The questions and original answers

In New Zealand, you and your partner can absolutely apply for a home loan after becoming self-employed, even if you previously owned a home while working as employees. The main difference is that a lender will need to establish how much income your business reliably generates, how much of that income is available to you personally, and whether you can keep up mortgage repayments if business conditions change.

Because you have owned a home before, you'll generally be treated as existing or previous homeowners rather than first-home buyers. That doesn't prevent you from getting a mortgage, but your deposit, income evidence and overall financial position will matter.

1. How a lender will work out what you can afford

Your business income

The lender will look at the business's financial performance, typically including annual accounts, profit and loss statements, and tax returns. They'll want to understand whether profits are stable, growing or declining.

Your usable personal income

They'll assess the income they consider sustainable and available to service the mortgage. This can differ from your business's turnover, accounting profit or the amount you draw from the business.

Your existing commitments and living costs

They'll consider personal loans, credit cards, car finance, student loans, dependants, household spending and other regular commitments. Business debts, tax liabilities and overdrafts may also affect the assessment.

Your deposit and the property

They'll consider your deposit, the proposed property's value, the loan-to-value ratio (LVR), and whether the loan meets their lending criteria.

Whether repayments are affordable under stress

A lender may test repayments using a higher interest rate than the rate you expect to pay. They'll also assess whether your household has enough money left over after expenses.

There isn't one universal formula that every New Zealand lender uses. Two lenders can assess the same self-employed couple differently, particularly when business profits fluctuate or the accounts contain significant add-backs.

2. How self-employed income is assessed

This is likely to be the most important part of your application.

Most mainstream lenders will generally want to see around two years of financial statements, although the requirements vary and some lenders may consider a shorter trading history.

They may ask for:

• Two years of annual business accounts prepared by your accountant.
• Business and personal tax returns, including IR3 or IR4 returns where applicable.
• Recent business and personal bank statements.
• Evidence of current revenue, contracts, repeat customers or forward bookings, where relevant.
• Details of GST, income tax, provisional tax, business loans and other liabilities.
• Your ownership structure, such as a sole trader, partnership, company or trust.

For example, suppose your business makes the following accounting profits:

Financial year	Business profit before tax
Year 1	$120,000
Year 2	$160,000
Two-year average	$140,000

A lender might start with the two-year average, or give more weight to recent results, depending on its policy. It won't necessarily accept $140,000 as your usable household income: it may adjust for business expenses, tax, unusual income or the sustainability of current earnings.

If you're company directors, the lender may examine salary, shareholder-employee salaries and dividends, as well as retained profits. Money left in the company isn't automatically treated as personal income if withdrawing it would weaken the business.

Some legitimate accounting expenses, such as depreciation, may be added back when calculating serviceable income. But lenders won't automatically add back every expense your accountant can identify.

3. What if you've only been self-employed for a short time?

This depends on how long you've been trading and whether the business can demonstrate a reliable income.

• Two or more years of established accounts: Usually the most straightforward starting point.
• Around one year of accounts: Some lenders may consider an application, particularly if revenue is consistent and the business has a strong outlook.
• Less than one year: It can be more difficult, as there may not be enough evidence of sustainable earnings. A specialist lender or a different lending structure might be worth discussing.

Your previous experience as a homeowner can help demonstrate that you understand mortgage commitments, especially if you have a good repayment history. However, it doesn't replace the need to prove your current income.

A mortgage adviser who works with self-employed borrowers can compare lenders' policies before you make a formal application.

4. How your deposit affects your borrowing power

The deposit and your income are two separate parts of the assessment. A large deposit can reduce the amount you need to borrow, but it doesn't automatically overcome an income shortfall.

In New Zealand, the Reserve Bank's current rules allow banks to allocate up to 25% of new owner-occupier lending to borrowers with deposits below 20%. That means a deposit below 20% doesn't automatically rule you out, but approval depends on the bank's own criteria and its capacity to make low-deposit loans. Understanding loan-to-value restrictions - Reserve Bank of New ZealandReserve Bank maintains Loan-to-Value Ratio (LVR) settings - Reserve Bank of New Zealand

Banks also have debt-to-income (DTI) restrictions. For owner-occupiers, borrowing that takes total debt above six times annual gross income is classified as high-DTI lending. Banks can make some high-DTI loans within their permitted lending allowance, so six times income is not an absolute individual borrowing cap. Understanding debt-to-income (DTI) restrictions - Reserve Bank of New Zealand

Your available deposit may include savings, proceeds from selling a previous property, or other eligible funds. If you currently own a property, the lender will also consider any existing mortgage and how you intend to manage or repay it.

5. What you can do now to improve your application

I'd suggest working through these steps before looking seriously at properties.

1. Talk to your accountant. Ask them to prepare your latest financial statements and explain what income a lender is likely to recognise.
2. Keep business and personal finances clear. Make it easy to distinguish business revenue, expenses, tax obligations and personal drawings.
3. Get tax obligations up to date. If you have an arrangement with Inland Revenue, have the details ready.
4. Review personal debt. Credit card limits, buy-now-pay-later accounts and car loans can affect borrowing capacity.
5. Build a clear deposit record. Document your savings and the source of any funds you plan to use.
6. Seek pre-approval before making an offer. A mortgage adviser experienced in self-employed lending can identify suitable lenders and explain any conditions.

For a practical document checklist, see BNZ's guide to preparing for a home loan appointment. Preparing for a home loan appointment

6. Let's estimate what you might be able to borrow

I can help you build a rough estimate based on your situation. The most useful starting point is your business income, because that's often where self-employed applications differ most from standard mortgage applications.

Your home-loan starting point

Estimates are optional. Rounded figures are fine, and you can leave fields blank if you're unsure.

With those details, I can help you distinguish between what a lender might approve and what would be comfortable for you to repay while keeping your business healthy.