How much can I borrow when self-employed?

How lenders work out your borrowing capacity

Your borrowing capacity is the maximum a lender will let you borrow, based on your income, your existing commitments, your living expenses and the lender's own serviceability buffers. For self-employed borrowers, the key variable is how the lender calculates your income from your tax returns and financials — and lenders differ enormously on this.

Where are you going?

For many business owners, the tax returns only tell part of the story.

Maybe you've just secured a major contract. Perhaps you've invested heavily in new equipment that's only just starting to generate revenue. Maybe an expensive lease has finished, you've hired key staff, or you're expanding into a new market. On paper, your financials may still reflect where the business was six or twelve months ago — not where it's heading.

The right lender doesn't just look at what's happened. They want to understand what's changing and whether those changes are sustainable.

That's where a good finance strategy makes all the difference.

Before we recommend a lender, we'll sit down with you and work through your business. We'll understand how you generate income, what's changed recently, where you're heading over the next 12–24 months, and whether there are factors your financials don't yet reflect. Then we'll identify the lenders whose policies and credit teams are most likely to understand your story.

Sometimes it's not about finding a lender with the lowest rate.

It's about finding the lender who sees the opportunity the same way you do.

What income counts when you're self-employed?

Lenders generally use your net business profit (not turnover), often averaged over two years, plus any wages you pay yourself. Many will add back certain expenses (depreciation, one-off costs, additional super, and interest on debts being refinanced), which can lift your assessable income well above your taxable figure. Company profits and trust distributions can also count when they are presented correctly.

Why two lenders can offer very different amounts

Because each lender applies its own income calculation, buffers and expense benchmarks, the same application can produce borrowing estimates that differ by well over a hundred thousand dollars. One lender might average two lean years; another might use your stronger most-recent year. This is exactly why taking a self-employed application to the right lender matters so much.

Commitments that quietly reduce what you can borrow

Capacity is income minus commitments, and the commitments side is where most of the avoidable losses sit. These are the ones that catch self-employed borrowers out:

• Credit-card limits, which are generally assessed on the limit available to you rather than the balance you carry
• Buy-now-pay-later accounts and overdrafts, including ones you opened and forgot
• Car loans, equipment finance and novated leases
• Business facilities you have personally guaranteed, which can be assessed as if they were your own debt
• Compulsory study-loan repayments, while the debt remains
• Ongoing commitments such as school fees, insurance and child support
• Dependants, since more people in the household lifts the living-expense figure a lender assesses you against

The useful thing about this list is how much of it is under your control. Closing an unused card limit, paying out a small balance that carries a large minimum repayment, or clearing a facility that no longer serves the business can move your capacity without changing your income at all. Just do it well before you apply, so the closures are visible on your statements and your credit file by the time an assessor looks.

How to increase your borrowing capacity

A few practical levers can lift what you're able to borrow:

• Reduce or consolidate existing debts, especially credit cards and car loans
• Keep your tax returns current and your financials clean
• Talk to your accountant about how add-backs present your real income
• Choose the lender whose income policy suits your situation
• Consider the loan structure: interest-only versus principal-and-interest changes serviceability

Get a realistic borrowing figure before you shop

The most useful thing you can do is get a realistic borrowing range before you start house-hunting, so you shop with confidence and don't fall for a home you can't finance. At BleuHaven Finance we assess your position across our panel of lenders and give you a straight answer — no cost, no obligation.

Related reading

Guide

Securing a home loan when you're self-employed

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Calculator

Try the figures yourself in our borrowing capacity calculator

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Local guide

Mortgage broker in Mornington

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