Written and reviewed by Yatin Kainth, Financial Adviser FSP1007497 · Last reviewed 25 September 2026
Short answer: yes, you can get a home loan in New Zealand when you’re self-employed. If your income is fully documented, a main bank will usually offer you the same rates as a salaried borrower. What changes is the evidence. Most main banks start from two years of finalised financial statements, then add back certain expenses to get to the income they’ll lend on. If you don’t have two years, or your accounts undersell the business, some lenders will work from one year. Non-bank lenders also offer low doc loans, now called alt doc.
I’m self-employed myself, so I know what it’s like to walk into a system built around payslips. This guide is the detail behind how lenders read your numbers. If you’d rather I just looked at your figures, that’s what my self-employed home loan service is for.
How New Zealand banks assess self-employed income
A salaried applicant hands over three payslips and an employment contract. The bank has a number in about four minutes, and it trusts that number, because an employer is contractually obliged to keep paying it.
You don’t have that. You have a business. So the bank wants to know how confident it can be that the money keeps coming for thirty years. Answering that takes a lot more paperwork than answering “how much do you earn?”.
So banks look backwards. The main banks generally start from the same place: two full financial years showing income that’s steady or rising. The reason is simple. One strong year could be a single contract that never comes back.
What they do with those two years varies. Many average them. Some use whichever is lower, your latest year or the two-year average, which hurts if last year dipped. A few will use the latest year on its own if it’s clearly stronger and your accountant can explain why. Banks also check your tax is up to date. Arrears or late payments to IRD worry them, so sort those out before you apply, or at least get any arrangement with IRD documented.
Why your assessed income is lower than your real income
This is where most people come unstuck.
Say you’re a builder trading through a company. You pay yourself a modest shareholder salary and leave some profit in the business. You also claim the ute, depreciation on your tools, and part of the house as an office. Your accountant does a tidy job and your taxable income lands at $85,000.
You know the business made more than that. You can see it in the account. But unless someone builds the case properly, the lender uses something close to $85,000. As a result, the approval comes back smaller than it should.
In my experience, this gap is the biggest reason self-employed applications get declined or come up short. The business is usually fine. The way it’s been presented to the lender usually isn’t.
These are the situations I see most often behind a bank saying no:
- Income dipped in one year, and the bank used the lower figure.
- The business is growing, so expenses ran ahead of income for a while.
- The business is new and still building up its income.
- Income has jumped, but there aren’t two years of accounts that show it yet.
- Your accountant has, entirely within the rules, set things up to keep taxable income low.
None of those mean you can’t borrow. They mean the application needs to go to the right lender and be presented properly.
Two years of finalised financial statements is the usual starting point at the main banks. It’s a credit policy setting, not a legal requirement, which is why exceptions exist.
Add-backs explained: the expenses lenders will add to your income
An add-back is an expense that a lender adds back to your profit. That’s because it isn’t real cash leaving the business, or it won’t happen again. Get them right and your assessed income can go up a lot without anything in your business changing.
| Add-back | Usually accepted | Why it counts |
|---|---|---|
| Depreciation | Yes, at most lenders | An accounting entry, not cash out the door |
| Home office costs | Usually | You’d pay for the house anyway |
| One-off equipment purchase | Case by case | Won’t repeat next year |
| Interest on business debt | Varies | Depends how the debt is treated in the application |
| Shareholder salary | Yes | It’s your income, just paid a different way |
| Retained profits in the company | Varies widely | Some lenders take all of it, some none |
| Non-recurring legal or setup costs | Case by case | Needs a clear explanation |
Two things about add-backs that people don’t hear often enough.
First, they vary by lender, and not by a little. One bank might count all your retained profit, while another counts none. That one difference can move your borrowing by six figures. Picking where a self-employed application goes is most of my job.
Second, if the lender can’t see an add-back, you don’t get it. Send a one-page summary instead of full financial statements and the depreciation line isn’t there to add back. I’ve seen approvals turn on nothing more than sending the complete accounts.
Documents you need for a self-employed mortgage in NZ
Get these together before you apply anywhere:
- Two years of full financial statements, including profit and loss and balance sheet, not a summary page
- Matching IRD income summaries or notices of assessment for the same years
- Confirmation your tax is up to date, or the paperwork for any IRD arrangement
- Six months of personal bank statements
- Six months of business bank statements
- Recent GST returns if you’re registered
- Any long-term contracts you’re working under
- A letter from your accountant confirming your income and that the business is trading normally
- Proof of your deposit and where it came from
- Photo ID and proof of address
Not sure what your accounts say about your borrowing power?
Send them through and I’ll tell you the number before you apply anywhere.
When one year of financials is enough
Your financials are older than you think
Most New Zealand businesses have a 31 March balance date. If you file through a tax agent with an extension, you can file that return as late as 31 March the next year (IRD, extension of time arrangements).
Put those two together and the maths gets awkward. A year that ended on 31 March can still be unfinalised nearly twelve months later. So a lender assessing you in early autumn may be reading accounts for a trading year that finished two years ago.
That matters a lot if you’re growing, because your best year is invisible. So ask your accountant to finalise early. It’s one of the most useful things you can do, and it only costs a phone call.
