The Reserve Bank of Australia held the cash rate at 4.35 per cent through its July 2024 meeting and APRA has kept the serviceability buffer at 3.0 percentage points since October 2022. For an employee with a steady PAYG payslip, the arithmetic is tedious but straightforward. For a company director whose business was registered six months ago, it is an entirely different equation. Australian Bureau of Statistics data (ABS cat. 8165.0, Counts of Australian Businesses, entries and exits, 2022-23) recorded 438,000 new business entries. Many of those entities were founded by sole traders and directors who now confront a blank wall at the major banks: the standard requirement of two full financial years of tax returns before any home‑loan application will be assessed.
That two‑year default is not a footnote; it is the operational implementation of APRA’s APS 220 Credit Risk Management Standard (last revised 26 October 2022), which requires lenders to verify all income from self‑employment with a level of assurance that matches the risk. A six‑month trading history simply does not generate the evidentiary mass that a traditional credit officer needs to sign off. Yet mortgage brokers, accountants and the specialist lending sector have built a workable bypass. The question is no longer whether a director in this position can obtain a mortgage, but at what price, under which policy constraints, and with exactly which documentation.
The Two-Year Default and the Six-Month Exception
Why Mainstream Banks Insist on a Two‑Year Track Record
The four major banks and most mutual ADIs anchor their self‑employed credit policies to two consecutive years of personal and business tax returns, accompanied by corresponding ATO notices of assessment. The reasoning is not capricious. A new company’s profit is volatile. Lumping 12 months of trading into two tax returns gives underwriters a view across seasonal swings, GST cycles and the operational reality that many small businesses do not survive their third year. Without that series, a loan cannot be sold into an RMBS pool that requires full‑doc verification. The banks’ appetite to hold non‑conforming self‑employed paper on balance sheet is virtually zero for the six‑month window.
Consequently, directors who approach a major lender with a freshly issued ABN and six months of BAS receive a blunt message: wait another 18 months, or find a guarantor who meets full‑doc standards. The bottleneck is real, and it is growing as the weighted average owner‑occupier variable rate on new loans pushed past 6.80 per cent in early 2024, compressing borrower capacity even for those with clean documentation.
APRA’s Verification Standard for Non‑PAYG Income
APRA’s APS 220 (effective 1 January 2021, revised 26 October 2022) does not prescribe an explicit minimum trading period. It sets an expectation that lenders must “verify the amount, reliability and sustainability of income” for all borrowers. For self‑employed applicants, that translates into a mandated file that typically includes tax returns, business financial statements, ATO portal summaries and, for non‑full‑doc products, alternative evidence. The regulator’s Prudential Practice Guide APG 220 notes that where standard documentation is not available, lenders may accept “recent trading statements, business activity statements and an accountant’s declaration” provided the institution can demonstrate that the assessment remains conservative. This is the regulatory permission that specialist lenders exploit.
Which Specialist Lenders Accept Six Months of Trading?
Pepper Money – Near Prime Low Doc
Pepper Money’s Near Prime Low Doc product guide (effective 12 June 2024) permits a company director to use six months of consecutive BAS statements where the business has been registered for GST from inception. The policy requires a minimum ABN registration date of at least six months and a valid GST registration for the same period. Gross income declared across the six-month BAS run is annualised, then an underwriter applies a 20 per cent shading factor to account for the short observation window. The maximum LVR is 65 per cent for a purchase up to $1.5 million in metro locations, and the debt‑to‑income ratio cap sits at 6.0 times. Pepper applies its standard low‑doc floor rate of 9.75 per cent p.a. for serviceability assessment and adds the 3.0 per cent APRA buffer, producing an effective assessment rate of 12.75 per cent.
La Trobe Financial – Specialist Mortgage Solutions
La Trobe Financial’s Specialist Mortgage Lending guide (April 2024) accommodates directors of companies that have been trading for at least six months under the Super Prime and Prime Alt Doc categories. The ABN must be registered for six months and the business must show GST registration active for the same window. La Trobe requires six months of lodged BAS and an accountant’s letter that confirms the director’s income is sustainable and that the business has met all ATO payment obligations. LVR is capped at 60 per cent for a standard residential security, with a maximum loan size of $1,000,000. DTI is limited to 7.0 times, but any ratio above 6.0 triggers a mandatory credit committee review. Serviceability is tested at the higher of the product rate plus a 2.5 per cent margin or a floor rate of 8.95 per cent p.a. With La Trobe’s current Prime alt‑doc rate of 8.20 per cent, the buffer pushes the assessment rate to 10.70 per cent.
