Being your own boss comes with plenty of perks—flexibility, independence, and the ability to work in pajamas (if that’s your thing). But when it comes to getting a mortgage, freelancers often face a tougher road than their salaried counterparts. Traditional lenders prefer steady, predictable incomes, and that’s not always how freelance life works.
The good news? Getting approved for a home loan as a freelancer isn’t impossible—it just requires some extra preparation, strategy, and a little bit of patience. Let’s break down how you can boost your chances of mortgage approval and finally secure that dream home.
Why Is It Harder for Freelancers to Get a Mortgage?
Lenders love stability. When they assess mortgage applications, they want to see proof that you have a reliable income and can consistently meet your repayment obligations. As a freelancer, your income might fluctuate from month to month, which makes some lenders nervous.
The biggest hurdles freelancers face include:
- Inconsistent income – Unlike a salaried employee with a fixed paycheck, freelancers often deal with fluctuating earnings.
- Higher scrutiny of financial records – Lenders will want to see at least two years of tax returns, bank statements, and profit-and-loss reports.
- Limited proof of job security – Without an employment contract, lenders see self-employed borrowers as higher risk.
Despite these challenges, many freelancers successfully secure home loans by taking the right steps.
How to Improve Your Chances of Mortgage Approval
Show a Stable Income History
Lenders typically want to see at least two years’ worth of steady income. If you can demonstrate a consistent or growing income trend through your tax returns and bank statements, you’ll have a much stronger case.
If you’re new to freelancing and don’t have two years of records yet, some lenders may accept one year’s worth, especially if you were in the same industry as an employee before going solo.
Keep Your Financial Records in Order
Having well-organized financial records is crucial. This includes:
- Up-to-date tax returns
- Business activity statements (BAS) if registered for GST
- Profit and loss statements
- Personal and business bank statements
If your bookkeeping is a mess, consider working with an accountant to tidy things up before applying.
Minimise Your Business Expenses
Freelancers often claim business deductions to reduce taxable income, which is great for tax time but can hurt mortgage applications. If your declared income looks too low, lenders may doubt your ability to repay a loan. Striking a balance between deductions and a strong income on paper is key.
Save for a Larger Deposit
A bigger deposit reduces a lender’s risk. If you can put down 20% or more, you’ll have a better chance of approval and may avoid paying Lender’s Mortgage Insurance (LMI), which can be an extra cost for borrowers with smaller deposits.
Reduce Your Debt and Improve Your Credit Score
Freelancers often use business credit cards or lines of credit, but too much debt can negatively impact your borrowing power. Paying off outstanding debts and maintaining a strong credit score will make you more attractive to lenders.
Consider a Specialist Lender
If traditional banks are giving you the cold shoulder, look into lenders that specialize in self-employed or freelancer mortgages. These lenders understand the nature of freelance income and may offer more flexible assessment criteria.
Provide Additional Documentation
Since freelancers don’t have payslips, alternative income verification methods can help, including:
- Signed contracts with clients
- Invoices and payment records
- A letter from your accountant confirming your income stability
The more proof you can provide that your income is sustainable, the better.
Show Consistent Savings Habits
Lenders like to see evidence of responsible money management. If you can demonstrate a habit of saving and maintaining a financial buffer, you’ll strengthen your application.
Opt for a Low-Doc Loan if Necessary
If you don’t meet the strict income documentation requirements of mainstream lenders, a low-documentation (low-doc) loan might be an option. These loans allow self-employed borrowers to provide alternative proof of income, though they often come with higher interest rates.
Turning the "No" into a "Yes"
Getting a mortgage as a freelancer might take a bit more effort, but it’s far from impossible. The key is preparation—having your financial records in order, demonstrating stable earnings, and choosing the right lender for your situation.
The freelance life is all about independence and carving your own path. With the right financial strategies, you can apply that same mindset to homeownership and turn the dream of buying a home into reality. Stay proactive, stay organized, and soon enough, you’ll have the keys to your very own home.
FAQs
Can I get a mortgage with less than two years of freelancing experience?
Yes, but it may be more challenging. Some lenders will consider one year of self-employment if you can show a stable income and have experience in the same industry before going freelance.
What credit score do I need to get approved as a freelancer?
Most lenders prefer a credit score above 600, but the higher, the better. A strong credit history shows you’re financially responsible, which can help compensate for the perceived risk of freelancing.
Can I use freelance income from multiple sources to qualify for a loan?
Absolutely! Many freelancers have multiple income streams. Just be prepared to provide documentation, such as contracts, invoices, and bank statements, to prove your total earnings.
Are there mortgage lenders that specialize in freelancers?
Yes. Some lenders cater specifically to self-employed borrowers and offer more flexible criteria. Working with a mortgage broker can help you find the best options.
Do freelancers have to pay higher interest rates on home loans?
Not necessarily. While some low-doc or alternative verification loans may have slightly higher rates, many freelancers secure standard home loan rates by providing strong financial documentation and a solid deposit.
For more tips and assistance with freelancer mortgages, visit Wealthy You and explore tailored loan options designed for self-employed individuals.
If you have any questions or need further assistance, please contact us.
info@wealthyyou.com.au
☎️ (02) 7900 3288
Related Stories:
