Low-Doc Home Loans: What Documents Do You Actually Need?

Investment Loans

8 Oct

When you run your own business, do contract work or have shifting income streams, applying for a standard home loan can be frustrating. Many lenders demand payslips, employment contracts and tax returns - documents you may not always have. That’s where low-doc home loans come in. They give borrowers who can’t fully verify income in the usual way a pathway to home ownership. In this article, I’ll walk you through exactly what documents you do need for a low-doc home loan in Australia, what lenders typically expect, and tips to present a stronger application.

What is a low-doc home loan?

A low-doc home loan (sometimes called “alt doc”) is a mortgage where the lender accepts alternative forms of proof of income rather than standard payslips and full tax returns. The term “low documentation” doesn’t mean “no documentation” - you'll still need to show that you can afford repayments under responsible lending rules. Many lenders now classify these as alt-doc under updated regulations.

These loans are popular among self-employed people, contractors, freelancers or business owners whose financials don’t neatly align with full doc requirements.

Because the risk is seen as higher, low-doc loans often come with stricter terms: you may need a larger deposit, expect higher interest rates, and your loan-to-value ratio (LVR) may be capped more conservatively.

Core eligibility requirements

While each lender has their own rules, these are the usual criteria you’ll need to satisfy:

You must hold an ABN (Australian Business Number), typically registered for a minimum period (often 6 to 12 months).
Some lenders require GST registration, especially if your turnover passes the threshold.
A good credit history is crucial. Defaults, late payments or bankruptcies reduce your options.
You’ll usually need a larger deposit - many low-doc loans restrict the LVR to 80 % (i.e. a 20 % deposit) or lower. Some lenders may go to 85 % in specific cases.
All the usual identity and verification documents (driver’s licence, passport, proof of address etc) still apply under the 100-point check system.

What documents do you actually need?

Because lenders vary, you may need different combinations of documents. Below is a list of the most commonly accepted ones:

Business Activity Statements (BAS): Usually 6 to 12 months of the lodgements. Lenders use these to assess your turnover and revenue.

Business bank account statements: Providing 6 to 12 months of trading / business account statements helps verify consistent cash flow.

Accountant’s letter or declaration: A letter from your accountant confirming your financial position or income can carry significant weight. Some lenders also require a signed “income declaration” alongside this.

Self-declaration of income: You may be asked to formally declare your income in a signed document (sometimes on a lender’s template).

Proof of ABN / business registration / GST: You’ll need documentation showing your ABN is active and, if applicable, your GST registration status, including how long registrations have been in place.

Personal tax returns / Notices of Assessment (if available): Even though low-doc aims to reduce reliance on full tax returns, if you have them, they’re useful to bolster your case. Some lenders may still ask.

Identity and address verification: Your driver’s licence, passport or other acceptable identity documents, and proof of current residential address via utility bills, rates notices or bank statements under the 100-point rule.

Property documents: Once you’re buying a property, lenders will also need the contract of sale, title documents, and property valuation. These are part of any home loan, not specific to low-doc.

Variations and lender flexibilities

Some lenders are more lenient and may accept fewer documents or alternative combinations, especially specialist or non-bank lenders.
The degree of risk perceived by the lender will influence how many and which documents they demand. The less you provide, the higher the interest rate or associated risk fees.
Some lenders require both an accountant’s letter and bank statements; others may accept one or the other depending on your situation.
For loans from overseas buyers, documents may need to be witnessed by a Justice of the Peace or authorised person, depending on state/lender rules.

Conclusion

Low-doc home loans offer a realistic option if your income is non-traditional, variable or hard to neatly document. While they allow for more flexibility, you still need to supply solid evidence of your ability to repay - via BAS, bank statements, accountant declarations, identity checks and property documents.

Because each lender has its own rules, your best approach is to gather as many of these supporting documents as possible to strengthen your case. The better your package, the better your chances of securing a low-doc home loan on terms that aren’t overly punitive.