In short: A low doc home loan lets self-employed borrowers prove income with an accountant's declaration, business activity statements or business bank statements instead of two years of tax returns. You generally need an ABN for 12–24 months, a deposit of 20–40%, and you pay a higher rate and often a risk fee. It is a bridge to a standard loan once your tax returns catch up.
Low doc lending has changed a lot since the pre-2009 days of signing a form and stating any income you liked. Under the National Consumer Credit Protection Act every lender must verify that you can afford the loan, so today's low doc loans still check income, just with different paperwork. This guide explains what is accepted, what it costs, and when it is the right tool.
Full doc, low doc and alt doc
| Full doc | Low doc | Alt doc | |
|---|---|---|---|
| Who it suits | Employees; self-employed with two years of returns | Self-employed with returns not yet lodged, or returns that understate current income | Self-employed with strong recent trading but complex or new structures |
| Income evidence | Payslips or two years of tax returns, notices of assessment and financials | Accountant's declaration and/or 12 months BAS and/or income declaration | 6–12 months of business bank statements and/or BAS with lender analysis |
| ABN and GST | Usually 2 years ABN, 1 year GST | Typically 12–24 months ABN; GST registration usually required | Typically 12 months ABN |
| Typical maximum LVR | 95% with LMI, 80% without | 60–80% | 70–85% |
| Rate | Standard | Premium, often 0.5–1.5 percentage points above full doc | Premium, usually between full and low doc |
| LMI or risk fee | LMI above 80% | Risk fee or LMI often from 60–70% LVR | Varies |
| Lender range | Widest | Non-bank and specialist lenders mainly | Non-bank and specialist lenders |
The line between low doc and alt doc is blurry, and lenders use the terms differently. The practical question is which documents you have, and what each lender will accept.
What counts as income verification
Accountant's declaration
A signed letter from your accountant confirming your income for the relevant period and that the figure is consistent with the records they hold. Many lenders now cross-check it against BAS, because accountants have grown cautious about declaring figures they cannot substantiate.
Business activity statements
Twelve months of lodged BAS shows your turnover as reported to the ATO. Lenders apply an industry margin (for illustration, 40–60% of turnover) to arrive at an income figure. A café turning over $600,000 might be assessed on $240,000–$360,000 of income; a consultant with few expenses might be assessed on 80% of turnover.
Business bank statements
Six to twelve months of statements showing regular deposits. The lender annualises the credits and applies a margin. This method rewards businesses with clean, consistent banking and punishes those that mix personal and business transactions.
Income declaration
You declare your income on a form. On its own this is rarely enough today; it is combined with one of the methods above.
What a low doc loan costs
Take Maria, who owns a café in Sunbury. Her last two years of tax returns show low profit because she wrote off a fit-out, but 12 months of BAS show turnover of $480,000. She wants a $700,000 home with a $140,000 deposit (80% LVR).
| Item | Full doc (not available yet) | Low doc |
|---|---|---|
| Loan | $560,000 | $560,000 |
| Rate (for illustration) | 6.00% p.a. | 6.75% p.a. |
| Monthly repayment (30 years, principal and interest) | $3,357 | $3,632 |
| Extra cost per year | $3,300 | |
| Risk fee or LMI at 80% LVR | nil | often $3,000–$8,000 depending on lender |
| Stamp duty (VIC general rate on $700,000, not a first home) | $37,070 | $37,070 |
| Application and valuation fees | approx. $600 | approx. $1,000–$1,500 |
Over two years the premium costs Maria roughly $6,600 in interest plus the risk fee. After that, with two clean tax returns lodged, she refinances to a full doc loan and the premium disappears. That is the normal life cycle of a low doc loan. Use the LMI calculator and the LVR calculator to test your own deposit position.
LVR limits and deposits
Because the lender is taking more verification risk, it takes less price risk. Most low doc products cap at 80% LVR, many at 70%, and risk fees start well below the 80% threshold that applies to full doc LMI. On a $700,000 purchase:
| Maximum LVR | Deposit needed | Plus duty and costs (VIC general rate) |
|---|---|---|
| 80% | $140,000 | approx. $40,000 |
| 70% | $210,000 | approx. $40,000 |
| 60% | $280,000 | approx. $40,000 |
If you are a first-home buyer, the Victorian duty exemption or concession still applies on a low doc loan, and so does the First Home Owner Grant for a new home. The First Home Guarantee is available only through participating lenders and requires full income verification, so it rarely pairs with low doc. Our understanding LVR and LMI guide covers the thresholds.
