Proven Tips to Plan Your First Home Purchase

When you're self-employed and buying your first home, the lender doesn't care what you earned last month or what your bank balance looks like today.

They care about what your tax return says you earned after deductions, and whether that income has been consistent over at least two years. That changes how you need to prepare, and how far in advance you need to start planning.

Why Two Tax Returns Matter More Than Your Bank Balance

Lenders assess your income using two full years of tax returns and sometimes your accountant's financials if you're mid-year. If your taxable income dropped in the most recent year because you claimed extra deductions or reinvested profits, the lender uses the lower figure. That can reduce your borrowing capacity by tens of thousands of dollars, even if your business is doing well.

Consider a buyer who runs a digital consulting business and earned $95,000 in their first year and $72,000 in their second after claiming depreciation on new equipment. The lender uses the lower $72,000 figure to calculate what they can borrow. If they'd waited another year to rebuild their taxable income, they would have qualified for a higher loan amount.

If you're planning to buy in the next 12 to 18 months, speak with your accountant now about how your upcoming tax return will look to a lender. The deductions that save you tax might cost you borrowing power.

How Victorian Stamp Duty Concessions Work for Self-Employed Buyers

Victoria offers full stamp duty exemption on properties up to $600,000 and reduced duty up to $750,000 for eligible first home buyers. That can save you between $10,000 and $30,000 depending on the purchase price, and you can stack it with the federal First Home Guarantee.

To qualify, you need to be over 18, an Australian citizen or permanent resident, and you and your partner must not have previously owned property in Australia. The property must become your principal place of residence within 12 months of settlement.

Self-employed buyers sometimes assume their income variability will disqualify them from state concessions, but the eligibility rules don't include income caps in Victoria. Your income only matters when the lender assesses how much you can borrow, not whether you qualify for the concession.

Choosing Between a 5% and 10% Deposit Under the First Home Guarantee

The First Home Guarantee lets eligible buyers purchase with as little as a 5% deposit without paying Lenders Mortgage Insurance. The scheme was expanded from October 2025 with no income caps and no property price limits, which opened it up to self-employed buyers who were previously excluded.

A 5% deposit gets you into the market sooner, but it also means higher repayments and less equity from day one. In our experience, self-employed buyers with variable income do better with a 10% deposit because it gives them more breathing room if their income dips during a quiet quarter.

If you're saving inside super through the First Home Super Saver Scheme, you can withdraw up to $50,000 plus earnings to put towards your deposit. That's particularly useful for self-employed buyers who want to save at a 15% tax rate instead of their marginal rate, which could be 32.5% or higher.

What Lenders Actually Want to See in Your Application

Self-employed borrowers need to provide two years of tax returns, two years of notices of assessment, and recent business financials prepared by your accountant. Some lenders also ask for business bank statements covering the last three to six months.

The documentation itself isn't difficult to gather, but the timing matters. If you're between tax returns and your most recent financials show a profit drop, some lenders won't approve your home loan application until the next tax return is lodged. That can delay your purchase by months.

We regularly see buyers who start the pre-approval process without checking whether their most recent financials will support the loan amount they need. Pre-approval based on outdated figures doesn't hold up when the lender orders updated documents closer to settlement.

Before you start attending open homes, confirm with a broker that your current taxable income and business structure will support the loan amount you need. If it won't, you'll know whether to wait, increase your deposit, or look at a lower price range.

How to Structure Your Loan When Your Income Fluctuates

Variable income means you need flexibility in how you manage repayments. An offset account lets you park surplus cash against your loan balance and reduce the interest you pay, without locking that cash away. When you have a strong month, you can deposit extra. When work slows down, you can draw on that buffer without needing to apply for a redraw or explain the withdrawal to your lender.

Some buyers split their loan between fixed and variable rates to lock in part of their repayment while keeping access to offset on the variable portion. Fixed rates give you certainty, but they usually don't come with full offset access and you'll pay break costs if you need to exit the fixed period early.

For self-employed buyers, keeping at least 60% to 70% of your loan on a variable rate with full offset gives you enough flexibility to manage income gaps without overpaying for features you won't use.

When to Lock in a Fixed Rate as a Self-Employed Buyer

Locking in a fixed rate makes sense if you want certainty over repayments and you're confident you won't need to sell, refinance, or make large extra repayments during the fixed period. If your income is seasonal or project-based, a fixed rate can protect you during lean months by capping what you owe.

But if you're likely to receive irregular lump sums from contract work or annual bonuses, a fixed loan without redraw access means that cash sits in your offset on the variable portion or in a savings account earning less than the loan is costing you.

We regularly see self-employed buyers fix 30% to 40% of their loan for two to three years, then keep the rest variable with offset. That gives them a baseline repayment they can budget around, while still allowing them to reduce interest when cash flow is strong. You can read more about what happens when your rate term ends under fixed rate expiry.

Why Lender Choice Matters More When You're Self-Employed

Not all lenders assess self-employed income the same way. Some will average your last two years of taxable income. Others will take the lower of the two. A few specialist lenders will use your accountant's profit and loss statement to assess your current year's income, even if the tax return hasn't been lodged yet.

If your income has grown over the last two years, a lender that averages will give you a higher borrowing capacity than one that takes the lower figure. If you've had a strong current year but your last lodged return was weaker, a lender that accepts accountant-prepared financials might approve a loan that others won't.

This is where working with a broker who understands low doc loans and self-employed lending makes a tangible difference. The right lender match can mean the difference between approval and decline, or between borrowing $450,000 and $520,000.

Call one of our team or book an appointment at a time that works for you using our online booking system. We'll review your tax returns, help you understand what lenders will see, and show you how to structure your application to give yourself the strongest chance of approval.

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