Lenders assess income in two parts: how much a borrower earns and how reliably they will keep earning it. Employment type drives the evidence needed, so the broker’s first job is matching each client’s situation, whether PAYG, contract, freelance or self-employed, to the documentation and track record their target lenders actually require.
This guide sets out what different employment types need for the mortgage application process, how probation and recent job changes are treated, and where expatriate files diverge from the standard path.
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How lenders read different employment types
Permanent full-time employees sit at the easy end: two payslips and an employment letter often suffice, and probation is usually acceptable after a short period in role. Part-time and casual employees can be assessed on their regular hours, though casual income generally needs a history of twelve months or more with the same employer before many lenders will count it in full.
Contract and freelance income gets closer scrutiny because continuity matters more than the rate of pay. Lenders typically want to see the contract’s remaining term, renewal history or a pattern of repeat engagements, and some apply loading or discounts to the assessable figure. Self-employed borrowers face the heaviest documentation load: two years of tax returns and financial statements are the common benchmark, although some lenders accept one year or alternative verification such as BAS records or accountant letters.
Probation, gaps and recent changes
A new job is not automatically a problem, but timing shapes the file. Many lenders prefer borrowers to have commenced rather than merely signed a contract, and some require the probation period to be complete or nearly complete before settlement. Employment gaps need a short written explanation covering study, travel, illness or caring responsibilities; unexplained gaps invite questions late in assessment when they cost the most time. Where overtime, bonus or commission income forms part of the picture, expect lenders to average it over the past one to two years rather than take the best year at face value.
Pricing interacts with all of this. A borrower whose income is harder to verify can still qualify, but the perceived risk shows up in the interest rates offered or the conditions attached, so comparing lenders’ treatment of non-standard income is worth real money.
Preparing the file
Strong files are assembled before an application is keyed, not after questions arrive. Collect recent payslips, employment letters stating role, tenure and contract terms, plus tax records; for self-employed clients add complete financial statements rather than summaries. Well-prepared mortgage applications move faster because the assessor’s questions are answered in advance instead of through rounds of follow-up.
Expatriate and non-resident borrowers
Expats face extra layers: foreign-income policies differ widely between lenders, some exclude certain currencies or countries of residence, and additional lending criteria can apply to non-residents. Where a family member is willing to provide security support through a guarantor arrangement, the deposit hurdle can drop substantially, with some lenders accepting little or no borrower deposit. That benefit carries weighty obligations for whoever guarantees, so both parties need independent legal advice and a clear-eyed view of what happens if repayments fail.
The rest of the assessment
Income and employment never stand alone. A client’s credit score and their credit history colour how the same income is read, and living-expense declarations that contradict bank statements undermine an otherwise clean file. Check the two stories match before lodging.
Experienced mortgage brokers add value here by knowing which lenders currently treat casual, contract or foreign income generously, because those policies move with the housing market and each lender’s appetite. Before you lodge the next file with non-standard income, call your target lender’s business development manager and confirm in writing exactly which documents will satisfy their assessor; a ten-minute check beats a week of re-work after a decline.
