Do I need two years of accounts to get a self employed mortgage?

Most lenders want two years of accounts or SA302 tax calculations. Some will accept one full year, particularly if you moved into self employment from a similar employed role. The key is showing income that is steady and high enough for the loan. We know which lenders are most flexible and will match you to the right one.

How do lenders calculate self employed income?

It depends on how your business is set up. For sole traders and partnerships, it is your share of the net profit. For company owners, some lenders use your wage plus dividends, while others use your wage plus your share of the profit left in the company. Contractors can often be assessed on their day rate instead. Most lenders average the last two years, though some will use the latest year if it is higher.

Can I get a mortgage as a limited company director?

Yes. Many company owners take a small wage and top it up with dividends. Some banks only look at the wage, which gives a low borrowing figure. Others count your dividends too, and a few will use your share of the profit kept in the business. Choosing the right lender can make a big difference to how much you can borrow.

What is an Agreement in Principle and do I need one?

It is a written confirmation from a lender that it would be willing to lend you a certain amount, after a first look at your income and a credit check. It is not a guarantee, but it puts you in a much stronger position when you make an offer, because estate agents and sellers see you as a serious buyer. We arrange it for you as part of our service.

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Self Employed Mortgage Advice That Starts With Your Income

Working for yourself has plenty of upsides. You're your own boss, you choose your hours and you keep more of what you earn. But when it comes to a mortgage, the goalposts move. Many high street banks struggle with income that changes from year to year, with dividends, or with day rate contracts. That's where we come in. We arrange self employed mortgages every week for sole traders with two years of SA302s, company owners paid through dividends, contractors on a day rate and CIS subcontractors. We know which mortgage lenders are likely to say yes to your kind of income, and we package your application so the underwriter sees the full picture first time.

"We are fee free on over 90% of the mortgages we arrange. If a fee applies to your case, we tell you in writing before we start."

Helping You Buy Sooner

The Types of Self Employment We Work With

Self employment is not one size fits all, and neither is the way your income gets assessed. We work with every kind of business set up and know where each one fits best.

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Sole Traders
and Partnerships

As a sole trader, your mortgage income is your net profit, not what you invoice. You will usually need two years of SA302 tax calculations and supporting accounts. We know who averages your last two years, who uses only the most recent year, and who is most flexible when profits have gone up and down. GOV.UK explains how to get your SA302 tax calculation from HMRC. Foster carers usually file self assessment too, so our guide to mortgages for foster carers covers how lenders treat fostering income.

Income Basis
Net profit

Trading History
2 years typically

Max LTV
Up to 95%

Partnerships and LLPs are assessed similarly. Lenders look at your share of the net profit. If your accounts clearly show your profit allocation this can be straightforward. We will make sure your documents are structured clearly before submission.

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Limited Company
Directors

If you run a limited company, some banks only count the small wage you pay yourself, which can badly understate what you really earn. Others add your dividend payments, or your share of the profit left in the business, and that can lift your borrowing a long way.

Make sure your accounts are up to date and clearly show how you pay yourself. We work with accountants regularly and can suggest how best to present your figures.

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Contractors
and Freelancers

Day rate contractors are often better off with a lender that works out affordability from your daily or weekly rate rather than your company accounts. That can make a big difference to what you can borrow. Some will even consider contractors with less than 12 months' history, as long as you have experience in the same field.

Agreement in Principle: What It Means for Self-Employed Buyers

An Agreement in Principle (AIP) is a written confirmation from a lender that they would be willing to lend you a specific amount, based on an initial review of your income and a credit check. For self-employed borrowers, this step is especially valuable as it confirms a lender has assessed your income structure and is prepared to proceed.

Your broker at Alexander Southwell will approach the lender best suited to your income structure. They review your documents, carry out a credit check, and confirm the amount they are willing to lend. You receive an indicative monthly repayment figure based on your self-employed income.

Why it matters: Estate agents and sellers take offers much more seriously when you have an AIP in hand. For self-employed buyers especially, having one demonstrates that a lender has already reviewed your income and is satisfied you can proceed.

Step by Step

How the Self-Employed Mortgage Process Works

Here is what to expect when applying for a mortgage as a self employed borrower. The steps are the same as any mortgage application, with a few differences in how your income is checked.

Initial Consultation

Your adviser looks at how you are paid, your accounts, tax returns and credit profile. We work out how much you can borrow from your real income and which lenders are most likely to approve you.

Agreement in Principle

We approach the lender that suits your income best for an early decision. It reviews your income documents and confirms how much it will lend, so you can make offers with confidence.

Property Search & Offer

With your AIP in hand, you make an offer on a property. Estate agents verify your AIP and treat you as a serious, mortgage-ready buyer. Once your offer is accepted, you proceed to the full mortgage application.

