If you work on the tools, getting a home loan can feel harder than it should. Home loans for tradies depend heavily on how you earn your money, because lenders treat a PAYG electrician, an ABN subcontractor and a builder running their own company quite differently. In this guide, I explain how lenders look at each situation, which documents they usually ask for, and why the order of your ute loan and home loan matters.
Here in the Sutherland Shire, trades are a big part of the local economy. In fact, you only need to drive through the industrial areas of Taren Point and Caringbah, or Kirrawee, to see how many electricians, plumbers, carpenters, tilers and builders work out of the Shire every day. As a Sutherland Shire mortgage broker based in Bangor, I work with many of them, and I also help tradies across Australia by phone and video.
Why Lenders Look at Tradie Home Loans Differently
Most tradies don’t earn a simple, flat salary. Instead, income often moves with the season, the building cycle and how much overtime is on offer. Lenders want to see that your income is stable and likely to continue, so they look closely at where it comes from. As a result, two tradies on similar money can end up with very different borrowing capacities, depending on their pay structure and the lender they choose.
PAYG Employed Tradies
If you work for a builder or contractor and receive payslips, lenders generally treat you as a PAYG employee. Your base wage is the easy part. However, overtime, allowances and site allowances are where lenders differ. Some lenders count most or all of your regular overtime, while others only count a portion of it or want to see a longer history first. Similarly, tool, travel and site allowances may count in full, in part or not at all, depending on the lender’s policy.
That is why it pays to understand how lenders calculate your income before you apply. It also explains why different banks give you different borrowing capacities for the same payslips. So, if overtime makes up a big share of your pay, choosing the right lender can make a real difference.
ABN Subcontractors
Many tradies work on an ABN for one or two builders, often at an hourly or daily rate. Some lenders treat this like any other self-employment and want tax returns, while others will also consider contracts or invoices that show steady work for the same company. In practice, the right approach depends on how long you have held your ABN and how consistent your work has been.
Sole Traders and Company Owners
If you run your own trade business as a sole trader, or through a company or trust, lenders will usually assess you under their self-employed home loans policy. They look at the business financials as well as your personal income, and they want to see that the business trades steadily. Company owners may also need to provide company tax returns and financial statements, because the lender needs to see the full picture.
How Long Do You Need an ABN?
There is no single answer, because each lender sets its own rules. Many lenders prefer two years of self-employment history, since that gives them two tax returns to compare. Even so, some lenders will consider a shorter ABN history, particularly if you worked in the same trade as an employee before you went out on your own. For example, many lenders see a plumber who spent years on a builder’s payroll and then started subcontracting in the same role as lower risk than someone who changed careers entirely.
If you have recently moved to an ABN, talk to a broker before you apply. That way, you can find out which lenders suit your timeline, rather than collecting a decline from the wrong one.
The Documents Lenders Usually Ask For
The paperwork for home loans for tradies depends on your situation and the lender. Generally, though, you can expect requests for some of the following:
- Recent payslips and possibly an employment letter (for PAYG tradies)
- Personal tax returns and ATO notices of assessment, often for the last two years
- Business tax returns and financial statements (for company or trust structures)
- Business Activity Statements (BAS) for recent quarters
- An accountant’s letter confirming your income or business position
- Bank statements showing income deposits, savings and spending
Meanwhile, if your tax returns are behind or don’t reflect your current income, an alt doc (or low doc) loan may be an option. These loans use alternative evidence, such as BAS, business bank statements or an accountant’s declaration, instead of full tax returns. However, they usually come with higher rates and fewer lender choices, and you will generally need a larger deposit. Our guide to self-employed home loans explains low doc and alt doc options in more detail.
Tax Deductions, Add-Backs and Your Borrowing Power
Tradies often work hard with their accountant to reduce tax, and that makes sense. However, lenders generally assess your taxable income, so every deduction that lowers your tax bill can also lower the income a lender uses. For instance, if your business had a busy year but your tax return shows a modest net profit, your borrowing capacity will reflect the lower figure. This is one of the most common surprises with home loans for tradies who run their own business.
The good news is that many lenders allow add-backs. These are expenses that reduce your taxable profit but don’t affect your real ability to repay a loan. Common examples include:
- Depreciation on tools, vehicles and equipment
- Interest on business loans that you are paying out as part of the new loan
- One-off expenses that won’t happen again
- Extra super contributions above the compulsory amount
Each lender has its own list of acceptable add-backs, so the same tax return can produce different results. If you plan to buy in the next year or two, talk to your accountant and your broker together, because a strategy that saves tax can also cut your borrowing power.
Utes, Vans, Tools and Equipment
Most tradies need a reliable vehicle and good gear to earn a living. With asset finance for utes, vans, tools and equipment, you can spread the cost over a set term rather than paying a large lump sum upfront. Common structures include a chattel mortgage, where you own the asset from the start, and commercial hire purchase. Your accountant can tell you which structure suits your tax position.
On the tax side, the ATO’s instant asset write-off page lists a limit of $20,000 per asset for eligible small businesses with an aggregated turnover under $10 million. Importantly, the limit applies to the asset’s full cost, so many new utes will sit above it. Because eligibility depends on your circumstances, check with your accountant before you buy anything for tax reasons. In fact, it’s a good idea to talk to your accountant whenever you’re planning a big financial decision for your business.
For vehicle and equipment finance, you’ll see any fees, and I’ll explain them, before you sign anything. Depending on the amount and your situation, I may also refer you to a lender or another broker who specialises in that type of finance.
Why the Order of Your Loans Matters
This is where many tradies come unstuck. A new ute or equipment loan adds a monthly repayment, and lenders include that repayment when they work out how much you can borrow for a home. In other words, a new vehicle loan can noticeably reduce your home loan borrowing capacity, even when the business makes the repayments.
Some lenders will look past a business vehicle loan if the business can clearly afford it, while others count it in full. So, if you plan to buy a home and upgrade your ute in the same year, talk to a broker first. Often, it makes sense to sort out your home loan before you take on new vehicle or equipment debt. That said, if the ute is essential for work, the right order depends on your whole situation.
How I Help Tradies in the Shire
Because I ran my own multi-site retail business from 2016 to 2024, I understand how self-employed income moves around and why a tax return rarely tells the whole story. When it comes to home loans for tradies, I work with dozens of lenders, from the major banks to specialist lenders, so I can match your pay structure to a lender whose policy fits. Moneysmart’s home loan guide is a useful starting point if you want to read more first.
Home loan broking is generally at no direct cost to you, because the lender usually pays the broker a commission when the loan settles. You’ll receive our Credit Guide, which explains how we’re paid, before we start working together.
Home Loans for Tradies: FAQs
ABN, Income and Documents
Possibly. Many lenders prefer two years of self-employed history, but some will consider a shorter ABN history, especially if you worked in the same trade as an employee beforehand. A larger deposit can also help.
It depends on the lender. Some count most regular overtime and allowances, while others use only part of them or want a longer history. Because policies vary, the lender you choose can change how much you can borrow.
Usually, yes. Lenders include the repayment on any vehicle or equipment loan when they assess your borrowing capacity. So, if you plan to do both, talk to a broker about the order first.
Low Doc Loans and Tax
A low doc or alt doc loan uses alternative evidence, such as BAS, business bank statements or an accountant’s letter, instead of full tax returns. However, these loans usually carry higher rates and may need a larger deposit.
They can, because lenders generally use your taxable income. That said, many lenders add back items such as depreciation and one-off expenses. Speak to your accountant or tax adviser about tax.
Talk to a Local Broker About Your Next Step
If you’d like to talk through home loans for tradies, a quick chat is the easiest place to start. Whether you are a PAYG sparky, an ABN subcontractor or running your own building company, we can work out where you stand. Book a free first chat, and we’ll look at your income, your plans for the ute and the home, and the best order to do things.
The information on this page is general in nature and does not take into account your objectives, financial situation or needs. Lending criteria, fees and charges apply. Consider whether it is appropriate for you and speak to us for advice specific to your situation. Speak to your accountant or tax adviser about tax.
Need Some Help?
Not sure where to start? That’s exactly what we’re here for. Drop us a message and we will get back to you within one business day with clear, honest advice tailored to your situation.
