Self Employed Home Loans › How do lenders calculate income for self employed borrowers?

How do lenders calculate income for self employed borrowers?

Lenders generally take your net business profit, then apply their own rules. They often add back certain non cash or one off expenses such as depreciation and interest, and they may average two years or use the most recent year if it is lower.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

Two lenders can look at the same tax returns and arrive at very different income figures, because each has its own add back rules and averaging method. That is exactly why a borrower declined by one lender can be comfortably approved by another. Understanding which lender reads your figures most favourably is the core of self employed lending.

The key points

Lenders start from net business profit.
Add backs such as depreciation can lift assessable income.
Some average two years, others use the lower or latest year.
Different lenders reach different figures from the same returns.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.