Liberty Financial – Alt Doc for New Directors
Liberty Financial updated its Alt Doc matrix on 20 February 2024 to include a “start‑up director” pathway. A company director with six months of trading may be assessed under Liberty’s Specialist Alt Doc product if they can supply six quarterly BAS (or six monthly BAS if the entity lodges monthly), an accountant’s declaration of income and a 12‑month trading projection. Liberty takes the lower of the annualised actual income or the accountant’s projected figure. LVR extends to 70 per cent for purchases below $2,000,000 and the lender enforces a minimum credit score of 680. DTI is capped at 6.5 times. The serviceability floor rate is 9.50 per cent p.a., and Liberty layers its own 2.0 per cent buffer on top, giving an assessment rate of 11.50 per cent. Where the borrower has less than a 20 per cent deposit, LMI is underwritten by QBE, and the premium is capitalised into the loan.
Resimac – Prime Alt Doc and Six‑Month Proof
Resimac’s Prime Alt Doc policy (January 2024) allows a director to use an ABN and GST registration that are at least six months old, supported by six months of BAS and an accountant‑prepared interim profit and loss statement. The lender uses the net profit before tax from the P&L and reviews bank statements to confirm that business revenue matches the declared turnover. Resimac caps LVR at 70 per cent for standard residential purchases with a maximum loan of $1,500,000. DTI is limited to 6.0 times. Serviceability is measured using the actual product rate plus a 3.0 per cent buffer, and for a near‑prime alt‑doc loan the effective assessment rate typically lands between 9.50 and 10.00 per cent p.a. Borrowers must be clear of any adverse credit listings for the previous 24 months.
Bluestone Mortgages and Brighten Home Loans – Tight Policy Windows
Bluestone Mortgages’ Specialist Product Guide (March 2024) accepts six months of trading for directors under its Alt Doc Plus product only if the company can demonstrate six months of lodged BAS and the director provides an accountant’s letter confirming ongoing viability. LVR is capped at 65 per cent, and DTI must not exceed 5.5 times. Bluestone applies a serviceability floor rate of 9.25 per cent p.a. and a mandatory 3.0 per cent buffer, creating an assessment rate of 12.25 per cent. The product is restricted to purchase and rate‑and‑term refinance; cash‑out is excluded.
Brighten Home Loans released its “New Company Director Hospitality” update on 10 August 2023, which is a narrow but genuine window. The policy covers directors with six months of trading, provided the business holds an ABN and GST registration for the full period and the applicant presents six months of lodged BAS with a clear income trend. The LVR limit is 65 per cent for a loan up to $1,000,000, and DTI is constrained at 6.5 times. Brighten’s servicing test uses the product rate plus 2.5 per cent, and for its low‑doc offering the effective assessment rate generally exceeds 10.50 per cent p.a. The lender’s appetite is strongest for applicants in professional services, construction and hospitality.
The Numbers That Matter: LVR Caps, DTI Limits and the Serviceability Buffer
Loan‑to‑Value Ratio Constraints
Among the lenders listed, the highest available LVR for a company director with six months of trading is 70 per cent, offered by Resimac and Liberty under tightly conditioned policies. Several providers such as La Trobe and Brighten cap LVR at 60 to 65 per cent. That means a director targeting an $800,000 property must bring at least $240,000 to $320,000 in genuine savings, excluding stamp duty and transaction costs. The LVR cap is the binding constraint for most new‑company borrowers, not serviceability. Lenders view the short trading history as an elevated default risk, and the LVR limit directly reflects the impaired recovery assumptions in their capital models.
Debt‑to‑Income Ceilings
Specialist lenders impose hard DTI ceilings that range from a conservative 5.5 times at Bluestone to a more generous 7.0 times at La Trobe. While a DTI ratio of 6.5 times may sound high relative to APRA’s long‑standing guidance for ADIs, the context is different: the income used in the denominator is a heavily discounted, annualised snapshot from six months of BAS statements. A company director who shows $55,000 of net profit across six months has an annualised figure of $110,000. After a 20 per cent low‑doc shading, the usable income drops to $88,000. At a DTI cap of 6.0, the maximum total lending (including existing debts) falls to $528,000. If the applicant already carries a $20,000 car loan, the available home‑loan capacity shrinks to $508,000. In a capital‑city market where the median dwelling price exceeds $1,000,000, that DTI constraint eliminates most four‑bedroom purchases before the LVR cap is even tested.
