Can you get a mortgage if you are self‑employed with irregular income?
- Ben Stephenson
- Oct 25
- 10 min read
Updated: Oct 29
Updated: 26th October 2025
Quick Answer: Yes.
Not every lender will say yes, however many mainstream and specialist lenders will consider self‑employed applicants whose income is seasonal or fluctuates. The key is how your income is evidenced and assessed.
Lenders typically want your SA302 tax calculations and Tax Year Overviews, recent business accounts where applicable, and clear bank statements to support the pattern of deposits. For contractors, some lenders assess affordability using a contract‑based approach that annualises your day rate, while limited company directors may be assessed on salary and dividends, or with certain lenders, share of net profit or retained profits.
Under responsible lending rules, lenders must check affordability using realistic assumptions about interest rates, so expect a stress rate test and sometimes averaging of your last two or three years’ figures, or they may take the lower of your most recent year and average. Strong credit conduct, a sensible deposit, and a coherent explanation of any income dips or gaps can make the difference. A broker who understands complex income can package your documents to match the right lender’s appetite and policy.
Written by Ben Stephenson, CeMAP‑qualified Mortgage Broker, and reviewed by Mortgage Experts. Manor Mortgages Direct is FCA authorised, firm reference 496907, has traded for nearly 30 years and is highly reviewed with a 4.9 Google rating. We have helped thousands of clients secure the right mortgage. We are Bristol based mortgage brokers, and we assist clients nationwide.
Contents
What do lenders actually look for when your income is irregular?
How 2025 rules shape self‑employed affordability
Lender Acceptance Spectrum, from mainstream to specialist
Documents checklist that really moves the dial
Sole trader, limited company director, contractor, umbrella, LLP, which route fits?
Policy exceptions, when lenders may go out of policy
What surveyors and underwriters look for, beyond the numbers
Step‑by‑step mortgage journey for irregular earners
Buy‑to‑let and investor angle for self‑employed clients
Hidden costs, timescales and common mistakes
Market trends, what has changed in the last 12 months
Myth vs Reality for self‑employed mortgages
Broker insights, what we see most often
FAQs
Glossary
Reader’s checklist and next steps
1) What do lenders actually look for when your income is irregular?
Lenders care about affordability, sustainability and evidence. If your income is seasonal, project‑based or has peaks and troughs, the key questions are simple. Can you afford the mortgage now, if rates rise, and can you prove that with documents that reconcile to your tax returns and bank statements?
Expect lenders to consider:
The pattern of income across one to three years, including any dips, gaps or exceptional spikes.
The basis of income they will use, for example net profit for sole traders, salary plus dividends for directors, or contract day rate for contractors.
The lower of average or latest year in some cases, particularly if your latest year fell.
Stress testing, would you still afford payments if rates were higher than today.
Overall credit conduct and commitments, such as credit card balances, car finance and student loans.
A useful mindset is to show that your income is recurring and explainable, not random. A short written narrative that bridges any dips or gaps, for example finishing a project, taking parental leave, investing in equipment, can help the underwriter understand your story.
2) How 2025 rules shape self‑employed affordability
The current UK regulatory backdrop matters because it frames how lenders assess you.
Responsible lending and affordability: The FCA’s Mortgage Conduct of Business rules require firms to evidence income and assess affordability, including variable elements such as bonuses and non‑guaranteed income. Lenders must be able to demonstrate that repayments remain affordable after considering all material factors.
Interest rate environment: As of September 2025 the Bank of England held Bank Rate at 4 percent, and lenders still apply internal stress rates when they test affordability. Do not be surprised if a lender assumes a higher notional rate for the test than today’s pay rate.
Stress test application in 2025: The FCA has clarified how firms should apply the interest rate stress test rule, allowing flexibility but keeping a clear expectation that lenders consider the impact of potential rate rises on affordability.
Loan‑to‑Income flow limit: The Financial Policy Committee’s LTI framework continues to influence market behaviour. Implementation has been adjusted in 2025 to give individual firms a little more flexibility while the overall market‑wide constraint remains monitored. The practical takeaway, high LTI loans may still be available, however capacity is rationed and will not suit every case.
What this means for you: for irregular income, lenders will often smooth your figures, stress at a prudent rate, and ask for documents that tie your numbers back to HMRC. Presenting your case clearly reduces friction and avoids “computer says no” outcomes.
3) Lender Acceptance Spectrum, from mainstream to specialist
Think of lender appetite as a spectrum.
Mainstream, stricter policy: often prefer two or three years of consistent figures, may average income and take the lower of latest year and average if volatility is high. They may be less flexible with day rate or retained profits.
Mainstream with specialist underwriting teams: may use contract‑based assessments for contractors, consider one year’s figures if there is a strong rationale, and take a more holistic view where overall risk is low.
