Self-employed · Tradies Home loans for sole traders and tradies
If you’re a tradie on an ABN, the question lenders ask isn’t really how much you earn. It’s how long you’ve been doing it, and what you can show on paper. Here’s what changes at each stage of an ABN, and where lenders differ.
Key takeaways
- With two years of lodged tax returns, most lenders will look at you on standard terms.
- Some lenders accept 12 months of ABN history, and some less, if you worked in the same trade as an employee first.
- Day-rate contractors may be assessed on an annualised day rate by some lenders, instead of tax returns.
- Ute, tool and equipment finance counts against what you could borrow, even when the business pays it.
How long do I need an ABN? The ladder
Find the row that matches you. Each step up the ladder opens more lenders and usually a better rate.
| If your ABN is | Then lenders usually look at | What helps |
|---|---|---|
| 2 years or more, with 2 returns lodged | Most lenders, full doc, on your last two returns | Returns and notices of assessment, recent BAS, lodgements up to date |
| 12 to 24 months, with 1 return lodged | Some lenders, on one year of returns | A full year lodged, BAS showing the same level since, history in the same trade |
| 6 to 12 months | A smaller group of lenders, often as a contractor or low doc loan | Two or more years employed in the same trade before, contracts or steady invoices, BAS |
| Under 6 months | Very few lenders | Same trade, same kind of client, and a clear income history. Often waiting is the better answer |
General ranges across the market, not one lender’s rules. Lender policy changes often, and each application is assessed on its own.
Same trade as your last job? That counts
Lenders worry about new businesses because many don’t last. A plumber who was employed for six years and now subcontracts to the same builders isn’t really a new business. Some lenders see that, and look at your work history as well as your ABN.
What helps your case: payslips or a group certificate from your last employed role, your licence or trade qualification, and contracts or invoices that show steady work since you went out on your own. Your apprenticeship can count as time in the trade.
Contractors on a day rate
If you work for one or two clients on a day rate, some lenders treat you more like a contractor than a business. Instead of tax returns, they annualise your rate. For example, $800 a day, five days a week, over 46 weeks is $184,000 a year.
Illustrative only. Lenders differ on the number of weeks they use and on the evidence they ask for, usually a current contract and a history of invoices or payments.
That can open a loan earlier than two years of returns would. It can also be lower than your actual earnings if you work more than 46 weeks, so it’s worth comparing both ways.
BAS or tax returns: which do lenders use?
Tax returns, for a full doc loan. They show profit after costs, and they’ve been lodged with the ATO. Your BAS shows turnover, which lenders use to check the business is still trading at the level your last return shows.
If you haven’t lodged a return yet, a low doc loan can use BAS, business bank statements or an accountant’s declaration instead. It can work, but the rate is usually higher and the maximum loan is usually lower. It’s a way in, not usually the place to stay.
GST registration
You must register for GST once your turnover reaches $75,000. Lenders check your ABN record, and a business trading above that level without GST registration raises questions you don’t want in an application.
The ute loan that shrinks your borrowing
Vehicle, tool and equipment finance all count as commitments. A $1,200 a month ute repayment can reduce what you could borrow by more than you’d expect. Some lenders treat business-paid finance differently when it’s already in your business accounts. That’s one of the places where the choice of lender changes the answer.
What tradies get asked for
Bring these to your Real Number Session if you have them. If you don’t, I can still work out where you stand.
- Your last two personal tax returns and ATO notices of assessment, or one if that’s all you have.
- Your last four BAS, if you’re registered for GST.
- Your ABN, trade licence and, if your ABN is new, proof of your employed work in the same trade.
- Statements for any vehicle, equipment or credit card debts.
- An ATO statement, if you have a tax debt or a payment plan.
Income that drops in winter, or after an injury
Lenders look at the whole year, so seasonal work isn’t a problem in itself. A recent drop in your BAS is different: lenders may ask why, and some will use the lower figure. If you’ve had time off for an injury, tell me early. The right lender and the right timing can make that a footnote rather than the headline.
Is it a first home?
Being self-employed doesn’t stop you using the Australian Government 5% Deposit Scheme, which has no income cap. You still need a lender that reads your income well, and the scheme only works through participating lenders. See first home buyers for the rules and price caps.
FAQ Questions clients ask
How long do I need an ABN to get a home loan?
Two years with lodged tax returns opens the most lenders. Some lenders accept 12 months, and some look at less if you worked in the same trade as an employee before you went out on your own. The shorter the ABN, the fewer lenders fit.
Can I get a home loan with a new ABN?
Possibly, if you did the same work before. Some lenders treat an electrician who was employed for years and is now subcontracting to a builder as continuing in the same field, and look at contracts, invoices and BAS instead of two years of returns. A new ABN in a new line of work is much harder.
What’s the best home loan for tradies?
There isn’t one best loan. The right lender depends on how long you’ve held your ABN, whether you’ve lodged returns, how you’re paid and what you owe on vehicles and equipment. I compare the lenders on my panel against your figures and show you why one fits better than another.
Do lenders count cash jobs?
No. Lenders can only use income you’ve declared on lodged returns or BAS. Income that isn’t declared can’t help a home loan application, and it creates a tax problem on top.
Does my ute or equipment finance affect my borrowing power?
Yes. Lenders count the repayments on car, ute and equipment finance as commitments, even if the business pays them. Some lenders treat business-paid finance differently when it already shows in your business accounts, which is one of the places lenders differ.
Do I need to be registered for GST?
You must register for GST once your turnover is $75,000 or more. Lenders check it, because a business with turnover over that level and no GST registration raises questions. Below that level, registration is optional.
Is the process different in NSW or QLD?
Lender policy for tradies is the same across states, because lenders set it nationally. What changes by state is stamp duty and the first home buyer concessions, so your real number is worked out for the state you’re buying in.
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