The questions and original answers

If you’re applying for your first home loan in New Zealand as a contractor, three years of earnings records is a useful starting point. The key is helping the lender understand how much income you genuinely earn, how reliable it is, and how much of it you can continue to earn while meeting your mortgage repayments.

Unlike a salaried employee, whose income may be verified through payslips and an employment contract, a contractor often needs to demonstrate their income through financial statements, tax records, invoices and bank transactions.

1. The documents a lender will want to see

1. Annual financial statements for the last 2–3 years

Ideally, have accountant-prepared accounts showing:

• Revenue or contracting income.
• Business expenses and net profit.
• Your salary or shareholder salary, if you operate through a company.
• A balance sheet showing business assets and liabilities.

Many mainstream lenders ask for the last two years of financial statements, so having three years puts you in a good position to show the longer-term picture. Preparing for a home loan appointmentHow to apply for a Home LoanGaining pre-approval

2. Personal tax returns and IRD records

Prepare your filed income tax returns for the last two or three years, plus the relevant income summaries or tax assessments from Inland Revenue (IRD).

These help the lender cross-check the income declared in your application against your tax records. If you're a sole trader, your personal return is particularly important; if you operate through a company, company accounts and your personal income records may both be needed. Gaining pre-approvalAPPPLICANT’S CHECKLIST

3. Invoices, contracts and evidence of ongoing work

Gather:

• Your current contracting agreement or agreements.
• Recent invoices and evidence of payment.
• Any upcoming work bookings, renewals or extensions.
• Details of your hourly or daily rate and typical hours worked.

These help explain whether your historical earnings are likely to continue. They can be especially useful if you recently increased your rates or have a new contract.

4. Business and personal bank statements

Have at least your most recent three months of statements ready, and be prepared for a lender to request more.

These show payments arriving from clients, transfers between your accounts, business expenses and your household spending. BNZ, for example, asks for recent transaction statements to understand living costs and financial commitments. Preparing for a home loan appointmentHow to get home loan pre-approval

5. GST returns and current-year figures, if applicable

If you're GST-registered, keep your GST returns available. A current-year profit-and-loss report can also help demonstrate that you're still trading at a healthy level since your last completed financial year.

GST turnover is not the same as personal income: the lender needs to understand what remains after expenses and tax obligations.

2. How the lender will calculate your income

This is often the most important part of the application.

A lender generally wants to establish your sustainable income available to service a mortgage, not simply your total invoices or the amount of money passing through your bank account.

For example, suppose your accounts show the following:

Financial year	Annual business net profit
Year 1	$90,000
Year 2	$110,000
Year 3	$120,000
Three-year average	$106,667

Illustrative figures only, before any lender-specific adjustments.

A lender might use the most recent two years, an average, or a more conservative figure depending on its policy and your circumstances. The three-year average above is not automatically the income a bank will accept.

They'll also look at:

• Consistency: Is your income steady, growing or declining?
• Concentration of clients: Does most of your income depend on one client or contract?
• Business expenses: Are your operating costs reasonable and likely to continue?
• Legitimate add-backs: Could certain expenses, such as depreciation, be added back when calculating income? This depends on the lender's policy and the expense.
• Current trading performance: Is your latest financial year representative of what you're earning now?

If you're operating through a limited company, your company’s profit, the salary you pay yourself, and any money retained in the company need to be understood together. The lender won't necessarily treat all company revenue or retained profit as your personal income. How NZ banks assess self-employed income for a mortgageSelf-Employed Mortgage NZBuying a property using self-employed income

3. They will also assess whether you can afford the repayments

Even with three strong years of earnings, the lender will review your wider financial position.

Be ready to provide:

• Deposit evidence: Savings, KiwiSaver balance and any gifted deposit documentation.
• Personal expenses: Recent bank statements showing your normal household spending.
• Existing debts: Credit cards, personal loans, vehicle finance and buy-now-pay-later facilities.
• Business liabilities: Tax owing, business loans, leases or other ongoing commitments.
• Identification: Passport or New Zealand driver licence, as requested.

These are standard parts of assessing a home loan application, alongside income verification. Preparing for a home loan appointmentGaining pre-approval

4. How to make your application stronger

Before applying, I'd suggest doing these three things:

1. Ask your accountant to prepare or review your latest financial statements and explain any unusual changes in income or expenses.
2. Prepare a simple one-page summary of your contracting history, annual income, current contract, rate and expected future work.
3. Speak with a mortgage adviser who regularly handles self-employed and contractor applications. Different lenders can assess the same income differently, so it's worth understanding their criteria before submitting multiple applications.

One important point: don't assume you need to wait for another year of earnings. Three years of records is already a useful history, and some lenders primarily request two completed years of financial statements. Whether your records are sufficient will depend on how they're documented and your overall application.

One question that will help me tailor this to you

How are you paid as a contractor in New Zealand?