How the 3.0 Per Cent APRA Buffer Changes the Calculation
APRA’s 3.0 per cent serviceability buffer, applied to the product rate, converts an advertised loan rate into an assessment rate that can be as high as 12.75 per cent for a low‑doc product. The mathematical effect is severe. Consider a loan of $500,000 assessed at 12.50 per cent p.a. over a 30‑year principal‑and‑interest term. The monthly repayment factor is approximately 0.01067 per dollar borrowed (calculated from (0.1042 per cent monthly rate × compounding)). The resulting monthly obligation is $5,335, which consumes $64,000 of net income per annum. If the director’s usable income is $88,000, the debt service ratio sits at 72.7 per cent—tight, but possibly acceptable to a specialist lender that allows a DSR up to 80 per cent if living expenses are demonstrably low. The buffer does not merely protect the lender; it actively shrinks the borrowing capacity of every six‑month director who does not have a second household income.
Building the Application File for a Sub‑12‑Month Company
BAS Statements as the Backbone of Income Evidence
The six‑month BAS run is the central pillar of any alt‑doc submission. Lenders do not accept draft or un‑lodged BAS. They require the ATO‑issued lodgment confirmation for each quarter (or month), and they cross‑check the GST turnover figure on the front page with the business bank statements. Where the reported turnover exceeds the bank credits by more than 10 per cent, the loan stalls. Underwriters prefer BAS that show a steady or rising trend. A director whose business earned net profit of $18,000, $22,000 and $24,000 across three consecutive BAS quarters will be viewed more favourably than one who swung from $35,000 to $8,000 in the same period, even if the total sums are similar. Consistency is a proxy for sustainability in the absence of a long‑dated history.
The Accountant’s Letter: Wording That Satisfies Credit
A generic letter confirming that the director “earns sufficient income” is worthless to a credit officer. Effective accountant letters used for six‑month applications state explicitly: the director’s ABN and GST registration dates; the net profit before tax for the six‑month period derived from management accounts; the accountant’s opinion that the business is trading profitably and has met its tax obligations; and a declaration that the income is expected to continue at no less than the annualised level. The letter must be on the accounting firm’s letterhead and dated within four weeks of the application. A growing number of lenders, including Pepper and Resimac, provide a template that the accountant can complete, reducing the risk of omissions that trigger a rework.
Business Bank Statements and Projections
Lenders request six months of consecutive business transaction account statements to verify revenue deposits, rent payments, supplier outflows and discretionary expenses. The statements are used to build a cash‑based profit estimate that the underwriter compares against the BAS and the accountant’s letter. Any unexplained deposit greater than $10,000 requires a credible explanation. Directors should also be prepared to submit a 12‑month financial projection if the lender requires it. Liberty’s start‑up pathway, for instance, asks for a projection that breaks down expected revenue, cost of goods sold, operating expenses and net profit by quarter. The projection is not used to inflate serviceability; it exists solely to confirm that the director has a plausible plan to maintain income across the loan’s early years.
Five Immediate Steps for a 6‑Month Company Director
- Secure BAS lodgments without gaps. Lodge every BAS on time for the six‑month window, even if the business had a nil quarter. A gap tells the lender that the entity was not actively trading, which breaks the continuity of the income narrative.
- Engage a specialist mortgage broker who works daily with Pepper, La Trobe, Liberty, Resimac and Brighten. Policy changes occur quarterly. A broker who last looked at alt‑doc options in 2023 will not know that Liberty raised its LVR cap for six‑month directors to 70 per cent in February 2024 or that Brighten tightened its hospitality sector exclusions in August 2023.
- Commission the accountant’s letter early. Do not wait until the broker asks. Ask the accountant to prepare management accounts for the six‑month period and a declaration of income sustainability that mirrors the lender’s preferred wording. A proactive file moves 14 days faster.
- Hold off on any large discretionary business purchases. A $40,000 equipment outlay that reduces the next BAS net profit by 30 per cent will shrink usable income just as the application is being assessed. Delay capital expenditure until after settlement.
- Investigate a bridging deposit strategy if the 12‑month mark is only 90 to 120 days away. Some lenders offer a short‑term private bridging facility secured against an existing property, allowing the director to purchase now and refinance onto a full‑doc loan once the business hits the 12‑month anniversary and the first full‑year tax return is available.
The specialist sector has built a real, documentable pathway for directors of six‑month‑old companies. The interest rate premium and the tighter LVR caps are the cost of that access, not a market failure. The director who assembles six clean BAS, an accountant’s letter that matches the lender’s template, and a deposit that meets a 60 to 70 per cent LVR constraint can expect a credit decision inside three weeks. The main barrier is not policy; it is preparation.