Self-employed home loan declined? What lenders check and what to do next

A self-employed home loan is usually declined for 1 of 3 reasons. The income on your tax returns does not pass the lender’s test, your business history is shorter than its policy allows, or your credit report or paperwork does not fit. A decline from 1 lender is a decision on 1 policy, not on every lender. Self-employed rules vary widely between lenders, from 6 months of ABN history at some non-banks to 2 full financial years at Westpac.

After a decline, 2 things are worth doing before you apply anywhere else. Find out whether your credit report played a part, because the lender has to tell you in writing if it did. Then match your income and history to a lender whose published policy actually fits them.

Self-employed lending policies at a glance

We checked the published self-employed home loan policies of 6 lenders on 26 September 2026. Lender policies are subject to change, so treat this as a snapshot and confirm the details with the lender or a broker before you apply.

Lender	Minimum business history	Income evidence it describes
Westpac	Business established and trading for at least 2 full financial years	Fast Track: 2 years of personal Australian Taxation Office (ATO) Notices of Assessment and a 20% deposit, without business financials. Also a 1-year income assessment
CommBank	Profit and loss for the last 2 years, with a profit each year (simplified path)	Simplified path: a regular salary from your business and 6 months of salary credits
ANZ	ABN or ACN registered for 18 months on its streamlined path (valid for 2 years if you take director’s fees or dividends)	For most applications, 1 financial year of tax statements. Streamlined path for directors paid a company wage for at least 6 months
AMP	ABN established for at least 2 years	Most recent 1 year tax return and Notice of Assessment
NAB	1 to 2 years of self-employed income history	A single year’s financial statements where the loan to value ratio is 80% or less
Pepper Money (non-bank)	ABN and GST registration for at least 6 months (Alt Doc)	A declaration plus 6 months of business bank statements, 6 months of BAS or a Pepper Money accountant’s letter

Sources: Westpac, CommBank, ANZ, AMP, NAB, Pepper Money.

The spread is the point for home loans for self-employed borrowers. An application that fails Westpac’s 2-year rule can still fit a lender that accepts 1 year of returns or 6 months of ABN history.

Why self-employed home loans get declined

Self-employed home loan applications are assessed on documents rather than a payslip, so your self-employed income is only as strong as your paperwork shows. Lender pages and Moneysmart point to 6 common causes of a decline:

• Taxable income is too low for the loan amount. Lenders work from the income on your tax returns and Notices of Assessment, after deductions. Deductions that cut your tax bill also cut the income the lender sees, which weakens your serviceability on paper.
• Other debts take too much of your income. Moneysmart lists other debts that reduce your capacity to repay as a common reason for a decline.
• Your income dropped. NAB says that if your income is significantly lower than a comparable earlier period, a lender may use the lower amount to assess how much you can borrow.
• Your history is too short for that lender. Westpac requires 2 full financial years of trading under all its self-employed assessment methods, and AMP requires an ABN held for at least 2 years.
• Your paperwork is out of date or inconsistent. Pepper Money says missing or inconsistent documentation can delay or derail an application, and most lenders want your ATO lodgements up to date.
• Your credit report shows a problem. Late repayments, defaults or many recent credit applications can lead to a decline, according to Moneysmart.

The test itself is strict for every borrower. APRA requires banks to assess your repayments at least 3 percentage points above the loan rate, a buffer it confirmed in May 2026 (APRA). On a 6.24% loan, the RBA’s average for new owner-occupier loans in July 2026, the bank checks you could afford 9.24%. The assessment rate glossary entry explains the buffer.

Find out why your home loan was declined

A lender that declines your home loan after checking your credit report has to tell you in writing. The rule is in the Privacy (Credit Reporting) Code 2025. If a lender obtained your credit reporting information and refuses your application within 90 days, it must give you a written notice of refusal (OAIC, Credit Reporting Code 2025).

The notice must arrive when you are told about the decision or within 10 business days. It must explain:

• your right to get your credit reporting information free during the 90 days after the notice, and how to ask for it;
• that the lender relies on several sources, including what you provided and your credit report;
• the factors often taken into account, such as your income, your other debts, the security of your employment and your credit history.

The notice does not have to give you the lender’s full assessment. The National Consumer Credit Protection Act requires a lender to give you a copy of its assessment on request, but not if the loan is never entered into (NCCP Act, s132). Ask the lender, or your broker, which part of its policy you failed.

Check your credit report before you reapply

After a self-employed home loan is declined, check your credit report: it is free, and the decline may have come from it. Moneysmart says you can get a free copy from a credit reporting body every 3 months, or more often if you show you were recently refused credit (Moneysmart). Australia has 2 main credit reporting bodies, Equifax and Experian, and they can hold different information, so check both.

Look for 3 things:

• Debts that are not yours or are already paid. Ask the credit reporting body to fix them. Moneysmart says this is free and you do not need a paid credit repair company.
• Late or missed repayments and defaults. Moneysmart says a default listing expires 5 years after it goes on your report.
• Recent credit applications. Each application is noted on your report, and too many in a short time can lower your credit score.

That last point is why applying to several lenders in quick succession after a decline can backfire. Moneysmart’s advice is to improve your situation first and wait before applying again.