Full Mortgage Application

Your broker prepares and submits your full application, packaging your documents (SA302s, accounts, bank statements, contracts) to present your income in the clearest possible light. The lender arranges a property valuation.

Mortgage Offer Issued

Once approved, the lender issues a formal mortgage offer. For self-employed applicants, this typically takes 4 to 8 weeks from full application, depending on the lender and the complexity of your income documentation.

Exchange & Completion

Your solicitor handles exchange of contracts and completion. You receive the keys. We also strongly recommend putting income protection in place at this point, as it is especially important for self-employed borrowers whose income is not guaranteed.

How Long Does It Take?

The timeline from initial advice to completion is typically 10 to 16 weeks for self-employed applicants. Being well prepared with your documents ready upfront is the single biggest factor in keeping things moving smoothly.

How lenders look at your income

How Lenders Assess Self Employed Mortgages By Business Type

Here is the thing most people only find out after they have been turned down once. Two lenders can look at exactly the same accounts and come up with very different income figures. Neither of them is wrong. They just have different rules, and which rules apply depends on how your business is set up.

This is the short version for each of the main types. Each one has its own full guide further up the page if you want the detail.

How you work

Income lenders usually use

History most lenders want

Watch out for

Sole trader

Income used:Net profit from your SA302s. Some lenders average two years, others use the latest year if profits are rising.

History:Usually two years, sometimes one

Watch out:Turnover does not count. Heavy expenses claims bring the figure down.

Partnership or LLP

Income used:Your share of the partnership profits, as shown on your tax return.

History:Usually two years

Watch out:The profit split needs to be clear in the accounts.

Limited company director

Income used:Salary plus dividends, or with some lenders, salary plus your share of the company's net profit after corporation tax.

History:Usually two years of company accounts

Watch out:Retained profits only count with certain lenders. You usually need to own 20% to 25% or more of the shares to be treated as self employed.

Day rate contractor

Income used:Your day rate turned into an annual income, often the day rate times 5 days times 46 weeks.

History:Often 12 months contracting, sometimes less with experience in the same field

Watch out:Gaps between contracts, time left on the current contract and IR35 status.

CIS subcontractor

Income used:Either gross CIS income from your payment statements, less any materials, or the net profit on your SA302.

History:Often 12 months of statements, or one to two years of tax returns

Watch out:The net profit route can cut your borrowing a long way.

The type you are is not always obvious, either. A contractor working through their own limited company is a company director on paper, but plenty of lenders will treat them as a day rate contractor instead. That one decision can move the answer by tens of thousands of pounds.

Worked example: one company director, three different answers

Take Sarah. She is made up, but she is very typical of the directors I speak to. She owns all the shares in her limited company, takes a salary of £12,570 and draws £38,000 in dividends. After corporation tax, the company made a net profit of £72,000 last year.

Lender A looks at her salary only. £12,570 at 4.5 times income is about £56,600.

Lender B uses salary plus dividends. £50,570 at 4.5 times is about £227,600.

Lender C uses salary plus her share of the net profit. £84,570 at 4.5 times is about £380,600.

Same person, same business, same year. The only thing that changed was the lender. That is why I always ask directors for the full company accounts and not just the dividend vouchers. Affordability checks and her monthly outgoings still apply, so these figures are upper limits, not promises.

Worked example: a sole trader whose profits went up

Dan is a self employed electrician working as a sole trader. His net profit was £38,000 two years ago and £52,000 last year. A lender that averages the two years works from £45,000, which at 4.5 times comes to £202,500. A lender happy to use the most recent year's figures works from £52,000, which comes to £234,000.

That is £31,500 more buying power from the same tax returns. It works the other way too. If last year was the lower one, nearly every lender will use the lower figure, so it helps to know which year you are applying on before you start viewing houses.

Self employed florist wrapping a bouquet in her shop with an order book on the bench

The trickier cases

Self Employed Situations That Need A Bit More Care

Most self employed mortgages are straightforward once the paperwork is right. These are the cases where the choice of lender really matters, and where I would always suggest a quick chat with us before you apply anywhere.

Less than two years trading

One year's accounts can be enough with some lenders, especially if you were previously employed in the same field and simply went it alone. Under a year is harder, but a contractor with a strong track record in the same industry can sometimes still get a mortgage. Expect fewer options and possibly a larger deposit.

Contractor mortgages with a short history

You moved from sole trader to limited company

Lots of people make the switch for tax efficiency. Some lenders treat the new company as a brand new business and want two years of company accounts. Others look at your whole trading history as long as the work itself has not changed. Get the timing wrong and you can lose a year, so ask before you apply.

