The two-year rule isn't always two years: how to get a home loan with less self-employed history

The "two-year rule" for self-employed home loans isn't a hard rule. While most mainstream Australian lenders prefer two years of tax returns, several legitimate pathways exist for borrowers with less self-employed history. These include same-industry transitions from PAYG (sometimes as little as 6 months of self-employment), one-year-only assessments from some lenders, low-doc and alt-doc loans using BAS or accountant declarations, contractor arrangements treated as PAYG-like, and joint applications where a PAYG partner anchors the application. The key is matching your specific situation to the right lender, which is usually easier with a broker than going direct to a bank.

This post explains the exceptions to the two-year rule and how to qualify with less self-employed history.

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This post is part of the Getting a home loan when you're self-employed guide. If you want the broader picture, start there.

The "two-year rule" is one of the most repeated and most misunderstood ideas in Australian self-employed lending. You hear it from bankers, friends, online forums, and sometimes other brokers. You need two years of tax returns to buy a house if you're self-employed.

It's mostly true. And it's frequently incorrect, depending on your specific situation.

Here are the exceptions worth knowing about.

Exception 1: You moved from PAYG to self-employment in the same industry

This is the most common and most powerful exception. If you worked as a PAYG employee in a particular industry for a meaningful period (usually two years or more) and then went out on your own in the same field, many lenders will let you apply with significantly less than two years of self-employment.

The logic is straightforward. Your income may now come through your business, but your skills, your client relationships, and your earning capacity are continuous. You're not a beginner. You're an experienced professional with a new business model.

Lenders that offer this pathway typically require:

• At least 6 to 12 months of self-employment in the same industry
• Evidence of your prior PAYG history (payslips, employment letters, tax returns)
• Clean credit and tax compliance
• Profitable trading from the start of self-employment
• Usually a stronger deposit (10 to 20 percent at minimum)

Common scenarios this applies to:

• A nurse who left a hospital to start her own home-care business
• An electrician who worked for a large firm and then started his own
• A consultant who left a big firm to go solo
• A hairdresser who worked in salons and started her own
• An accountant or bookkeeper who left a firm to work for herself

If this is you, the conversation with a broker is worth having well before you have two years of tax returns.

Exception 2: One-year tax return assessments

Some lenders will accept just one year of tax returns rather than two, particularly if:

• That year shows strong, stable income
• Your industry is one the lender treats favourably
• Your business is structured cleanly (sole trader or simple company)
• Your prior PAYG history was in a related field

These lenders are typically specialist self-employed lenders or major non-bank lenders rather than the big four. A broker can identify which lenders this pathway exists with at any given time.

A one-year assessment usually means slightly higher rates or larger deposit requirements than a two-year assessment, but it's significantly cheaper than waiting another year or going down a low-doc path.

Exception 3: Low-doc and alt-doc loans

Covered in detail in a separate post, low-doc and alt-doc loans use alternative income evidence (BAS statements, accountant declarations, business bank statements) instead of tax returns. These can sometimes proceed with as little as 6 months of trading.

The trade-offs are real: higher rates (typically 0.25 to 1 percent above standard), larger deposit requirements (usually 20 to 30 percent), and the strategy usually involves refinancing to a standard loan once two years of tax returns are available.

For borrowers in their first year of self-employment with a strong deposit, this is often the cleanest path.

Exception 4: Contractor arrangements treated as PAYG

Some types of contractor work are treated by lenders as more like PAYG income than self-employed income. This can dramatically reduce timing requirements.

Common examples:

• Labour-hire IT contractors working long-term contracts through a company structure
• Healthcare contractors working regular shifts under a contractor arrangement
• Professional services contractors with long-running engagements at the same client

Whether your situation qualifies depends on the lender, the contract terms, and how clearly your income is paid into your sole name. A broker familiar with contractor lending can advise on which lenders treat your specific arrangement most favourably.

Exception 5: Joint application with a PAYG partner

If you have a partner with PAYG income, that's often the simplest pathway forward, particularly when your self-employed income is new or limited.

In a joint application:

• The PAYG income anchors the application
• Your self-employed income can be added as supplementary, even if you don't have two years of tax returns yet
• The combined household income is used for serviceability
• Both names typically go on the loan and the title

This isn't always appropriate. If you want the home in your name only for personal or legal reasons, this option doesn't apply. But for couples buying together, it's often the fastest path when one of you is newly self-employed.

Exception 6: Significant deposit and asset position

If you have a substantial deposit (40 percent or more), some lenders are more flexible about trading history because the loan-to-value ratio is so low that their risk is minimal.

