The good news: you may not need two years of tax returns anymore
Historically, self-employed applicants have needed two years of tax returns to apply for a home loan (and where the two years differ, banks typically use the lower figure, or an average). That threshold has long been the biggest obstacle for self-employed borrowers — particularly those who haven’t been in business long but already have stable income.
The good news is that all four major banks now offer a “one year’s tax return” application pathway: ANZ from September 2024, CBA from late 2024, NAB from March 2025, and Westpac from July 2025 — as of now (August 2026), all four are live. In other words, if you’ve been trading for a full year with a complete tax return, you may already be eligible to apply, without waiting for a second tax season. That said, having this pathway available doesn’t guarantee approval — banks still assess your industry, income stability and other liabilities holistically.
What banks are actually looking at
Whether it’s one year or two, the bank’s core question is always the same: is your income genuine, sustainable, and sufficient to cover the repayments? Specifically, they look at:
- Tax returns plus your Notice of Assessment: banks don’t just take your declared income at face value — they cross-check it against the ATO’s Notice of Assessment to confirm it’s been formally assessed;
- Serviceability buffer rate: this applies equally to self-employed and PAYG borrowers — APRA requires banks to add a 3 percentage point buffer to the actual loan rate. With mainstream variable rates around 6.1%–6.8%, that means being tested at over 9%;
- Debt-to-income ratio (DTI): since 1 February 2026, APRA has capped high-DTI lending — banks can’t have more than 20% of new owner-occupier loans at 6x income or above, and the same 20% cap applies to investment loans. If your income is variable, or you’re looking to borrow a relatively large amount against your income, this is worth understanding well ahead of time, rather than discovering a shortfall close to settlement.
Practical steps to improve your approval odds
- Keep your books and tax lodgements current, well ahead of time: don’t scramble to finalise your accounts right before applying — Notices of Assessment take time to process, and clean, timely bookkeeping is itself a point in your favour with the bank;
- Keep your income structure as simple and explainable as possible: if your business has multiple income streams, or unusually large one-off transactions in the books, prepare an explanation in advance — assessors are wary of accounts that don’t make sense at a glance;
- Work out your DTI ahead of time: add up your existing liabilities (business loans, credit card limits, other property loans) and check how close you are to the 6x income threshold — if you’re close, it’s worth discussing structuring options with an advisor early;
- Work with a broker who knows self-employed lending policy: the one-year-tax-return criteria at the big four, and the alternative options at non-bank lenders (such as low-doc loans), all differ — checking each one yourself is time-consuming, and an experienced broker can match you to a suitable product much faster.
Every self-employed applicant’s income structure and supporting documents are different, and whether a one-year or two-year tax return pathway suits you better depends on your specifics. Get in touch and we’ll assess your borrowing capacity based on your actual accounts.
The bank one-year-tax-return policy start dates, and the APRA serviceability buffer and DTI requirements referenced here reflect publicly available information at the time of writing (September 2026), for general information only; please refer to each lender’s current approval criteria.
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