Free Sole Trader Borrowing Assessment
Tell us your ABN age, income structure and deposit — we'll tell you which lenders will approve you and what you can borrow.
There are more than 1.4 million sole traders in Australia — plumbers, electricians, consultants, designers, tradespeople, beauty therapists, accountants and countless others. If you're one of them and you want to buy a home, this guide covers exactly how Australian lenders assess your income and what you need to qualify.
How Sole Trader Income Is Assessed
As a sole trader, your income for home loan purposes is your net profit from your individual tax return (the profit from your Schedule of Business Income) — plus any legitimate add-backs.
- Depreciation (non-cash expense)
- Motor vehicle depreciation and private-use portion
- One-off non-recurring expenses
- Interest on business debts being refinanced
- Superannuation contributions above the compulsory amount
Lenders then calculate a 2-year average of your add-back income and use this as your assessable income for serviceability purposes.
Worked Example
| Item | Year 1 | Year 2 |
|---|---|---|
| Net profit (from tax return) | $78,000 | $85,000 |
| Add: depreciation | $8,000 | $9,000 |
| Add: motor vehicle (private portion) | $4,000 | $4,500 |
| Add-back income | $90,000 | $98,500 |
| 2-year average: $94,250 | ||
In this example, the borrower's tax return shows ~$81,500 average net profit, but after add-backs, the lender uses $94,250 — a significant difference in borrowing capacity.
Documents You Need
| Document | Purpose |
|---|---|
| Last 2 years personal tax returns (with NOA) | Primary income evidence for full doc |
| Last 2 years Business Schedule (if included in personal return) | Shows gross revenue and expenses |
| Last 4–8 quarters of BAS statements | Alternative to tax returns for alt doc; confirms GST turnover |
| 6–12 months of business bank statements | Confirms business activity and cash flow |
| ABN registration confirmation | Confirms self-employment and ABN age |
| Accountant's add-back letter | Documents eligible add-backs to increase assessed income |
| Accountant's current-year income letter | If most recent tax return not yet lodged |
Loan Options for Sole Traders
| Option | Requirements | Rate | Max LVR |
|---|---|---|---|
| Full doc | 2 years tax returns; consistent or growing income | Standard | 95% |
| Alt doc (BAS) | 12+ months ABN; 4+ quarters BAS | +0.1–0.4% | 80–85% |
| Alt doc (bank statement) | 12+ months ABN; 6+ months business bank statements | +0.2–0.4% | 80% |
| Alt doc (accountant letter) | 12+ months ABN; accountant confirms income in writing | +0.1–0.3% | 80–85% |
| Low doc | 12+ months ABN; income declaration only | +0.3–0.7% | 60–80% |
FAQs
our broker team works with sole traders across Western Sydney every week — from tradespeople and beauty therapists to consultants and designers — helping them understand how their income is assessed and navigate the path to homeownership.
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