Your income dropped last year

A lower year is not the end of the road. Lenders want to understand why it happened. A big contract that ended, time off for a new baby, or heavy investment in new equipment can all be explained, especially if your latest figures show the business is back on track.

Gaps between contracts

For contractors, lenders look at how long you have been contracting and how long is left on the current contract. A short gap between contracts is normal and most underwriters expect it. Long gaps, or a contract that ends the week before completion, make them nervous, so timing matters.

Buy to let when you work for yourself

Being self employed does not stop you buying a rental property. Buy to let lenders mostly focus on whether the rent covers the mortgage, though many still want a minimum personal income backed up by your tax returns. Our buy to let mortgages page explains how the rent test works.

Buy to let mortgages explained

Retained profits left in the company

If you leave money in the company to keep your personal tax bill down, a salary plus dividends lender will simply ignore it. A lender that uses your share of the company's net profit can count it. For directors with healthy retained profits, this is often the biggest single lever on borrowing.

Self certification mortgages

People still ask about these. Self cert mortgages, where you just stated your income, were stopped when the Mortgage Market Review rules came in during April 2014. Every lender now has to check your income properly, which is why your SA302s and accounts carry so much weight.

Self employed first time buyers

There is nothing stopping a self employed first time buyer getting a 5% or 10% deposit mortgage. The same income rules apply. Getting your tax return filed early in the year is the single most useful thing you can do, because a lender cannot use a year that HMRC has not seen.

How 5% deposit mortgages work

Hands holding the keys to a red brick semi detached house bought with a self employed mortgage

Self employed mortgage calculator

How Much Could You Borrow When You Are Self Employed?

Pick how you work, put in your own figures and the calculator shows two numbers. The cautious one is what a stricter lender might work from. The best fit one is what a lender that suits your business structure might offer. The defaults are the same examples used above, so you can see how they play out.

Net profit two years ago (£)

Net profit last year (£)

Salary from your company (£ per year)

Dividends you took (£ per year)

Your share of company net profit after corporation tax (£)

Day rate (£)

Days worked per week

Salary plus dividends you draw (£ per year)

Average gross CIS pay per month (£)

Materials included in that figure per month (£)

Net profit on your latest SA302 (£)

Deposit (£)

Income multiple

Cautious income figure

£0

Cautious lender could offer

£0

Best fit lender could offer

£0

Possible property budget

£0

For illustration only and not financial advice. Figures are estimates based on common ways lenders assess self employed income. Lenders also look at your outgoings, credit file, deposit and the property, and not every lender offers higher income multiples. Your home may be repossessed if you do not keep up repayments on your mortgage.

Most lenders typically offer 4 to 4.5 times income. Some will go to 5 or 5.5 times for higher earners or certain professions, and a small number go further. If the gap between your cautious and best fit figures is big, that is exactly the situation where picking the right lender matters most, and where I can usually help the most.

Self employed mortgage guide

Self Employed Mortgage Requirements: What Lenders Need to See

Getting a mortgage when self employed is very possible. The only difference from an employed application is how you prove your income. There is no payslip, so a lender looks at your tax records, your accounts and your bank statements instead, and it wants to be confident the money will keep coming in. It is a bit more paperwork, but with the right documents in place most self employed people get the same mortgage deals and the same mortgage rates as everyone else. Here is what to expect.

Printed business accounts, a tax calculation and bank statements on a table, the documents needed for a self employed mortgage

Who is considered self employed?

For a mortgage, you are usually considered self employed if you work for yourself as a sole trader, you are a partner in a business, or you own 20% to 25% or more of a limited company. The exact cut off varies. Contractors and freelancers can fall either side of the line depending on how they are paid.

Your employment status matters because it decides which lending criteria apply to you and which documents you will need. If you are not sure where you sit, tell us how you are paid and we will work it out with you.

How many years of accounts do you need?

As a general rule, you will need at least two years of accounts or tax returns. That gives an underwriter enough history to judge whether your income is steady. Some lenders will accept one full year, particularly if you were doing the same job as an employee before you went it alone and your work history shows it.

If you have been trading for less than a year, it is still possible to get a mortgage in some cases, for example as a contractor with a strong track record. The choice is narrower and you may need a bigger deposit.

The documents you will need to provide

Having the right documents ready before you start is the easiest way to speed up the mortgage application process. Expect to need:

SA302 forms and a tax year overview for each of the last two years
Business accounts, ideally certified accounts from a qualified accountant
Three to six months of personal and business bank statements
A passport or driving licence as photo ID
Proof of address, such as utility bills or a council tax bill
Loan statements for any finance you pay, plus any upcoming contracts or work

SA302 forms and your tax year overview

An SA302 is HMRC's tax calculation for a tax year, produced after you file your self assessment tax return. The tax year overview confirms that the tax has been paid and nothing is outstanding. You will usually need both for each year being assessed, and you can download them from your HMRC online account.

