Free resource
1-Year ABN Home Loan Checklist
Documents needed, lenders who accept 1-year history, and how to strengthen your application.
Every mortgage broker will tell you "the bank wants 2 years of self-employment." And for major banks, that's true. But it's not the whole picture.
Specialist lenders — Pepper, Liberty, La Trobe, Bluestone, and others — have specific products for borrowers with 12 months or even 6 months of business history. The trade-off is a larger deposit requirement and slightly higher rates. But for many new business owners, it's the only path to buying now rather than waiting another year.
Why Banks Want 2 Years of Self-Employment
Lenders want 2 years of tax returns for self-employed borrowers because:
- Tax returns are the most reliable, ATO-verified income documentation
- 2 years shows income stability — not just one good year that may not repeat
- The first year of business often shows artificially low income (start-up costs, establishing clients)
- Business failure rates are highest in year 1–2
This is conservative — but it does protect both the lender and borrower from overcommitting based on one year of uncertain income.
Options When You Have Less Than 2 Years of Business History
| Option | Min ABN Age | Documentation | Min Deposit | Rate Premium |
|---|---|---|---|---|
| Full-doc with 2 years tax returns | 2 years | 2 years tax returns + financials | 10–20% (LMI may apply) | Standard rate |
| 1-year ABN loan (alt-doc) | 12 months | 12 months BAS + 6 months bank statements + accountant letter | 20% | +0.3–0.8% |
| 6-month ABN loan (specialist) | 6 months | 6 months BAS + 12 months bank statements | 30–40% | +1–2% |
| Apply while still employed (PAYG) | N/A — use employment income | Standard PAYG documents | 5–20% (standard) | Standard rate |
| Wait for 2 years then full-doc | 2 years | Full documentation | 5–20% | Standard rate |
The PAYG Strategy: Apply Before You Quit
This is one of the most underused strategies for new business owners:
If you're transitioning from employment to self-employment, apply for your home loan while you're still employed and receiving PAYG income.
Lenders assess your employment status at application. If you're still an employee at the time of application, you'll be assessed as a PAYG borrower — no self-employment requirements. Once your loan is settled, you can then transition to self-employment without it affecting your existing mortgage.
1-Year ABN Loan: How It Works
A 1-year ABN loan (also called a low-doc or alt-doc loan) is assessed using income evidence other than tax returns:
| Document | What It Shows | Required Months |
|---|---|---|
| BAS (Business Activity Statements) | GST turnover reported to ATO each quarter | 12 months (4 statements) |
| Business bank statements | Actual cash flow in/out of business | 6 months |
| Personal bank statements | Personal income received, spending habits | 6 months |
| Accountant declaration letter | CPA/CA confirms income level and business viability | Current |
| ABN registration evidence | Confirms ABN is 12+ months old | N/A |
| GST registration | Shows business turnover exceeds $75,000 threshold | N/A |
Same Industry, Different ABN — The Exception
If you've been working in the same industry for years as an employee, and you've recently gone to contracting/consulting under an ABN, many lenders apply a more favourable assessment:
- Your employment history in the same industry counts as relevant experience
- Some lenders will treat you as having "effectively self-employed" in your industry for longer than your ABN age
- A strong prior employment track record in the same field + 12 months ABN is often sufficient for second-tier banks
Example: A nurse who worked for a hospital for 5 years and recently became a nursing agency contractor with a new ABN — many lenders view this more favourably than someone who started a completely new type of business.
Frequently Asked Questions
Yes — if you're buying jointly with a PAYG-employed partner, the lender may primarily assess the PAYG income and treat your business income as a secondary or supplementary income source. This is one of the simplest solutions: if your partner has stable employment, their income alone (or combined with any of your income that can be verified) may be sufficient to qualify.
Some lenders accept a "projection" or "current-year income" assessment supported by an accountant letter confirming the current financial year income. This is particularly useful if your most recent lodged tax return shows a lower income than current reality. Ask your broker which lenders accept this approach.
Most lenders require the letter from a CPA or CA (Chartered Accountant). The letter must confirm your income, confirm the business is financially viable, and state that the declared income is sustainable. Lenders typically have their own standard letter format they prefer — your broker can provide the template.
New to business but ready to buy?
We know exactly which lenders work with new business owners. Let's find your options — no obligation.
Self-Employed Home Loans →