A female sole trader stands before a clothing rack, representing her fashion business.

How to Get Home Loan as a Sole Trader in Melbourne

Home loans for sole traders can feel out of reach, especially when dealing with inconsistent income and complex financial documents. Unlike PAYG employees, sole traders work hard to build their businesses, yet traditional lenders often see them as high-risk borrowers due to fluctuating taxable income and stricter lending criteria. 

Experienced mortgage brokers such as the team at EverLend can help simplify the mortgage process for our self-employed borrowers. Brokers would match borrowers with lenders who understand business financials, offer flexible loan options, and help organise financial documents to improve the chances of loan approval. 

Let’s explore how sole traders in Melbourne can successfully apply for a home loan and enjoy competitive rates and favourable mortgage terms.

What Are Home Loans for Sole Traders?

Home loans for sole traders are designed for self-employed individuals who run their own businesses and don’t have traditional PAYG income. These loans accommodate the distinct finances of sole traders by allowing alternative financial documentation.

Home Loans for Sole Traders vs. Traditional Home Loans

Traditional home loans typically require PAYG income verification through payslips and consistent employment records. For sole traders, lenders instead assess business financials, taxable income, and overall financial stability. While this means extra paperwork, sole trader loans often come with flexible terms to account for variable income streams.

Key Features of Sole Traders Home Loans

If you’re a sole trader, here’s what makes these loans stand out:

  1. Alternative Documentation: Instead of payslips, lenders may accept business bank statements, business activity statements, or financial statements to assess your borrowing power.

  2. Low-Doc Loan Options: Low-documentation (low-doc) loans cater to sole traders by reducing the need for extensive paperwork.

  3. Flexible Loan Terms: Lenders may offer flexible terms to accommodate fluctuating income, such as variable-rate loans or interest-only periods.

  4. Competitive Interest Rates: Many lenders now offer competitive rates for self-employed borrowers, especially those with strong credit history.

  5. Extra Repayments Allowed: Many loan products allow additional repayments to help reduce the principal faster.

Melbourne Property Market in 2025: Insight Into Sole Traders Homeownership

The Melbourne property market remains a hot spot for investment and homeownership. In 2024, Melbourne’s median price for all dwellings was approximately $776,949, with suburbs like Brunswick, Footscray, and Preston offering growth potential.

According to one expert, there could be a 25-basis-point interest rate decrease in May that could cover Melbourne as well, making it an ideal time for sole traders to invest. 

Melbourne’s strong economy, cultural diversity, and access to business opportunities make it a top choice for self-employed borrowers looking to secure residential properties. The city’s infrastructure, lifestyle amenities, and thriving communities make it an ideal location for long-term property investment and personal growth.

 

Types of Sole Traders’ Home Loans That Brokers Can Assist With

Sole traders often face stricter lending criteria, but mortgage brokers can connect them with tailored loan products and help access relevant government grants. Here are some home loan options available for sole traders in Melbourne.

Low-Doc Loans

Low-documentation (low-doc) loans are designed for self-employed borrowers who cannot provide traditional income verification like PAYG payslips. Lenders assess alternative documents such as business tax returns, BAS statements, and bank statements to determine borrowing capacity.

Full-Doc Self-Employed Home Loans

A full-doc loan requires comprehensive financial statements, including personal tax returns and business financials. Sole traders with a strong credit history and stable income may qualify for better loan terms, competitive rates, and government grants like the First Home Owner Grant (FHOG).

Variable-Rate Loans

Variable-rate loans come with interest rates that fluctuate with the market, offering potential savings when rates drop. These loans allow extra repayments, making them ideal for business owners who want flexibility in managing mortgage repayments.

Fixed-Rate Loans

Fixed-rate loans lock in interest rates for a set term (typically 1-5 years), providing financial stability. This option is beneficial for self-employed applicants who want predictable monthly repayments and may be eligible for stamp duty concessions through the Victorian Government.

Offset Account Loans

An offset loan links a mortgage to a savings account, reducing the interest paid on the loan balance. This structure helps sole traders manage cash flow effectively while taking advantage of the First Home Guarantee scheme, which lowers the deposit requirement for eligible applicants.

Line of Credit Loans

A line of credit loan allows business owners to borrow against the equity in their property for business or personal use. This type of loan is useful for covering business liabilities, renovations, or one-off expenses while keeping financial commitments manageable.

Guarantor Loans

Guarantor loans help sole traders who may not have a larger deposit or strong credit history. A family member provides security for the loan, increasing borrowing power and reducing lenders mortgage insurance costs, potentially in combination with the Family Home Guarantee scheme for single parents.

Mortgage brokers can help you explore these loan types and check eligibility for government grants, ensuring you access the best home loan solutions while maximising financial benefits.

 

Eligibility Criteria for Sole Traders Home Loans in Melbourne

Sole traders face stricter lending criteria compared to PAYG borrowers, but understanding the requirements can improve your loan eligibility. Here are the key factors lenders assess when reviewing applications for self-employed home loans.

  • Stable Income: Lenders require self-employed borrowers to demonstrate stable income over at least two financial years. Financial documents like business tax returns, bank statements, and business activity statements are essential to prove income consistency.
  • Strong Credit History: A strong credit history significantly increases your chances of loan approval. Lenders will review your credit reports, credit score, and history of monthly repayments to assess your financial stability.
  • Larger Deposit Requirement: Sole traders often need a larger deposit, usually around 20%, to offset the risk and avoid lenders mortgage insurance. A larger deposit not only reduces the loan amount but may also secure you competitive interest rates.
  • Accurate Financial Statements: Providing accurate financial statements, including loss statements and personal tax returns, is crucial. These documents give lenders a comprehensive picture of your taxable income and borrowing capacity.
  • Business Longevity: Lenders typically prefer business owners who have been operating their business for at least 12 months or more. A longer business history, supported by business bank statements and financial records, demonstrates financial stability and lowers perceived risk.