File your return early if you can. A lender will usually only use a tax year once it has been filed, so a late return can hold you back even if the year was a good one.

Why certified accounts help

Many banks and building societies like to see accounts certified by a registered accountant, meaning a member of a recognised body such as ICAEW, ACCA or AAT. Accounts certified this way give the underwriter more confidence in the figures, and a few will accept nothing else.

If you do your own books, that is fine for HMRC, but it can limit your choice of lender. It is worth speaking to us before you apply so we can point you to the ones that accept SA302s on their own.

How much could you borrow?

Most offer around four to four and a half times your income, and a few go higher for bigger earners. For a sole trader, income means net profit after operating costs. Some average your last two years, while others use the latest year if your profits are rising, which can make a real difference to how much you could borrow.

If your profits fell last year, expect the lower figure to be used. Our mortgage borrowing calculator gives you a quick starting point before you speak to us.

Deposits and mortgage rates

Being self employed does not mean paying a higher interest rate. With two years of accounts, you can usually access the same mortgage deals as an employed buyer, including some 5% deposit mortgages. A bigger deposit of 10% or 15% opens up more choice and a lower rate.

Many self employed clients choose a fixed rate mortgage. When your income varies, knowing your monthly repayments will not change for two or five years makes budgeting much easier.

Your credit file and credit score

A good credit score matters just as much when you are self employed. Check your credit report with all three agencies before applying for a self employed mortgage, make sure you are on the electoral roll, and fix any errors on your credit file. Keeping business and personal spending separate also helps an underwriter read your bank statements.

Our guide to credit scores explained covers what gets checked, and CheckMyFile shows all three reports in one place.

If your income varies month to month

Underwriters look at your yearly figures, so it does not matter if your income varies month to month. What they want to see is reliable income across the year, and a business that is stable or growing. One weaker year can usually be explained, especially if there was a clear reason and your latest figures are back on track.

If your business made a loss, or you left profit in the company, tell us early. We can present the full picture and provide evidence of future earnings, such as signed contracts or a strong order book.

Joint mortgage applications

If you are buying with a partner who is employed, a joint mortgage application can make things simpler. The lender looks at both incomes together, so your partner's payslips may carry more of the weight while your accounts cover the rest. Both of you will be personally responsible for the full payment of the mortgage.

If only one of you will own the home, our page on joint borrower sole proprietor mortgages explains another option.

Remortgaging when you are self employed

When your current deal ends, the same checks apply if you move to a new lender. Staying with your existing lender on a product transfer usually means no fresh income check, which can help if your last year was quieter. It is worth comparing both routes before you decide.

You can read more on our remortgage advice page, or if you are paying off a lump sum at the same time, try our overpayment calculator.

Rental income and dividend payments

If you earn from more than one source, it will normally count, as long as you can show it on your tax return. That can include rental income from a let property, dividend payments from your own company and a part time wage alongside your business. A lender that will accept dividends in full can make a big difference to company owners.

Let us know about every source of income at the start, not just your main income. It often changes which self employed mortgage is the right fit.

Simple steps to improve your chances of being accepted

File your tax returns on time. A year that has not been filed cannot be used, and late filing raises questions.

Keep your credit clean. Pay every bill and credit card on time for at least six months before applying, and avoid new credit just before you apply.

Get your paperwork together first. Extra documents slow things down if the underwriter has to ask for them later. More proof up front means fewer questions.

Think about your deposit. A bigger deposit gives you more choice and more confidence in the result.

Speak to a mortgage broker before applying for a mortgage. Each application leaves a mark on your credit file, so it pays to go to the lender most likely to accept you first time. A mortgage is a big financial commitment, and the right advice at the start makes the rest easier.

Written by Jamie Alexander, Director and Mortgage Adviser (CeMAP) at Alexander Southwell Mortgage Services. Jamie has 15 years in mortgages, founded the firm in 2019 and has arranged mortgages for sole traders, contractors, company directors and CIS workers throughout that time. Last updated and reviewed October 2026.

Self Employed Mortgages

Self Employed Mortgage Advice That Starts With Your Income

The Types of Self Employment We Work With

How the Self-Employed Mortgage Process Works

What Is a Self Employed Mortgage?

Sole Traders & Partnerships

Limited Company Directors

Contractors & Freelancers

CIS Workers

Everything You Need to Know

Sole Trader Mortgages

Mortgages for Ltd Company Directors

Contractor Mortgages

CIS Mortgages

Your Credit Score and Self Employed Mortgages