Specialist, intermediary‑only lenders: for example United Trust Bank, Precise Mortgages, Pepper Money, Foundation Home Loans, Tandem Bank. These lenders may consider complex or mixed income, one year of trading where supported by strong background, and nuanced treatment of director income and retained profits. They will still assess affordability carefully, there is never a guarantee, but the door is often open where the packaging is right.
Why this matters: placing an irregular income case with a lender that only prices for neat PAYE payslips can reduce borrowing capacity. The same case, presented correctly to the right policy, may be assessed more fairly.
4) Documents checklist that really moves the dial
Bring documents that prove, not just state.
SA302 tax calculations and matching Tax Year Overviews for the last one to three years, downloaded from your HMRC account.
Full business accounts if you trade as a company or partnership, ideally signed by a qualified accountant.
Three to six months of personal and business bank statements, clear, legible, and with any unusual credits or transfers explained.
Current contracts for contractors or freelancers showing day rate or fee schedule, length, renewal terms and gaps.
Proof of deposit with source of funds, and evidence of any gifts.
Up‑to‑date management information where the most recent tax year is not representative, for example a year‑to‑date profit and loss and pipeline schedule, to show the direction of travel.
Pro tip: check your statements for avoidable red flags like persistent unarranged overdrafts, gambling patterns and late fees. These can be mitigated with a short, honest explanation where context exists, but prevention is better.
5) Sole trader, limited company director, contractor, umbrella, LLP, which route fits?
Sole traders and partnerships
Lenders usually assess net profit as per your SA302s and accounts.
Where income fluctuates, expect averaging across two or three years, or a focus on the lower of latest year versus average if the trend is down.
If your latest year is significantly up, some lenders may still average, others may accept latest year if the uplift is well evidenced and sustainable.
Limited company directors
Many lenders use salary plus dividends. Where dividends are tax‑efficiently low, this can suppress borrowing.
Some lenders may consider share of net profit, with or without adding back salary and dividends.
A smaller pool may consider retained profits in limited circumstances, typically where you are a significant shareholder and the profits are clearly accessible and sustainable.
Clean, professionally prepared accounts and a clear explanation of year‑on‑year changes help underwriters get comfortable.
Contractors on day rate
Some lenders use a contract‑based method, annualising your day rate over a typical working year, often between 46 and 48 weeks, subject to contract length, renewal history and gaps.
If you contract through an umbrella company, some lenders treat you like an employee and rely on payslips, while others look through to the contract terms and gross rate.
Case packaging matters, especially around time in the same line of work and any gaps between contracts.
LLPs and mixed income cases
LLP profit share can be treated similarly to self‑employment, but verify how the firm allocates drawings and profit.
Mixed income, for example part salaried, part self‑employed, is common. Be ready to evidence all streams and to show that the combined picture is stable.
6) Policy exceptions, when lenders may go out of policy
Lenders sometimes exercise discretion where compensating factors exist. Examples include:
Low loan to value with a larger deposit.
Strong recent trend with clear pipeline or contracted work.
Lengthy industry track record, even if self‑employment is relatively new.
Significant savings buffer and conservative spending profile.
Clean credit and low unsecured debt.
None of these guarantee acceptance. They do give underwriters a rationale to deviate slightly from a rigid template when the risk is low and the case is well presented.
7) What surveyors and underwriters look for, beyond the numbers
Underwriters look for internal consistency. Do the SA302s reconcile to what you claim as income. Do the bank statements show the deposits you say you receive. Are there signs of financial strain.
Surveyors provide the lender with an independent view of the property used as security. The valuation is not a full survey for your benefit. It confirms the market value and highlights defects that might impair value or saleability. For flats, lease terms, ground rent and service charges are pivotal. Missing one lease clause could cost you your mortgage offer, so do not assume every property is mortgageable just because it looks tidy.
8) Step‑by‑step mortgage journey for irregular earners
Discovery call. Outline your income sources, trading history, deposit and credit profile.
Document gather. SA302s and Tax Year Overviews, accounts, contracts, statements, ID and proof of address.
Affordability sense‑check. Use conservative assumptions to avoid overreach.
Case packaging. A short covering note that explains your income pattern, any gaps, and how you manage cash flow.
Agreement in Principle. Soft search where possible.
Property and offer. Build in realistic timelines, allow a little extra time for underwriting and valuation when income is complex.
Full application. Respond quickly to any underwriter queries.
Valuation and legal. Ensure your solicitor is lender‑panel approved and the lease or title is clean.
Offer and completion. Keep your finances stable, avoid new credit or withdrawing your deposit funds early.
9) Buy‑to‑let and investor angle for self‑employed clients
For buy‑to‑let, many lenders use an Interest Coverage Ratio test that compares the expected rent to a stressed interest payment. Portfolio landlords may face additional scrutiny across all properties.