How to Apply for Sole Traders Home Loans

Applying for self-employed home loans may seem complex, but breaking it into steps simplifies the process. Here’s a concise guide to help business owners and self-employed applicants navigate the loan landscape.

  1. Assess Your Financial Situation: Evaluate your borrowing capacity using loan calculators and review your business financials. Ensure your financial statements, such as bank statements, business tax returns, and loss statements, are accurate and up to date.
  2. Organise Your Financial Documents: Prepare a document checklist, including personal tax returns, business activity statements, and bank account statements. Having complete financial documents is essential for meeting lender policies and improving your loan eligibility.
  3. Consult an Experienced Mortgage Broker: Reach out to an experienced mortgage broker to explore tailored loan options. They can recommend a suitable loan product, such as a low-doc loan or full-doc self-employed home loan, based on your financial goals and circumstances.
  4. Choose the Right Loan Type: Work with your broker to select a loan type, such as variable-rate loans, fixed-rate loans, or loans with flexible terms. Understanding loan rates, loan terms, and features like extra repayments will help align the loan with your long-term goals.
  5. Submit Your Loan Application: Submit your loan application with the required financial documents, such as business bank statements and alternative forms of income verification. Lenders will assess your credit history, borrowing power, and chances of loan approval based on the entire application process.
  6. Receive Conditional Approval: Once your application is reviewed, you’ll receive conditional approval outlining the loan terms and conditions. This is the final step before loan settlement, bringing you closer to achieving your homeownership goals.

Case Study: Achieving Homeownership Goals as a Sole Trader

Sarah, a Melbourne-based freelance photographer, was struggling to find a lender due to her fluctuating income and lack of PAYG statements. She partnered with an experienced mortgage broker who reviewed her financial statements, including business activity statements and bank statements, to create a strong loan application.

The broker identified a low-doc loan option through a non-bank lender, which allowed Sarah to use alternative documentation like her business tax returns and personal income tax returns. By working with a dedicated lender, she secured conditional approval with competitive rates and flexible loan terms.

With her broker’s guidance, Sarah made a larger deposit to avoid lenders mortgage insurance and opted for a variable-rate loan with extra repayments. Today, she owns a residential property in Preston and is confidently managing her monthly repayments while focusing on her long-term financial goals.

How to Increase Chances of Approval for Home Loans for Sole Traders

Lenders apply stricter lending criteria to self-employed borrowers, making home loan approval more challenging. However, following these key steps can improve your chances of securing a loan with favourable terms.

Maintain Accurate Financial Documents

Lenders assess financial stability based on business tax returns, bank statements, and loss statements. Keeping detailed and up-to-date financial documents strengthens your loan application.

Improve Your Credit Score

A strong credit history and clean credit reports increase borrowing capacity. Pay off outstanding debts, make timely repayments, and check your credit score before applying.

Save for a Larger Deposit

A larger deposit reduces the loan amount and may help avoid lenders mortgage insurance. Saving at least 20% of the property value can also secure competitive interest rates.

Show Consistent Income

Lenders prefer stable income over fluctuating earnings. Providing business activity statements, personal tax returns, and alternative documentation can demonstrate income stability.

Reduce Business Liabilities

Lowering debt under payment arrangements and minimising business liabilities improves financial health. This reassures lenders that you can manage mortgage repayments comfortably.

Work with an Experienced Mortgage Broker

A mortgage broker can identify the best loan options, lender policies, and government grants for self-employed applicants. They also streamline the loan process and improve chances of conditional approval.

Taking these steps can help self-employed borrowers secure home loans with better loan terms, competitive rates, and a smoother application process.

Ready to take the next step toward homeownership? Our expert mortgage brokers can help you find the right loan solutions and improve your chances of approval. Call EverLend at 03 7036 3356 today!


FAQs

What documents do I need for a sole trader home loan?

You’ll need business tax returns, personal tax returns, business activity statements, and bank statements. Lenders may also request alternative income verification.

Do sole traders need a larger deposit for home loans?

Yes, many lenders require a larger deposit—often 20% or more—to mitigate financial uncertainty.

How long does the application process take?

It typically takes 2-4 weeks, depending on the lender and the completeness of your documents.

Can a sole trader buy a house?

Absolutely. Sole traders can buy homes using tailored loans that account for their variable income.

Can you get a mortgage with an ABN?

Yes, an ABN allows you to apply for low-doc loans or self-employed home loans, provided your ABN has been active for at least 12 months.

How much can I borrow as a sole trader?

Your borrowing capacity depends on your taxable income, financial stability, and lender policies. Many lenders offer online calculators for estimates.

Are low-doc loans more expensive?

Not necessarily. With a strong credit history and larger deposit, you may still secure competitive rates on low-doc loans.

Conclusion

Home loans for sole traders in Melbourne are more accessible than ever in 2025 with the right strategy and expert guidance. By preparing strong financial documents, improving credit history, and exploring tailored loan options, self-employed borrowers can achieve their homeownership goals with confidence.

 Working with an experienced mortgage broker ensures access to competitive rates, government grants, and lenders who understand self-employed income.

EverLend’s main office is located in St. Kilda, but we offer our services across the whole of Melbourne, helping clients in every suburb turn their vision into reality. Ready for the next step? Call us today at 03 7036 3356, or visit EverLend for a free personalised consultation.