If you’re self-employed and have ever applied for a home loan, you already know the drill: more questions, more documents, more hurdles.
Even with a thriving business, getting approved for self-employed home loans through traditional banks has often been harder than necessary.
But in a welcome shift, several major banks have finally started changing how they assess income for business owners. It’s a big deal, especially if you’ve had a strong year and want your borrowing power to reflect that.
These changes are more than just a checkbox tweak. They may finally allow business owners to access finance with the same confidence as salaried workers, without being unfairly penalised by past fluctuations. And in a housing market that rewards quick, informed decision-making, having that edge matters more than ever.
What’s Changed in 2025? A Shift to One-Year Financials
Until recently, most major lenders required two full years of financials to assess self-employed income. That often penalised business owners who had one “off” year, even if the latest figures were solid. Now, we’re seeing a shift.
Westpac has joined ANZ, CBA, and NAB in allowing self-employed borrowers to apply with just one year of financials. That means if your 2023–24 numbers are strong, but 2022–23 was disrupted by COVID recovery, investment costs, or slower trade, you may no longer be held back.
This change opens the door for more tailored loan solutions. It also signals that the big banks are finally recognising that small businesses don’t operate on the same timeline as salaried employees.
As our principal broker Chris Raymond puts it, “This is a long-overdue shift. Many businesses have bounced back strongly, but the previous two-year average meant they were still being held to outdated performance. A one-year assessment gives borrowers a fairer shot.”
What’s significant here is that this move shows intent. For years, self-employed Australians have been overlooked by rigid frameworks that didn’t reflect the agility of modern business models. By shortening the financial window, banks are beginning to match their lending practices with the real economic contributions of sole traders, contractors, and SME owners.
Who Benefits Most From the New Policy?
This policy update isn’t just a technical tweak. It could be a game-changer for thousands of business owners across Australia, especially if you fall into one of these groups:
- You had a strong 2023–24 but a weaker 2022–23
- You’ve recently scaled or restructured your business
- You’re out of the startup phase but don’t yet have two full years of financials
- You’ve been knocked back before due to past income averaging
- You’re newly self-employed after years of PAYG work
Imagine this: You’ve doubled your revenue this year, built strong retained profits, and your cash flow is healthy. But under the old rules, your 2022–23 numbers would still drag your borrowing capacity down. This new policy removes that barrier, and in the right hands, it could open up opportunities to refinance, purchase, or invest sooner than expected.
It’s also a welcome relief for clients whose business model involves seasonal contracts, delayed invoicing, or high reinvestment periods, where the latest year is the truest reflection of ongoing strength. These scenarios are common across industries like construction, consultancy, and ecommerce, where growth doesn’t follow a smooth curve. In some cases, exploring best lenders for first-home buyers in Australia can also help identify which institutions may be more open to flexible income arrangements.
Why One Year Still Isn’t Enough: What the Banks Are Missing
While this new flexibility is a positive step, it’s not a complete solution. One year of financials doesn’t automatically mean a smoother or more generous lending experience. Here’s where we still see self-employed clients running into brick walls:
- Banks double-count debts already accounted for in your financials
- They may ignore add-backs or one-off expenses that distort your net income
- Complex ownership structures still get flagged, even when the business is sound
- Some lenders treat retained earnings or director’s loans as unstable income
- Approval times remain slow, especially when manual assessment is required
This is especially frustrating when a salaried employee can get approved in days with one payslip, while the business owner who employs them faces months of paperwork and policy interpretation.
“It’s not just about how many years of income you show. It’s about whether the lender understands how your income is structured,” Chris says. “Right now, that understanding still lags at the major bank level.”
We also continue to see hesitation from lenders when it comes to business-related tax deductions, even when they are standard accounting practices. For borrowers, this can create confusion and the sense that they need to ‘defend’ legitimate expenses, instead of having their business evaluated on merit. It highlights the ongoing gap between traditional credit models and modern entrepreneurship.
Why Brokers Still Lean Toward Non-Bank Lenders for Self-Employed Clients
At Unconditional Finance, we work with both major banks and non-bank lenders. And while the recent policy changes are helpful, we still find that non-banks and second-tier lenders remain the go-to for many of our self-employed clients.
Here’s why:
- Greater flexibility around income documentation: Non-banks often accept alternative income verification, such as 12 months’ BAS or an accountant’s letter. This is especially useful if your tax returns aren’t finalised yet.
- Smarter treatment of business debt: If your financials already account for business loan repayments, some lenders won’t double-dip when calculating your liabilities.
- Faster turnaround times: Many non-banks have streamlined credit teams that understand business borrowers and approve files faster than legacy bank systems.
- Support for newer businesses or contractors: Been trading for just 12–18 months? You’ll likely find more flexible criteria through non-banks than majors.
