If you're self-employed and thinking about buying a home, there's a good chance you've already been told it's complicated.
Maybe someone mentioned the two-year rule. Maybe your accountant looked uncertain. Maybe you've just assumed it's too hard.
I want you to understand what's actually possible before you talk yourself out of it.
Yes, you can get a mortgage if you're self-employed in New Zealand. However, banks generally assess your income differently from someone earning a regular PAYE salary. They look at your business's financial performance, the sustainability of its profits, your existing debts and how long you've been operating.
Twenty years ago, I was a first-home buyer sitting across from an adviser who didn't explain the process properly. That experience is part of why I take the time to explain things clearly now — including the situations that most people find confusing or assume are too complicated to navigate.
And here's something that might surprise you.
You could be taking $100,000 a year out of your business, yet the bank might recognise considerably less income when assessing your mortgage.
On the other hand, you might only pay yourself a $70,000 salary, but the bank could potentially recognise additional income from your company's profits.
I've spent more than 20 years in financial services, including nine years assessing home loan applications for a major New Zealand bank.
One of the biggest misconceptions I encounter with self-employed clients is that they assume the money they take out of their business is the income the bank will use.
That's not necessarily how it works.
Let me explain how lenders assess self-employed income, where I've seen clients run into difficulties, and what you can do to put yourself in a stronger position before applying for a mortgage.
1. How Do NZ Banks Calculate Self-Employed Income for a Mortgage?
Banks generally start with the net profit shown in your business's financial statements, rather than simply using its turnover or the money you withdraw.
Depending on the lender and your circumstances, certain business expenses may then be added back when calculating the income available for mortgage servicing.
These can include:
Depreciation
Home office expenses
Interest paid on business borrowing
However, not every expense qualifies, and different lenders can apply different rules. Business debts and their repayments must also be considered.
Let's look at a simplified example.
Business turnover
$350,000
Business expenses
$250,000
Net profit
$100,000
Potentially allowable add-backs
$15,000
Indicative adjusted profit
$115,000
Illustrative example only. The amount a lender recognises will depend on its assessment policy, the nature of the expenses and the applicant's overall circumstances.
The business might have turnover of $350,000, but that doesn't mean the owner earns $350,000.
Likewise, the owner might have withdrawn $120,000 during the year, but that doesn't automatically mean the bank will use $120,000 when assessing their mortgage.
What matters is the income the business can demonstrate it is capable of generating sustainably.
For a broader explanation of how lenders calculate borrowing capacity, read How Much Can I Borrow for a Home Loan in New Zealand?
And that brings me to a real client experience.
2. Real Client Experience: When Director Drawings Didn't Count as Income
I recently worked with clients who wanted to purchase a home.
One of the applicants operated through a limited company.
The director had been taking regular drawings from the business and understandably regarded these payments as money available to support their household.
But there was an important detail.
The company owed the director a considerable amount of money.
The director's withdrawals were effectively repayments of money previously advanced to the company.
In other words, the payments were not necessarily income generated from the company's current trading profits.
There was another complication.
The business was still in its start-up phase. It was beginning to grow its profits, but the financial statements didn't yet demonstrate sufficient sustainable income to support the mortgage amount the clients wanted.
I had to explain that the bank couldn't simply use the director's drawings as evidence of ongoing income.
My recommendation was to concentrate on improving the profitability of the business.
As those stronger profits are reflected in future financial statements, we can reassess whether a higher home loan amount may be achievable.
It wasn't the immediate outcome the clients were hoping for.
But recommending an application the business's financial results couldn't support wouldn't have helped them either.
Sometimes the best mortgage advice is to explain what needs to change before a client applies.
Why director drawings can be misleading
A director may receive money from a company in several ways, including salary, dividends or repayments of amounts the company owes them.
Those payments do not all have the same accounting, tax or mortgage-lending treatment.
If the company is repaying a shareholder loan, that repayment isn't automatically new income earned by the director.
This distinction is important because a mortgage is generally a long-term commitment.
The lender wants to establish whether the business can continue generating sufficient income to support the household's future mortgage repayments.
For more information about how shareholder loan accounts operate, see Inland Revenue's guidance on shareholder current accounts .
3. What If You Pay Yourself a Salary Through Your Company?
Here's the opposite situation, and it's one that sometimes surprises clients for the right reasons.
A company director might tell me:
"I only pay myself $80,000 a year, so I suppose that's all the bank will consider."
Not necessarily.
When a business operates through a limited company, a lender may consider both the director's salary and the company's additional sustainable net profit.
For example:
Director's PAYE salary
$80,000
Additional company net profit, after that salary expense
$50,000
Combined amount potentially available for consideration
$130,000
Hypothetical example. This is not an automatic assessment figure or loan approval.
The bank may also consider eligible add-backs.
Of course, the lender must be satisfied that the profit is sustainable, that the business can meet its ongoing obligations and that the income is genuinely available to support the borrower.
It's also essential to avoid counting the same income twice.
But the key point is that your PAYE salary may not tell the whole story of what a lender could recognise.
This is one reason I prefer to review both the applicant's personal income and the underlying business financial statements before calculating potential borrowing capacity.
What about sole traders?
If you're a sole trader, lenders will generally examine your business profit and tax information, including your individual income tax return, while assessing whether the business is sustainable.
In New Zealand, sole traders generally file an IR3 individual income tax return , whereas companies file an IR4 company income tax return .
The business structure affects how the financial information is presented, but the underlying question remains similar:
Can this business reliably generate enough income to support the mortgage?
4. Do Self-Employed Borrowers in NZ Need Two Years of Financial Statements?
Most mainstream banks generally want two years of financial statements from self-employed borrowers. However, some may consider one year's results in suitable circumstances.
This is consistent with published lender guidance. For example, BNZ lists the last two annual business financial statements among its income evidence requirements for self-employed applicants.
From my experience, the flexibility available depends partly on the nature of the business.
Consider someone who has recently established an accounting practice, IT consultancy or financial advice business.
These types of businesses may have relatively low fixed overheads and might not require substantial capital investment.
The person's previous experience in the industry, the stability of their client base and their operating costs can all help a lender understand the business risk.
That doesn't mean one year's accounts will automatically be accepted.
It means there's value in investigating which lenders might be prepared to consider the application before assuming that everybody must wait two years.
Can you get a mortgage with only six months of trading history?
In some circumstances, a non-bank lender may consider an application using as little as six months of GST returns, supported by corresponding business bank statements.
But there's an important trade-off.
Greater lending flexibility can come with higher interest rates and potentially different fees and loan conditions.
I wouldn't recommend taking on a more expensive mortgage without first investigating whether a mainstream bank could consider the application.
Sometimes a non-bank loan provides a useful option. Other times, waiting until stronger financial statements are available may be the better decision.
The important thing is to understand the cost and risk of each option.
5. Will a NZ Bank Average Your Last Two Years of Business Profits When Assessing a Self-Employed Mortgage?
This is where I've seen the choice of lender make a meaningful difference.
Suppose your business has performed as follows:
Year 1
$50,000
Year 2
$120,000
Two-year average
$85,000
In my experience, many banks will commonly start by averaging the last two years' profits, subject to their income assessment rules.
In this example, that's $85,000 rather than the latest year's $120,000.
But what if the improvement isn't temporary?
What if the business has secured long-term contracts, increased its customer base or made lasting changes that have improved profitability?
With the right supporting evidence, some lenders may consider using the latest year's profit rather than the two-year average.
That could make a significant difference to borrowing capacity.
However, I'd need to provide a convincing explanation of why the improvement should continue.
What evidence helps demonstrate sustainable business profits?
Based on my experience, some of the most useful supporting information includes:
An explanation from your accountant
I want to understand why profitability has improved and whether the changes are likely to continue.
Simply showing that the latest year's profit is higher isn't always enough.
Long-term contracts
If the business has secured contracts providing future work or recurring revenue, these may strengthen the application.
The nature of the industry
A professional services business with low overheads may have a different financial risk profile from a business that requires expensive equipment, substantial inventory or ongoing capital investment.
The cost structure of the business
Low fixed operating costs can make a business more resilient when revenue fluctuates.
The objective isn't to convince the bank to ignore the previous year's results.
It's to give the lender sufficient evidence to consider whether the latest results better reflect the business's sustainable earning capacity.
That's an important difference.
6. Can Minimising Tax Reduce Your Mortgage Borrowing Capacity in NZ?
Yes. Legitimately reducing your business's taxable profit can also reduce the income a bank is prepared to recognise for mortgage servicing.
This is something I've encountered repeatedly.
Business owners understandably want to operate as tax-efficiently as possible.
They work with their accountants to claim legitimate business expenses and deductions.
There's nothing wrong with that.
But here's the trade-off.
If those deductions reduce the profit shown in the financial statements, the bank may also assess a lower level of income, except where it allows particular expenses to be added back.
You can't always have the maximum possible tax efficiency and maximum mortgage borrowing capacity at the same time.
That's why I encourage self-employed clients to discuss their property plans with their accountants well before applying.
Real Client Experience: From Mortgage Planning to a Lifestyle Property
I worked with clients who wanted to purchase a lifestyle property.
Their business finances were an important part of the mortgage assessment.
I recommended that they speak with their accountant about their homeownership plans and the financial information that would be required to support the application.
The important consideration was how to demonstrate the business's genuine income and profitability in a way that the lender could properly assess.
Those clients are now the proud owners of their lifestyle property.
It's a result I'm pleased about, because it reinforces the importance of planning ahead.
I don't believe mortgage advice and accounting advice should operate in isolation when a business owner is considering a significant property purchase.
Your accountant understands your business and tax position.
Your mortgage adviser understands how different lenders assess borrowing capacity.
When both understand what you're trying to achieve, you're in a much better position to make informed decisions.
Should you stop claiming legitimate business expenses?
No. That's not what I'm suggesting.
Business financial statements and tax returns must accurately reflect the business's activities, and all tax and accounting treatment must comply with the applicable requirements.
The objective isn't to inflate income or manipulate the accounts.
It's to understand in advance how legitimate accounting and business decisions may affect your mortgage options.
And sometimes that means accepting that a higher reported taxable profit can result in more tax being payable.
Whether that trade-off makes sense is something you should discuss with your accountant, taking your wider financial position into account.
7. Why Business Debt Can Reduce Your Personal Mortgage Borrowing Capacity in NZ
One comment I've heard from self-employed clients is:
"What happens in my business has nothing to do with the bank when I'm applying for a personal mortgage."
Unfortunately, that's not necessarily true.
When you rely on business income to service your home loan, the lender will generally want to understand the financial commitments of the business as well.
And business debt can have a particularly significant impact on mortgage servicing calculations.
Depending on the lender, business borrowing may be assessed using repayment assumptions that are more conservative than the repayments you're currently making.
The lender may want to allow for interest-rate movements, repayment risks or the underlying nature of the facility.
This means taking on additional debt for equipment, vehicles or other business purposes could affect your home loan borrowing capacity more than you expect.
Even if business interest is treated as an allowable add-back in an income calculation, the underlying debt doesn't simply disappear from the lender's assessment.
My advice?
If you're planning to buy a home, don't take on unnecessary debt unless there's a sound business reason to do so.
I'm not suggesting you should stop investing in a business that needs to grow.
But if you're considering borrowing $50,000 for business equipment and purchasing a house within the next year, I'd encourage you to understand the potential impact on your mortgage borrowing capacity before committing to that borrowing.
For a broader explanation of how existing debt affects home loans, read my article on whether to pay off debt or save for a house deposit .
8. Should a Self-Employed Borrower in NZ Apply for a Mortgage Now or Wait for Better Financial Statements?
This is one of the most important decisions I help self-employed clients make.
Imagine your business has become considerably more profitable during the current financial year.
However, your latest completed accounts still reflect a weaker year.
You could apply now, knowing that the lender may recognise less income.
Or you could wait until the stronger financial year is completed and the accounts are available.
Which is the better option?
I prefer to calculate both scenarios and show clients the difference.
First, we establish potential borrowing capacity using the financial information currently available.
Then we calculate what the borrowing amount might look like if improved profits are supported by the next set of financial statements.
That gives clients an indication of what they could potentially gain by waiting.
But there's a risk I always explain.
Better business profits don't guarantee a higher mortgage approval
Banks assess mortgage affordability using their own servicing criteria, including assessment interest rates that may be higher than the actual mortgage interest rate offered.
These assessment rates can change.
If the bank increases its assessment interest rate, the calculated repayment on the proposed mortgage rises, even if the advertised loan rate or the applicant's circumstances haven't changed.
That can reduce potential borrowing capacity.
So you might wait six months, produce stronger financial statements and still discover that the bank is prepared to lend less than you expected because its assessment settings have changed.
This is why I never promise that waiting will automatically result in a higher mortgage approval.
Instead, I explain what the numbers suggest under current lending settings, what might improve and what could change.
For a wider explanation of the factors affecting your borrowing amount, see How Much Can I Borrow for a Home Loan in New Zealand?
9. What Documents Does a Self-Employed Borrower Need for a Mortgage in NZ?
The precise requirements depend on the lender, business structure and complexity of the application.
Typically, I'd expect to review some combination of the following:
The most recent two years of business financial statements, where available
Relevant personal and company income tax returns
Recent business bank statements
GST returns, particularly where shorter trading history is being considered
Information about business debts and repayment commitments
Details of salary, drawings, dividends and shareholder loan accounts, where applicable
An accountant's explanation of unusual results or changes in profitability
Long-term contracts or other supporting evidence where future income sustainability needs to be demonstrated
The bank will also require the usual personal mortgage application information, including deposit evidence, living expenses and personal debts.
For example, ANZ's home loan application guidance confirms that self-employed applicants need financial statements, preferably prepared through their accountant.
I prefer to understand the financial statements before submitting the application, rather than discovering potential issues after a lender starts asking questions.
This is especially important where the company has shareholder loans, inconsistent profits or significant business borrowing.
If you're unfamiliar with the application process, my guide to home loan pre-approval in New Zealand explains what approval means and why the bank may still impose conditions.
10. My Advice if You're Self-Employed and Want to Buy a Home Within the Next 12–24 Months
If you're thinking about buying a property within the next year or two, there are three things I'd encourage you to do.
First, avoid unnecessary debt
Before taking out business finance, understand how the new commitment might affect your personal mortgage application.
A business investment may be worthwhile, but you should know the potential consequences.
Second, speak with your accountant early
Tell your accountant you're planning to buy a property.
Discuss how the business's current financial performance, legitimate deductions and future profitability may affect the income you can demonstrate to a lender.
Don't leave this conversation until after the financial statements have been finalised.
Third, find out what you could borrow before you start house hunting
A self-employed mortgage application requires more than looking at the salary you pay yourself.
I want to understand your business structure, profits, allowable add-backs, debts and whether a lender may be prepared to consider stronger recent results.
Then we can determine whether you're in a position to apply now or whether there's a better strategy.
The answer isn't always to wait.
And it isn't always to apply immediately.
The answer should come from your numbers.
Frequently Asked Questions About Self-Employed Mortgages in NZ
Can I get a mortgage if I've been self-employed for less than two years?
Possibly. While most mainstream banks generally prefer two years of financial statements, some may consider one year's accounts depending on the industry, trading history and strength of the application. Non-bank lenders may offer options with shorter trading histories, although costs can be higher.
Do banks use gross turnover or net profit for self-employed mortgages in NZ?
Banks generally focus on the business's net profit and sustainable earnings rather than gross turnover. They may consider certain allowable expense add-backs, depending on their assessment criteria.
Do director drawings count as income for a mortgage in NZ?
Not automatically. The lender needs to understand what the drawings represent. If they're repayments of money the company owes the director, they may not demonstrate sustainable ongoing income.
Can a NZ bank use my salary and company profits when assessing a self-employed mortgage?
Potentially, yes. A bank may consider a director's salary alongside additional sustainable company profits, subject to its policy and without double-counting income. The company must also be able to meet its own obligations.
What happens if my business made a loss last year?
A loss can make mortgage approval more challenging, but it doesn't automatically rule out every option. The lender will want to understand why the loss occurred, whether it was exceptional and what the business's current financial position looks like. Different lenders may assess the circumstances differently.
Will the bank use my latest year's profit if it has increased significantly?
Some lenders may consider using the latest year's results where there's convincing evidence that the higher profit is sustainable. Others may average multiple years or take a more conservative approach.
Can I get a self-employed mortgage in NZ using GST returns?
Some non-bank lenders may consider GST returns and corresponding bank statements when there isn't sufficient annual financial history. This can provide flexibility, but you should carefully compare the interest rates, fees and lending conditions.
Does claiming business expenses reduce how much I can borrow for a mortgage?
It can. Legitimate business expenses may reduce net profit, although certain expenses may qualify for lender-specific add-backs. Your accountant can help explain the tax implications, while your mortgage adviser can assess the potential borrowing impact.
Should I wait until my next financial year is completed before applying for a mortgage?
It depends on how much your borrowing capacity could improve and the risk of lending criteria changing while you wait. I generally recommend comparing both scenarios before making a decision.
The Bottom Line: Your Business Profits Tell a Bigger Story Than Your Drawings
If there's one thing I want self-employed borrowers to understand, it's this:
The amount of money you withdraw from your business isn't necessarily the amount a bank will recognise as mortgage income.
Sometimes clients overestimate what they can borrow because they're relying on drawings that aren't supported by sustainable profits.
Other times, they underestimate their borrowing capacity because they assume the bank will only look at their PAYE salary, overlooking the additional company profits that may be considered.
I've seen both situations.
The important thing is to understand which one applies to you before making decisions about buying a home.
You may already be in a stronger position than you think.
Or there may be some work to do first.
Either way, I'd rather give you a realistic assessment and a clear plan than let you spend months working towards a mortgage amount your financial statements can't currently support.
I believe that people who take the time to understand their real numbers — rather than assuming the worst or the best — are the ones who make genuinely confident decisions. That's who I'm here for.
Self-Employed and Unsure How Much You Could Borrow?
If you're running a business and thinking about buying a home, let's look at your financial position before you make any major decisions.
I'll help you understand how lenders may assess your business income, whether your current financial statements support the mortgage you're looking for, and what your next steps could be.
It's a safe place to start — no judgment, no pressure, just clarity on where you stand and what to do next.
If you're a first-home buyer, you can also start with Lookahead's free 3 minute mortgage quiz , which helps me understand your circumstances before we meet.
Andre Botha is a Mortgage Adviser with Lookahead, trading under ASA Investments Limited. This article provides general information based on professional experience and publicly available guidance. Lending criteria, assessment rates and individual circumstances vary. Tax decisions should be discussed with a qualified accountant.