Matching your situation to a lender’s policy

The fix for a declined self-employed home loan is usually a different lender policy, not a better-worded application to the same kind of lender. Before you apply for a home loan again, compare each lender’s eligibility criteria with what you need to provide. Start from what you can show:

• 2 or more years of steady, profitable returns. All 5 banks in the table above have a path for you. Westpac’s Fast Track can skip business financials if you have a 20% deposit and 2 years of Notices of Assessment.
• 1 year of returns, or your latest year is your strongest. Some lenders assess on 1 year. AMP asks for the most recent tax return with a 2-year ABN, and NAB accepts a single year’s financials at an LVR of 80% or less.
• You pay yourself a wage from your own company. CommBank and ANZ both describe simplified checks based on salary credits or payslips from your company.
• Less than 2 years in business. Some non-bank lenders consider 6 months of ABN history. Bankwest’s guide says a lender will likely want proof of prior experience in the same industry, such as old payslips and references from previous employers.

A deposit of 20% or more also widens your options. Pepper Money says it may help you avoid lenders mortgage insurance, and Westpac’s Fast Track requires it.

Full doc and alt doc (low doc) home loans

Lenders treat you as self-employed if you earn your income through your own business. Westpac’s criteria include a registered ABN as a sole trader, business partnership, company or trust. A self-employed home loan is then assessed in 1 of 2 ways. A full doc loan uses your tax returns, Notices of Assessment and financial statements. An alt doc or low doc home loan uses other evidence, usually BAS, business bank statements or an accountant’s declaration, for borrowers whose returns do not show their current income.

Pepper Money says full doc borrowers get the same interest rates and LVR requirements as PAYG customers. Alt doc is different. Bank of Melbourne does not offer low doc loans. It says that if you are self-employed without PAYG personal tax returns, other lenders may only offer a low doc loan with a higher interest rate or a larger deposit. Pepper Money says the interest rate, fees and charges it offers depend on its assessment at the time of application. None of the 6 lenders we checked publishes the size of the low doc rate difference, so compare the variable rate or fixed rate you are actually offered, and its comparison rate.

Alt doc is not a way around the rules. The lender still has to be satisfied of your ability to repay the loan: Moneysmart says a lender must decline a loan if its assessment shows it could cause you hardship.

Add-backs: income your tax return hides

An add-back is a business expense a lender adds back to your income for a self-employed home loan, because it is not an ongoing cash cost. Yard, a non-bank lender, lists 6 possible add-backs: depreciation, amortisation, certain one-off expenses, some motor vehicle expenses, voluntary super contributions and certain start-up costs (Yard).

Yard also warns that the treatment differs between lenders, so an add-back should not be assumed to raise your borrowing power. Westpac suggests having proof of expenses such as depreciation and asset write-offs ready. Ask your accountant to show these items separately in your financials, so a lender can see them.

Before you apply again

A second self-employed home loan application works best when the reason for the first decline has been dealt with. Before you reapply, work through these 7 steps:

• Get the written refusal notice, or ask the lender which policy you failed.
• Check both credit reports and fix any errors for free.
• Bring your tax lodgements and BAS up to date, and make sure the figures match across documents.
• Ask your accountant for a letter explaining any income dip or one-off expense.
• Run the numbers again with our borrowing power calculator, using the income a lender will actually see.
• Choose the next lender by its policy on your history and income, not by its headline rate.
• Get pre-approval before you make an offer. Westpac’s conditional approval is valid for 90 days.

If this is your first home, see what first home buyer grants and schemes in WA you can use alongside the loan. If you are buying a business property rather than a home, the rules are different. See commercial loans vs home loans.

How a broker fits in

150 businesses are listed in our self-employed and low-doc finance directory. A broker can compare your tax returns, business structure and credit history against several lenders’ self-employed policies before an application goes in, so a second decline is less likely. Ask how many lenders on their panel accept your length of business history, and check the broker’s credit licence before you share your documents.

Checked against lender policy pages, Moneysmart, OAIC, APRA and the NCCP Act on 26 September 2026. This is general information, not financial advice. It does not consider your objectives, financial situation or needs.

Frequently asked questions

Can I get a home loan if self-employed?

Yes. Self-employed borrowers, from sole traders to small business owners, can qualify for a home loan with major banks and non-bank lenders. Most lenders want 1 to 2 years of tax returns and Notices of Assessment, and some non-banks consider 6 months of ABN history with alternative documents such as BAS or bank statements.

How long must I hold an ABN?

The minimum ABN age depends on the lender. Westpac requires 2 full financial years of trading and AMP an ABN held for 2 years. ANZ asks for 18 months in some cases, and Pepper Money considers 6 months of ABN and GST registration for its Alt Doc loans.

Will the lender tell me why I was declined?

A lender that declines your home loan after checking your credit report must give you a written notice within 10 business days, under the Privacy (Credit Reporting) Code 2025. The notice explains your right to a free credit report for 90 days. The lender does not have to hand over its full assessment.

Does a declined home loan hurt my credit score?

Each credit application is noted on your credit report, and Moneysmart says too many applications in a short time can lower your credit score. That is why applying to several lenders quickly after a decline can make things worse. Check your report free (you can do so every 3 months), fix the reason for the decline, then apply once.

How do lenders calculate self-employed income?

Lenders usually work from the taxable income on your tax returns and Notices of Assessment, often averaged over 2 years. A sole trader at Westpac only needs personal tax returns, while Yard says companies also need business financial statements and company tax returns. NAB says a lender may use the lower year if your income dropped significantly. Some lenders add back non-cash expenses such as depreciation.

Is 1 year of tax returns enough?

Some lenders will assess a self-employed home loan on 1 year of tax returns. AMP asks for the most recent tax return and Notice of Assessment with a 2-year ABN, and NAB accepts a single year’s financial statements where the LVR is 80% or less.