This isn't a universal rule and doesn't apply to all lenders. But it's worth knowing that a strong deposit can sometimes open doors that would otherwise stay closed.

When the two-year rule really does apply

There are still scenarios where the standard rule applies and the exceptions don't help. These include:

• First-time self-employment in a new industry with no related PAYG history
• Volatile income in the early years that doesn't show consistency
• Tax compliance issues (unlodged returns, ATO debt without a payment plan)
• Business restructures that have changed the income picture significantly
• Industries with high default rates that lenders are cautious about

In these cases, waiting until you have two clean years of trading is usually the right answer. The waiting time can be used productively: building deposit, cleaning up debts, improving credit, lodging returns on time.

How do I know which exception applies to me?

This is where the value of a broker comes in. The exceptions aren't published in a neat list that you can check yourself. Each lender has slightly different policies, and those policies shift regularly.

A broker who works with self-employed clients will know:

• Which lenders are accepting one-year assessments currently
• Which lenders offer the same-industry PAYG pathway and what evidence they need
• Which low-doc lenders fit specific business structures
• Which contractor arrangements get PAYG-like treatment with which lenders
• Recent changes to any of the above

Going direct to your bank gets you one bank's interpretation, which may or may not include the exceptions. A broker comparing 30 to 40 lenders can find the right fit, if one exists.

Frequently asked questions

Can I get a home loan if I just started my business?

In some cases, yes. The most common pathways are: same-industry transition from PAYG with six months or more of self-employment, low-doc loans using BAS or accountant declarations, contractor arrangements treated as PAYG-like, or joint application with a PAYG partner. A mortgage broker can identify which pathway suits your specific situation.

Will I get a worse rate if I apply with less than two years of self-employment?

Usually yes, but the difference varies. Standard one-year tax return assessments might come with slightly higher rates or deposit requirements. Low-doc loans typically come with rates 0.25 to 1 percent higher than standard. Same-industry PAYG transitions to a standard loan often come with no rate premium at all. Your broker can compare specific options for your situation.

Do I need a higher deposit to apply with less self-employed history?

Often yes. Lenders take on more risk when assessing income with less history, so they typically want a larger equity buffer. Standard self-employed applications often need 10 to 20 percent. Low-doc loans usually require 20 to 30 percent. Same-industry PAYG transitions sometimes accept lower deposits than typical low-doc applications.

Should I just wait until I have two years of tax returns?

Sometimes that's the right answer. If you're close to having two years and your income is strong, waiting can save you money on rates and reduce your deposit requirements. But if you're earlier in self-employment and want to buy now, the exceptions exist for good reason. A broker can help you weigh the cost of waiting versus the cost of applying now under an exception.

The two-year rule is a guideline, not a wall

The right question isn't do I qualify for a standard self-employed home loan? It's which lender, with which product, with which evidence, fits my specific situation?

The answer is usually more flexible than people think. The pathways I've described above are real and frequently used. Same-industry PAYG transitions in particular help thousands of newly self-employed Australians into homes each year, and most of them had no idea the pathway existed until a broker walked them through it.

If you've recently gone out on your own and want to know what's actually possible, the conversation is worth having now, not in 18 months.

If you want a private, free space to start understanding your financial position, that's exactly what Runa was built for. No sales pitch, no broker calls.

Sign up free at runaapp.com.au

If you'd like a confidential, no-obligation conversation about your specific timing, I'm here.

Book a confidential conversation at matildatreefinance.com.au

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You may also find these helpful

• Getting a home loan when you're self-employed: what lenders actually want to see
• Low-doc and alt-doc home loans in Australia: what they are and who they're for
• How long do I need to be self-employed before I can get a home loan?
• Add-backs explained: how lenders actually calculate self-employed income

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Sources and references

This post is primarily based on Rielle's professional experience as a mortgage broker. The following sources are relevant to topics covered:

• ASIC Moneysmart on home loans: moneysmart.gov.au/home-loans

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This article is general information only and does not constitute financial, legal or tax advice. Please speak to a licensed financial adviser, solicitor and your superannuation fund about your specific circumstances.

Rielle Berglund is a mortgage broker and the founder of Matilda Tree Finance. She works with Australian women navigating major financial transitions, including separation, divorce, terminal illness and bereavement. She is also the creator of Runa, a free financial literacy app built for exactly this stage of life.

Book a confidential conversation with Rielle at matildatreefinance.com.au or start with Runa, free, at runaapp.com.au.