SPECIALIST LENDING
Contractor home loans
PAYG and ABN contractor income - assessed correctly. Because lender selection and income presentation matter more for contractors than for almost any other borrower type.
THE PROBLEM
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Income is calculated incorrectly
Many lenders fall back on last year's tax return rather than your current contract rate. For contractors who've grown their day rate, or had a contract gap, this significantly understates actual earnings, and borrowing capacity suffers as a result.
The wrong lender is approached
Different lenders have fundamentally different policies for contractor income. Some treat PAYG contractors like permanent employees. Others require two years of financials regardless. Knowing which to approach, and how to present your situation, is the difference between a smooth approval and an unnecessary decline.
Why contractor applications often go wrong
YOUR INCOME TYPE
PAYG contractor or ABN contractor?
PAYG contractor
Engaged on a fixed-term contract, paid through an agency or directly by the employer, with tax withheld at source and payslips provided. May receive some leave and super entitlements during the contract term.
HOW LENDERS ASSESS YOU
Many lenders treat PAYG contractors similarly to permanent employees (if the application is structured correctly). The key is demonstrating continuity of income and industry experience, not length of time with the current employer specifically.
ABN contractor
Invoicing under your own ABN, typically with one or two clients for personal services. You pay your own tax and super, with no PAYG withholding from the client.
HOW LENDERS ASSESS YOU
Most lenders apply self-employed criteria by default (requiring two years of tax returns and business financials), unless they specifically recognise the ABN contractor category.
The distinction matters more than most people realise. Lenders assess these two income types differently, and the right approach depends on which applies to you.
INCOME CALCULATION
Why the numbers often come out wrong
The most common mistake made by lenders is using last year's tax return to assess a contractor's income rather than their current contract rate. For a contractor whose rate has grown, or who had a gap between contracts last financial year, this can substantially understate actual earnings.
EXAMPLE
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A contractor on $1,000 per day, working 46 weeks a year, earns approximately $230,000. If last year's tax return shows $180,000 due to a contract gap or a lower rate at the time, many lenders will assess serviceability on $180,000, not $230,000. That's a significant difference in borrowing capacity that the borrower didn't need to lose.
We look at the income from your current contract rate and working pattern, then identify lenders whose policies will calculate based on what you're actually earning. That produces a different result to what many banks will tell you.
WHAT YOU NEED
Documents by contractor type
PAYG contractor
✔ Most recent payslips (typically 2)
✔ Current signed employment contract
✔ Two most recent tax returns and notices of
assessment
✔ Bank statements (typically 3 months)
ABN contractor
✔ Two most recent tax returns and notices of
assessment
✔ Current contract or agreement with client
✔ Recent invoices (typically 3 months)
✔ Bank statements (typically 3 months)
✔ ABN registration confirmation
Requirements vary by lender. This is a general guide - we'll confirm exactly what's needed for your specific situation.
COMMON MISCONCEPTIONS
What contractors often get wrong
1
"I need two years in the same contract role before I can apply"
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Not necessarily. For PAYG contractors, some lenders are satisfied with a current contract and evidence of experience in the same field. The two-year rule is more commonly applied to ABN contractors and self-employed borrowers. Even then, exceptions exist depending on the lender and the income structure.
2
"I need to go back to a permanent role to get approved"
​This is one of the most common and most costly misconceptions. Many contractors earn significantly more than they would in a permanent role, and the right lender will assess that income appropriately. Making a career decision based on an assumption about home loan eligibility is worth checking before you act on it.
3
"My bank will give me the best deal"
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Your bank knows your transaction history, but that doesn't mean its lending policies suit contractor income. In many cases, specialist or non-bank lenders have more favourable contractor policies than the major banks. Knowing your transaction history is not the same as assessing your income correctly.
4
"My borrowing capacity is the same as a PAYG employee on the same income"
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It can be - with the right lender. But it depends heavily on how your income is structured and which lender you approach. The gap between the best and worst lender outcome for a contractor's situation is often substantial. This is where lender selection matters most.
WHY WANT A LOAN
It helps to work with someone who's been there
Want A Loan is run by Noah, who spent years working in contractor roles within financial services, which means the conversation about what lenders look for isn't theoretical. The challenges contractors face in home loan applications are ones he navigated personally.
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That's also why Want A Loan exists: to make sure contractors understand what's actually possible before making decisions - about their career, their timeline, or their lender - based on assumptions that may not be accurate.
20+
Years' experience in financial services
30+
Lenders on panel
RELATED READING
You might also find useful
Self-employed home loans
If you operate your own business rather than invoicing through an agency or on a PAYG contract, the self-employed page covers how lenders assess your specific income type.
Borrowing capacity calculator
See a realistic borrowing estimate based on your employment type and income. Accounts for potential income shading for self-employed income.
Try the calculator →
Other pages and tools that may be relevant to your situation.
