Understanding Self-Employed Home Loan Requirements

Self-employed nurses and midwives can access the same home loan products as PAYG employees, but the income verification process works differently.

Lenders want to see consistent business income over time, not just a recent tax return. Most assess your business income as either an average of the last two financial years or your most recent year, whichever is lower. If you've been in business for less than two years, you may still be able to apply through a low doc loan structure, though the LVR and rate will usually be less favourable. The key difference is that lenders assess your taxable income after business deductions, not your total revenue. A nurse practitioner turning over $200,000 a year but claiming $80,000 in deductions is assessed on $120,000 of income, and that affects borrowing capacity directly.

What Lenders Look for in Self-Employed Applications

Lenders assess stability, consistency, and proof of income. For most self-employed applicants, that means providing tax returns from the Australian Taxation Office for the past two financial years, business financial statements showing profit and loss, and a Notice of Assessment for each year. Some lenders also ask for recent BAS statements or an accountant's letter confirming your income.

Consider a registered midwife who left hospital work in mid-2024 to run a private antenatal clinic. By mid-2026, she has two complete financial years of trading. Her taxable income in the first year was $85,000 and in the second year was $110,000. Most lenders will assess her income at $85,000, which is the average of the two years or the lower of the two, depending on the lender's policy. Her borrowing capacity is calculated on that figure, not on her current monthly revenue. If her business income is trending upward and the most recent BAS statements show consistent growth, some lenders will give weight to that trajectory, but the formal assessment still anchors to finalised tax returns.

Income Structures That Complicate Serviceability

Self-employed borrowers often pay themselves through a mix of salary, dividends, trust distributions, or retained profit. Lenders treat each structure differently. If you operate through a company and pay yourself a salary, that salary is assessed as employment income, but lenders may also assess retained profit or director's fees depending on the structure. If you operate through a trust and receive distributions, lenders assess those distributions as part of your income, provided they're declared in your tax return and supported by trust financials.

In our experience, nurses working as independent contractors often lodge tax returns showing a lower taxable income than their actual cash flow because they claim vehicle expenses, home office deductions, professional registration, and continuing education. That's legitimate tax planning, but it reduces the income figure lenders use for serviceability. A contractor nurse earning $120,000 before deductions but claiming $25,000 in business expenses is assessed on $95,000. If you're planning to apply for a loan within the next 12 to 18 months, it's worth discussing your deduction strategy with your accountant to balance tax outcomes with borrowing capacity.

ABN Age and Proof of Business Continuity

Most lenders require your ABN to be at least two years old to accept full-doc self-employed income. If your ABN is younger than that, you may still be able to apply using one year of tax returns combined with recent financials, but the range of lenders narrows and the rate may be higher. Some lenders accept 12 months of self-employment if you were previously employed in the same field. That means a nurse who worked in a hospital for five years and then moved to contracting may be assessed after 12 months of self-employment, provided the work is in the same profession and supported by an accountant's letter.

A nurse practitioner who registered an ABN in early 2025 and lodged her first tax return in mid-2026 is unlikely to qualify under standard full-doc policies until mid-2027, after the second return is lodged. In that situation, a low doc loan using accountant's statements or BAS declarations may be the only option until the two-year mark is reached. Low doc loans typically cap at 80 percent LVR, so if you're planning to buy before your second year of trading, a larger deposit will be required.

Company and Trust Structures: What Documentation Is Required

If you operate through a company or trust, lenders assess both the entity's financials and your personal tax return. You'll need to provide company or trust tax returns, a profit and loss statement, a balance sheet, and evidence of how income is distributed to you personally. Some lenders also request an accountant's letter confirming the business structure and your role within it.

Lenders pay attention to director loans, retained earnings, and the consistency of distributions. If your company shows strong profit but you've retained most of it rather than paying yourself a salary or dividend, lenders may not count that retained profit as assessable income unless it's been distributed. This is common for nurses who've structured their business to minimise tax, but it can restrict borrowing capacity. If you're applying for a home loan as a self-employed borrower, your accountant should prepare financials that reflect both your business performance and your personal income clearly.

Offset Accounts and Loan Features for Variable Income

Self-employed borrowers benefit from loan features that accommodate variable income. An offset account linked to your home loan reduces the interest charged without requiring you to lock funds into the loan itself. If you receive a large payment from a client or a lump sum at the end of a contract, you can park that money in the offset account and reduce your interest bill until the funds are needed for business expenses or living costs.

Split loan structures also work well for self-employed nurses and midwives. You can fix a portion of your loan to lock in repayments for budgeting certainty, and keep the remainder on a variable rate with full offset and redraw access. That structure lets you manage cash flow fluctuations without losing the ability to make extra repayments when income is strong. Most lenders allow you to split a loan into two or more portions, and there's no cost to set up a split at the time of application.

LMI Waivers and Self-Employed Applicants

Some lenders offer LMI waivers for nurses and midwives up to 90 percent LVR, but eligibility depends on both your profession and your employment status. Lenders that provide LMI waivers to registered nurses typically require PAYG income or permanent employment, and self-employed applicants are excluded from the waiver even if they hold current AHPRA registration. That means a self-employed nurse practitioner borrowing at 90 percent LVR will pay LMI, while a PAYG nurse practitioner at the same LVR may not, depending on the lender.

If you're self-employed and want to avoid LMI, the threshold is 80 percent LVR. At that level, LMI does not apply regardless of employment structure. For a property purchased at the current median in your target suburb, that means a 20 percent deposit plus settlement costs. If you're considering a move from PAYG employment to self-employment and you're planning to buy property within the next two years, it may be worth applying for home loan pre-approval before you make the employment change, while your income is still straightforward to verify.

How a Mortgage Broker for Nurses Supports Self-Employed Applications

A mortgage broker for nurses who works regularly with self-employed health professionals understands which lenders assess contractor income favourably, which accept one year of trading with an accountant's letter, and which policies allow you to include non-lodged income if your most recent financial year is strong. That knowledge matters because self-employed policies vary significantly between lenders, and a loan that's declined at one lender may be approved at another with the same income and deposit.

Brokers also work with your accountant to structure your income documentation in a way that maximises serviceability. If your tax return shows a lower income than your actual earnings because of legitimate deductions, a broker can identify lenders that add back certain expenses such as depreciation or home office costs when calculating serviceability. That can increase your borrowing capacity without requiring you to change your tax structure. If you're approaching your second year of self-employment, a broker can also lodge your application at the right time to capture the most recent income year, rather than waiting for the ATO to issue your Notice of Assessment.

Call one of our team or book an appointment at a time that works for you. We'll review your business structure, your income documentation, and your property goals, and match you with lenders that assess self-employed nurses and midwives fairly.

Frequently Asked Questions