Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Home Loans for Company Directors
Company directors are among the most capable borrowers in Australia. You run a profitable business, employ staff, generate consistent revenue and manage real financial risk every day. The challenge is that lenders do not always see the full picture. Your personal tax return may show a modest PAYG salary, while the company retains significant profits that never appear on your individual income assessment.
This disconnect between actual earning capacity and on-paper personal income is the single biggest barrier for company directors seeking home loans. The solution is lender selection. Different lenders have vastly different policies on how they treat company income, dividends, retained earnings and director salaries. We specialise in matching company directors with lenders whose policies capture the full picture.
Company directors are often the most under-served borrowers in the market. A director paying themselves $80,000 PAYG while the company nets $250,000 in profit will be assessed on $80,000 by most major banks. That is clearly not the full picture. The right lender will assess salary plus dividends plus a share of retained earnings, and apply add-backs for depreciation and one-off expenses. This can more than double the assessed income. Lender selection is everything for directors.
How Lenders Assess Company Director Income
When you operate through a Pty Ltd company, your income for lending purposes is a combination of several components. How each lender treats these components varies significantly.
PAYG Salary
Most company directors pay themselves a PAYG salary from the company. This is the simplest income component for lenders to assess. It appears on your personal tax return, you receive payslips, and there are group certificates (PAYG summaries) to verify it. Every lender will accept this income.
Dividends
Dividends paid from the company to you as a shareholder appear on your personal tax return. Most lenders will include franked and unfranked dividends in your assessable income. However, some lenders want to see a consistent dividend history over 2 years, while others will accept the most recent year. If your dividend payments vary year to year, lender selection matters.
Retained Earnings (Company Profits)
This is where the biggest differences between lenders emerge. Retained earnings are profits that remain in the company after tax and after any dividends paid. Many directors choose to retain profits in the company for working capital, future investment or tax planning. Some lenders will include your proportional share of retained earnings (based on your shareholding percentage) as part of your assessable income. Others ignore it entirely. If you retain significant profits in your company, this is the most important factor in lender selection.
Trust Distributions
If your company is the trustee of a discretionary (family) trust, income may flow to you as trust distributions rather than dividends. Trust structures add another layer of complexity. Lenders vary widely in how they treat trust income. Some will accept it at face value. Others discount it or require multiple years of consistent distributions. If you operate through a trust structure, we assess which lenders on our panel have the most favourable trust income policies.
Sole Trader vs Company Structure: What Lenders See
The difference between a sole trader and a company director from a lending perspective is significant. A sole trader's business income flows directly to their personal tax return. The taxable income on that return is their assessed income (plus any add-backs the lender allows). It is straightforward.
For a company director, income is split across multiple channels: salary, dividends, retained earnings, and potentially trust distributions. This fragmentation often results in a lower personal taxable income even when the total business earnings are substantially higher. The right lender and the right application structure can capture all of these income streams.
Why Some Directors Show Low Personal Income
There are several legitimate reasons why a profitable company director may show low personal taxable income.
- Tax planning: Your accountant may recommend paying a modest salary to stay within a lower tax bracket, with the company paying 25% company tax on retained profits rather than you paying up to 47% marginal personal tax.
- Retained earnings for growth: You may be reinvesting profits into the business for expansion, equipment or hiring, rather than paying them out as dividends.
- Multiple shareholders: If you are not the sole shareholder, your proportional share of company profits may be smaller than the total company income suggests.
- Lumpy dividend timing: You may pay a large dividend in one year and none the next, creating inconsistency that lenders struggle to average.
None of these situations mean you are a risky borrower. They simply mean you need a lender whose income assessment methodology accounts for how company structures actually work.
Key Add-Backs for Company Directors
Add-backs are non-cash or one-off expenses that reduce taxable income without reducing actual cash flow. Lenders who allow add-backs will reinstate these to your assessed income. Common add-backs for company directors include:
- Depreciation on company assets (vehicles, equipment, fit-out)
- One-off non-recurring expenses (legal fees for a specific matter, relocation costs, restructuring)
- Interest on business loans (already factored into serviceability separately)
- Superannuation contributions above the SGC rate
- Entertainment and travel expenses that are discretionary
Worked Example: Company Director in Sydney
- Structure: Sole director and shareholder, Pty Ltd, 5 years trading
- PAYG salary from company: $85,000
- Dividends declared (latest year): $40,000
- Company net profit (retained): $120,000
- Depreciation add-back: $18,000
- Personal taxable income (bank view): $125,000
- Assessed income (right lender): $263,000
- Purchase price: $1,400,000
- Deposit (20%): $280,000
- Estimated borrowing capacity: ~$1,050,000 to $1,200,000
- Outcome: Approved full doc with lender accepting retained earnings
Documentation Requirements
Full Doc (Standard)
- Last 2 years of personal tax returns and ATO Notices of Assessment
- Last 2 years of company tax returns
- Last 2 years of company financial statements (profit and loss, balance sheet)
- PAYG summaries or payslips
- Company ASIC extract showing directorship and shareholding
- Accountant's letter confirming income breakdown
Alt Doc (1 to 2 Years)
- Last 12 months of company BAS statements
- Last 6 months of business bank statements
- Accountant's letter confirming income and trading period
- ABN and ASIC registration evidence
Tips for Company Directors Applying for a Home Loan
- Talk to your accountant about the timing of dividends. If you plan to apply for a home loan, declaring dividends before lodging your tax return strengthens your personal income profile.
- Lodge your company and personal tax returns before applying. Lenders cannot assess income from unlodged returns.
- Keep company and personal finances separate. Mixing personal expenses through the company creates complications during assessment.
- If you have multiple companies or trusts, prepare a clear structure diagram. Lenders need to understand where the income flows.
- Avoid taking on new company debt or large equipment finance in the months before applying. These liabilities reduce your assessed capacity.