- Specialist credit assessors: Rather than applying rigid rules, they’ll take the time to understand your business story and interpret your financials in context.
- More competitive options for complex structures: If you operate through a trust, company, or multiple income streams, non-banks usually provide clearer pathways to approval.
- Ongoing support beyond the approval: These lenders often provide more consistent account managers post-settlement, which can be helpful for refinancing or restructuring as your business grows.
For many of our clients, the real difference lies in how they’re treated during the loan process. Non-banks are typically faster, more personal, and more proactive about asking questions instead of defaulting to “no.”
What Self-Employed Borrowers Need to Get Loan-Ready in 2025
The quality of your loan application matters, especially when your income doesn’t follow the neat PAYG format. So what does a strong, self-employed application look like?
Here’s a streamlined list to help you prepare:
✅ Most recent full-year financials (ideally 2023–24)
✅ Business and personal tax returns
✅ BAS statements for the past 12 months
✅ ATO income statements or portal access
✅ Profit-and-loss and balance sheet
✅ Summary of business structure and ownership
✅ List of liabilities with explanations (e.g. company car loans)
✅ Accountant’s letter (if required)
✅ Personal living expenses and dependents breakdown
Remember, this isn’t about volume. It’s about clarity. The right structure, clear separation of business vs. personal expenses, and a thoughtful explanation of any outliers (like abnormal COVID years or one-off purchases) can dramatically improve your chances. That’s why we don’t just collect documents. We help you present your business in its strongest form, while also guiding you through overcoming mortgage application challenges that can arise during the approval process.
What a Specialist Broker Brings to the Table
When you’re self-employed, you don’t just need a lender. You need a strategist. Someone who understands the financial patterns of business ownership, and knows how to translate that into a compelling case for approval.
Here’s what you can expect working with us at Unconditional Finance:
- Lender-matching based on your unique income profile
- Tailored application packaging that tells your story, not just your numbers
- Pre-emptive resolution of issues that could cause delays or declines
- Ongoing communication with lenders to advocate on your behalf
- Clear long-term strategy for refinancing, investing, or scaling your loan options
We also act as a buffer between you and lender jargon, so you’re not stuck interpreting ambiguous requests or confusing policy speak. Whether it’s explaining how your structure works, or advocating for addbacks to be recognised, we handle the conversations that matter. Our goal isn’t just to get you a loan. It’s to make that loan a meaningful step in your financial trajectory.
What This Means for You (And What You Can Do Next)
The recent shift by major banks is a welcome sign. It shows that lenders are starting to adapt to the changing face of work and income in Australia. But a policy change alone doesn’t mean success.
Your outcome still depends on:
- How well your application is structured
- Whether your financials reflect your real borrowing power
- Which lender is best aligned with your goals right now
This is especially true in 2025, where property opportunities move quickly and conditions vary between lenders week to week. Working with a mortgage broker ensures you’re not just eligible; you’re strategic.
Want to find out if the one-year assessment policy could unlock new options for you? Or are you simply tired of banks that don’t “get” how your business operates? Book a free consultation with Unconditional Finance.
Your income isn’t unusual. It’s entrepreneurial. And it deserves a loan solution that’s just as forward-thinking as you are.
Frequently Asked Questions (FAQs)
Not necessarily. While ANZ, CBA, NAB, and Westpac have introduced one-year income assessments, approval still depends on factors like your business type, income consistency, industry stability, and how long you’ve been trading. Some lenders may still request two years of data if your income is volatile or if you’re in a higher-risk sector. A broker can help assess whether your profile meets the criteria for one-year treatment, or if a non-bank option would be more suitable.
Typically, lenders want to see net profit (after expenses) from your most recent completed financial year, supported by finalised tax returns and business financials. That income must look consistent with your current cash flow and not rely on one-off windfalls or unsustainable contracts. If your business has seasonal spikes or reinvestment dips, we can help contextualise that to improve your chances of approval.
Yes, for most major banks, finalised tax returns are still required for one-year assessments. However, if you need to apply sooner (before EOFY lodgement is complete), some non-bank or second-tier lenders may consider BAS summaries, interim financials, or an accountant’s declaration. Timing your application well can make a big difference. Speak to us early so we can map out the best approach.
Absolutely. If your 2023–24 numbers are significantly stronger than the previous year, and you were declined due to a low two-year average, this change could make you eligible again. It’s worth having your application reassessed under the new guidelines, especially if you’ve repaid debts, improved cash flow, or restructured your business. We can compare how your borrowing power has shifted and recommend your next best step.
In many cases, yes. A skilled broker will calculate both options to see which approach maximises your borrowing capacity. For example, if your most recent year is stronger than the prior, a one-year assessment may work better. But if both years are consistent or trending upward, a two-year average may also support a strong application. The key is knowing which lender offers both and how to position the numbers to your advantage.