Who low doc loans suit
- Self-employed borrowers whose latest tax return is not yet lodged.
- Business owners whose taxable income is deliberately low but whose cashflow is strong and visible in BAS.
- People who have recently changed structure (sole trader to company) and cannot show two years under the new entity.
- Investors with rental income and a business who want to move quickly on a purchase.
They do not suit borrowers who simply do not want to show their paperwork, or whose BAS would not support the income they hope to declare. Under responsible lending rules the lender must be satisfied the loan is not unsuitable, and a declared income that the BAS contradicts will be picked up. Read the National Consumer Credit Protection Act for the legal framework.
From low doc to full doc
Plan the exit from day one:
- Lodge tax returns on time for the next two financial years.
- Keep business and personal banking separate.
- Avoid missed repayments; a clean 12–24 month history on the low doc loan is itself evidence for the next lender.
- Check the low doc loan's fixed period and exit fees before you sign, so refinancing at the two-year mark is not penalised.
- When two returns are lodged, refinance to a full doc product. The refinancing guide walks through the process.
Low doc application checklist
- ABN registration certificate showing at least 12 months (24 for many lenders).
- GST registration where turnover requires it.
- Twelve months of lodged BAS, or six to twelve months of business bank statements.
- Accountant's contact details and, if the lender requires it, a signed declaration.
- Personal bank statements showing deposit and genuine savings.
- Evidence of no overdue ATO lodgements.
- Identification and a clear credit file.
- Rental appraisal if buying an investment property.
- A budget that reflects the higher rate for at least two years.
Common mistakes
- Declaring income the BAS does not support. It will be reconciled and the application declined, leaving a credit enquiry on your file.
- Expecting 90–95% LVR. Low doc lending is a 60–80% product.
- Ignoring the total cost. A rate premium of 0.75 percentage points on $560,000 is $4,200 a year; budget for it.
- Applying with unlodged BAS. Lenders want BAS as lodged with the ATO, not draft figures.
- Choosing a lender by rate alone. Some low doc products carry heavy exit fees; the cheapest headline rate can be the most expensive to leave.
- Staying on low doc for years. Once your returns are current, the premium is money for nothing.
Frequently asked questions
What is a low doc home loan?
A low doc (low documentation) home loan is a loan for self-employed borrowers who cannot provide standard proof of income such as two years of tax returns. Instead, the lender verifies income using an accountant's declaration, business activity statements, or business bank statements. Low doc loans have lower maximum LVRs, higher interest rates and often a risk fee to compensate the lender for the lighter verification.
How much deposit do I need for a low doc loan?
Usually at least 20% of the purchase price, and some lenders require 30–40%. On a $700,000 Melbourne home that is $140,000 to $280,000, plus stamp duty and costs. Risk fees or LMI often apply above 60–70% LVR on low doc products, which is much lower than the 80% threshold on a standard loan.
Are low doc loans more expensive?
Yes. Expect a rate premium of roughly half to one and a half percentage points over an equivalent full doc loan, higher application fees, and a risk fee in place of or in addition to LMI. On a $560,000 loan a 0.75 percentage point premium adds about $3,300 a year. Most borrowers treat the loan as a two-year bridge and refinance once their tax returns are lodged.
Can I get a low doc loan with 1 year ABN?
Some lenders accept an ABN registered for 12 months, provided GST is registered where required and you can supply BAS or bank statements for the period. Many prefer 24 months. A shorter ABN history usually means a lower maximum LVR, so a larger deposit helps. Newer businesses with strong bank statements sometimes fit an alt doc product better.
Do low doc loans still exist in Australia?
Yes, but not the no-doc loans of the 2000s. Since the National Consumer Credit Protection Act, every lender must verify that you can afford the loan, so modern low doc products still check income using BAS, bank statements or an accountant's declaration. They are offered mainly by non-bank and specialist lenders rather than the major banks.
Can I refinance a low doc loan to a normal loan?
Yes, and you should plan to. Once you have two years of lodged tax returns and notices of assessment, you can refinance to a full doc loan at standard rates with the wider lender panel. Check your existing loan's exit fees and any fixed period first, and keep a clean repayment history, which makes the new lender's decision straightforward.
Talk to GNT Finance
GNT Finance arranges low doc and alt doc loans for self-employed buyers across Melbourne, from café owners in Sunbury to tradies in the northern growth corridor, and maps out the refinance to a standard loan from the start. Explore our self-employed loans and low-deposit home loans, then Book a free consultation or call 0426 403 703. There is no cost to you for our home-loan service in most cases.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.