TL;DR Summary
Company directors can include both salary and dividend income when applying for a home loan — but lender policies vary significantly. Some only use salary; others include dividends if they've been consistent across 2 years; and some specialist lenders can use company net profit or retained earnings if you own 100% of the business. A broker who understands company director structures makes a major difference.
How Lenders Assess Company Director Income
When you operate through a Pty Ltd company, your personal income and business income are legally separated. This has genuine advantages — asset protection, tax planning, flexibility — but it creates complexity for home loan applications.
Unlike a sole trader whose business profit flows directly through their personal tax return, a company director must extract income from their company in specific ways. Lenders are only interested in income that you personally receive and that appears on your personal tax return. The company's revenue or profit doesn't count — only what you drew out of it.
1. Director's Salary (PAYG)
Your director's salary is the most straightforward income component for lenders. Paid through the company's payroll, subject to PAYG withholding, and appearing on your group certificate and personal tax return — this is treated like any other PAYG income. Lenders will ask for:
- 2 most recent payslips from the company
- Most recent group certificate or PAYG payment summary
- Last 2 years of individual tax returns confirming the salary
If your director's salary is your only income from the company, and it's sufficient to service the loan, some lenders will treat your application almost identically to a standard PAYG employee application. This is the simplest path but often not the most advantageous for directors who draw significant dividend income.
2. Dividend Income
Dividends are distributions of company profit paid to shareholders. For many company directors who are also the sole shareholder, dividends are a tax-effective way to extract income — particularly franked dividends, which carry attached franking credits.
Whether lenders include dividend income, and how much weight they give it, varies significantly:
| Lender Type | Dividend Income Policy |
|---|---|
| Conservative banks (some Big 4) | May only include dividends if consistent over 2 years and documented on 2 years of personal tax returns |
| More flexible banks | Include consistent dividends shown on 2 years of personal returns; may average the 2 years |
| Second-tier banks | Often more generous — may include dividends shown on most recent year of returns if supported by company financials |
| Specialist / non-bank lenders | Most flexible — may include dividends, retained profits, or assess based on total company income for sole directors |
The key to including dividend income is showing that the dividends are sustainable — paid consistently, supported by company profit, and documented properly. A large one-off dividend in a single year is unlikely to be included; consistent annual dividends over 2+ years will be assessed more favourably.
3. Retained Company Profits
If your company has retained significant profits that you haven't yet distributed, some specialist lenders can include these in your income assessment — provided you own 100% of the company and the profits are accessible to you. This is not a mainstream lender feature, but it can be transformative for directors who've prioritised reinvestment over income extraction.
To include retained profits, you'll typically need 2 years of company financial statements showing consistent profitability, a letter from your accountant confirming the retained funds are accessible, and a lender with specific policy supporting this approach. Our team of self-employed mortgage specialists can identify which lenders offer this.
Documents Required for Company Directors
Being well-prepared saves significant time and reduces the chance of a decline due to incomplete documentation. For a company director home loan, expect to provide:
- Personal documents: 2 years of individual tax returns and Notices of Assessment
- Salary verification: 2 recent payslips from your company, most recent group certificate
- Dividend documentation: Dividend statements for last 2 years showing amounts and franking details
- Company financials (if required): 2 years of company tax returns, profit and loss statements, balance sheets
- Accountant's letter: Confirming your role, ownership percentage, income sustainability, and any add-backs. See our guide on preparing an accountant letter for your home loan.
- Company documents: ASIC certificate of registration, company constitution if relevant
- Bank statements: 6 months of both personal and company bank statements
Common Mistake: Applying Without Dividend History
Many company directors apply for home loans with minimal salary but strong company profit, expecting the bank to see the full picture. If you've been drawing primarily low salary and keeping profit in the company, you may be assessed only on salary. Planning 1–2 years ahead — either drawing a higher salary or documenting consistent dividends — dramatically changes what you can qualify for.
How Ownership Percentage Affects Your Application
Your ownership stake in the company significantly affects how lenders assess your situation:
- 100% ownership (sole director/shareholder): Some lenders take the most holistic view — assessing the total company income since you effectively control all of it.
- 50% ownership (joint directors/shareholders): Lenders typically assess your proportional share (50%) of company income or dividends. Your co-director's income is assessed separately.
- Minority ownership (under 25%): Most lenders only assess your salary and any dividends you personally received. The company financials are less relevant.
- Over 25% but under 100%: This is often the most complex scenario. Different lenders apply different thresholds — some treat over 25% as effectively self-employed, others are more flexible.
The Tax Minimisation Dilemma for Directors
One of the most common challenges for company directors is that the strategies that minimise tax — keeping profit in the company at the 25% company tax rate, drawing minimal personal income, fringe benefits for vehicles or health insurance — all reduce the income figure lenders see on your personal tax return.
This means a director running a $600,000/year revenue business but drawing $80,000 in salary and $40,000 in dividends will be assessed on just $120,000 — not the $600,000. Understanding how banks calculate self-employed borrowing power is essential for planning your income strategy in the years leading up to a property purchase.
The practical solutions are:
- Plan 1–2 years ahead and draw higher salary or dividends consistently before applying
- Work with a broker and your accountant to identify add-backs that increase assessed income without changing your tax position
- Choose a specialist lender who can assess company net profit or retained earnings
Read our full breakdown of why self-employed loans get declined — many of the same dynamics apply to company directors.
Low Doc Options for Company Directors
If your company structure is relatively new, or you've recently changed your income extraction approach, you may not yet have 2 full years of tax returns showing consistent salary + dividends. In this case, low doc options may be appropriate.
A low doc loan for a company director typically uses:
- 12 months of company BAS statements showing consistent business revenue
- 12 months of company bank statements confirming cash flow
- Accountant's letter confirming your directorship, ownership, and income sustainability
- Personal bank statements showing income deposits
Compare your options by reading the low doc vs full doc home loan guide before deciding which path suits your documentation position best.
Frequently Asked Questions
Can a company director use dividends to qualify for a home loan?
Yes. Most lenders will include dividend income if it's been received consistently over 2 years and is documented on your personal tax returns. Consistency and documentation are the key requirements — sporadic or one-off dividends are less likely to be included.
How do lenders assess a company director's income?
Most lenders assess your director's salary plus consistent dividend income from personal tax returns. Some specialist lenders will also include company net profit or retained earnings for sole directors. Exact policy varies significantly between lenders — a broker can identify the best match for your income structure.
Do I need company financials to get a home loan as a director?
Not always. If salary and dividends are documented on your personal tax return, many lenders won't require company financials. However, if you want to include company profits or need the lender to assess business health, 2 years of company financials will be required.
What if I own 100% of my company?
Owning 100% gives you the strongest position with specialist lenders who can assess total company income. Some will use company net profit rather than just salary + dividends — potentially significantly increasing your assessed income and borrowing capacity.
Can I include retained profits in my income?
Some specialist lenders will include retained company profits for 100% directors. It requires 2 years of company financials, an accountant's letter confirming accessibility, and a lender whose policy supports this approach. Most mainstream banks do not include retained profits.
Does my company structure affect which lenders I can use?
Yes. Simple Pty Ltd structures with clear salary + dividends are easiest. Family trusts with corporate trustees, group companies, or complex ownership arrangements require lenders experienced with these structures. A specialist broker is essential for navigating complex company arrangements.
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