Getting approved with one year of accounts
The two-year default bends more often than people expect. A shorter track record can work when:
- You did the same work as a PAYE employee right before, with no gap. Lenders can treat that as continuous experience rather than a brand new venture.
- You’re contracting on a long-term arrangement with an established client and can show it.
- You have one strong year plus a partial second year, backed by GST returns, business bank statements and a letter from your accountant.
- Your deposit is bigger, which changes the risk picture even though it doesn’t change the income figure.
If none of those fit, that’s usually where a low doc or alt doc loan comes in.
Low doc and alt doc home loans for self-employed borrowers
A low doc home loan, now usually called alt doc, is a mortgage from a non-bank lender. It checks your income with other evidence instead of two years of accounts. That might be GST returns, business bank statements or an accountant’s letter. The main banks generally don’t offer low doc loans. That’s why many self-employed people never hear about them. They ask their own bank, get told no, and stop there.
Most of the industry now says “alt doc” rather than “low doc”. Responsible lending rules mean nobody gets to skip the affordability test. The lender just checks it using different documents.
Who alt doc lending suits
It suits self-employed people, contractors and seasonal workers. Their income is real, but it doesn’t show up neatly in two years of accounts. What it can offer:
- Simpler paperwork and another way to show your income
- No two-year trading requirement. Some alt doc lenders will consider a much shorter self-employed history
- With some lenders, the option to release equity for business or personal purposes, where the numbers support it
The trade-off
The rate is usually higher. Sometimes that’s a fair price for buying now rather than in eighteen months, and sometimes it isn’t. I’d always run both sets of numbers properly before deciding. Plenty of my clients start on an alt doc loan and refinance to a main bank once their second year of accounts is done.
For the wider picture on this part of the market, I’ve written about non-bank lenders and when they make sense. If there’s a credit issue in the mix as well as self-employment, see bad credit options.
Alt doc still means proving you can afford it. You have to show the lender you can meet the repayments. You just show it with different documents.
What actually caps your borrowing
Being self-employed changes your assessed income. The rules that income then runs into are the same for everyone.
Three limits cap your borrowing, and whichever bites first wins. The first is your deposit and loan-to-value ratio. The second is the Reserve Bank’s debt-to-income limits. The third is the lender’s affordability test, run at a rate well above the advertised one.
The debt-to-income restrictions are measured against gross income. Since 1 July 2024, banks can write only 20% of new owner-occupier lending above six times income. For investors, it’s 20% above seven times. Being self-employed doesn’t affect your deposit. It does feed into the other two limits. That’s why a bigger deposit won’t fix a low assessed income. The deposit and the income limits are separate tests.
Lenders also compare the living costs you declare with their own model of household spending. If your figure looks low for your household, they use theirs. Personal debts count too, including unused credit card limits. See how credit cards, Afterpay and car loans affect what you can borrow.
For a rough starting figure, try the mortgage calculators or read how much can I borrow. Then treat the result as a ceiling until your add-backs have been worked through.
Applying at three banks to see who says yes leaves three credit enquiries on your file. That can look like you’re in trouble. I’d rather send one properly prepared application to the right lender.
Related: How much deposit do you need in NZ and Why home loan applications get declined
Frequently asked questions
Yes, with some lenders, though not all. Your case is strongest if you did the same work as an employee right before. An ongoing contract with an established client also helps. To fill the gap, you’ll need GST returns, business bank statements and usually an accountant’s letter.
Most start from your taxable profit over the last two years. They either average it, or use the lower of the latest year and the average. Then they add back expenses that aren’t real cash costs, such as depreciation and home office claims. That figure is what goes through their affordability test, and it’s usually lower than the money you actually see.
Not from the main banks, which generally don’t offer them. Some non-bank lenders offer low doc or alt doc loans that assess your income on GST returns, business bank statements or an accountant’s letter. The rate is usually higher and you still have to pass an affordability test. Many borrowers refinance to a main bank once they have two years of accounts.
No. A bigger deposit improves your loan-to-value ratio and often your rate. But lenders work out affordability and DTI limits from income, not equity. An income shortfall stays a shortfall.
You need two years of full financial statements and matching IRD income summaries. You also need six months of bank statements, recent GST returns, any contracts and an accountant’s letter. Send full statements rather than summaries, because a lender can’t add back what it can’t see.
Yes, as long as you meet the Kāinga Ora income caps and other eligibility criteria, plus the lender’s own criteria. Being self-employed doesn’t rule you out, but you’ll still need to evidence your income the usual way. My first home buyers guide covers the rest.
It makes it more complicated rather than harder. Some lenders are comfortable with multi-entity structures and others really aren’t. Picking the right one at the start saves a lot of grief later.
If your income is growing, almost always, because fresher accounts mean a higher assessed income. If your latest year is weaker than the one before, the opposite may be true, so talk it through before anything gets filed.
Find out what you can actually borrow
I work with contractors, tradies and business owners every week. Send me your accounts. I’ll tell you roughly what you can borrow, which lenders suit you, and what to fix first.
This article is general information only and is not personalised financial advice. Lending criteria, lender policies and Reserve Bank settings change regularly. Speak with a mortgage adviser about your own situation. Our Disclosure Statement sets out our services, fees and how we are paid. It’s free on request.