabilities are managed, and whether they are consistent with reported income, can influence assessment.
Yes, in many cases a partner’s PAYG income can help strengthen a joint application. Lenders usually assess combined income, liabilities, and living expenses. While your self-employed income still needs to meet policy requirements, a second stable income may improve overall serviceability, depending on the lender’s assessment model.
It depends on your goals and timing. Waiting until at least one year of tax returns is lodged can increase lender choice and reduce reliance on alternative documentation. However, if you have a time-sensitive purchase or refinancing need, some lenders may still consider earlier applications with the right supporting evidence. A broker can help you weigh the trade-off between timing and policy flexibility.