Your personal income still matters, particularly for top‑slicing approaches where your surplus income helps meet any rental shortfall. Expect valuation to verify the achievable market rent.
10) Hidden costs, timescales and common mistakes
Hidden costs people forget
Accountant fees for expedited SA302s or accounts
Valuation and survey upgrades if you want more than a basic mortgage valuation
Conveyancing disbursements, leasehold packs, management company fees
Cash flow strain if you pay your self assessment tax close to completion, which can alter your bank balance and affordability
Timescales
Complex income often adds a week or two to underwriting while documents are reviewed or clarified. Build this into any purchase timeline.
Common mistakes
Applying before you have a complete set of SA302s and matching Tax Year Overviews
Assuming a high day rate equals high borrowing, without checking the lender’s method
Large unexplained deposits or inter‑account transfers in your statements
Choosing a property with a lease defect or onerous ground rent clause
11) Market trends, what has changed in the last 12 months
Rates: Bank Rate has moved down from 2024 peaks and was maintained at 4 percent in September 2025. Lenders continue to apply prudent stress rates.
LTI implementation tweak: Regulators have allowed more flexibility in how the loan‑to‑income limit is implemented at firm level, while monitoring the overall market share of higher LTI loans.
Consumer Duty: Lenders are expected to show that outcomes are fair, communications are clear, and foreseeable harm is avoided. Packaging a case transparently helps lenders meet these standards.
Self‑employment landscape: ONS data shows a large and diverse self‑employed cohort across sectors. Lenders have become more nuanced in treating different income profiles.
12) Myth vs Reality
Myth: “I need three years of accounts or I cannot get a mortgage.”
Reality: Many lenders ask for two or three years, however some consider one year with strong mitigants.
Myth: “Umbrella contractors are treated exactly like employees.”
Reality: Some lenders do, others look through to the contract and day rate.
Myth: “Retained profits never count.”
Reality: Some specialist lenders may include retained profits for significant shareholders where accessible and sustainable.
Myth: “A valuation is a full survey.”
Reality: It is primarily for the lender’s security assessment, consider your own survey for peace of mind.
13) Broker insights, what we see most often
Cases decline for avoidable reasons, like missing Tax Year Overviews, unclear statement activity or not explaining a temporary income dip.
A short cover note with your documents can turn a marginal case into an acceptable one.
Specialist, intermediary‑only lenders may offer routes when mainstream policy is too rigid, although nothing is guaranteed.
Small language tweaks help, for example describing your income as seasonal with recurring contracts rather than irregular, anchors the underwriter on the repeatability, not the randomness.
14) FAQs
Q1. Can I apply with only one year of self‑employed accounts
Often, yes, if there is strong experience in the same field, good deposit and clean credit. Expect a smaller lender pool and closer scrutiny.
Q2. Will lenders use my latest year if I had a strong rebound
Some may, others average or take the lower of the latest year and average. The trend and sustainability narrative matters.
Q3. I work via an umbrella company, do payslips suffice
Some lenders use payslips only, others consider the underlying contract. A broker will know which approach is realistic for your case.
Q4. How do lenders treat director income with retained profits
A subset may consider salary plus share of profits or retained profits, case by case. Expect detailed accounts and questions on accessibility.
Q5. What if I had a three‑month gap between contracts
Explain it. Provide evidence of prior and future contracts, savings buffer and why the gap occurred. Long gaps are not fatal if the story is credible.
Q6. How much deposit do I need
There are routes from 5 to 10 percent in the wider market, although complex income can push practical minimums higher. More deposit usually equals more options.
Q7. Does buy‑to‑let ignore my personal income
No. While rent coverage is central, your personal income, tax position and portfolio performance can still influence the decision.
15) Glossary
SA302: HMRC tax calculation that confirms your taxable income for a given year.
Tax Year Overview: HMRC summary confirming income tax due or paid for that year.
LTI: Loan‑to‑Income ratio, a way of expressing loan size relative to income.
Stress rate: A higher notional interest rate used to test affordability.
Retained profits: Company profits left in the business after tax, not paid out as dividends.
Interest Coverage Ratio (ICR): For buy‑to‑let, rent divided by stressed interest payment.
Consumer Duty: FCA standard requiring firms to deliver good outcomes for retail customers.
16) Reader’s checklist and next steps
Your pre‑application checklist
Download SA302s and Tax Year Overviews for the last one to three years.
Gather three to six months of personal and business bank statements.
For contractors, prepare your current contract, CV and renewal evidence.
Ask your accountant to sanity check figures and prepare management info if the latest year has changed materially.
Write a one‑page explanation of any dips, gaps or one‑offs.
Sense‑check affordability using a conservative rate.
We are expert mortgage advisers with extensive experience helping self‑employed clients with irregular income secure the right mortgage. Get in touch today on 01275 399299.