Low Doc Home Loan

If you’re self-employed or don’t have the usual paperwork on hand, getting a home loan may feel like pushing a boulder uphill. Fortunately, this is where low doc home loans come in.

And in this article, we will walk you through what they are, their requirements, and how you can boost your approval chances.

What Are Low-Doc Home Loans?

A low documentation (low-doc) home loan is a mortgage that is ideal for self-employed individuals or business owners who have a solid income but may not have the traditional proof that banks require. Instead of standard payslips and tax returns, you can provide bank statements, an accountant’s declaration, or Business Activity Statements (BAS) to prove your financial position.

These loans are ideal for self-employed individuals, freelancers, or investors whose financial documents are incomplete or not up to date. They offer a pathway to home ownership even if your paperwork isn’t perfect.

If you’re in the process of buying a home and want to understand the key steps involved, here’s a helpful guide to walk you through it.

How Low-Doc Loans Work?

Instead of relying on standard proof of income, low doc loans use self-verification. You’ll be asked to sign an income declaration confirming how much you earn and where that income comes from.

This approach is perfect for those early in their self-employed journey like freelancers, who may not possess a comprehensive financial record.

Who Can Benefit From A Low Doc Home Loan?

Low doc loans are meant for people who may not have regular PAYG income but still have a healthy financial position. Sole traders, contractors, small business owners, and investors with irregular income streams can benefit from this.

If your tax returns are overdue or you’ve only recently started your business, alternative documents like BAS statements can help support your application. These loans give flexible options to people whose financial lives don’t fit into neat boxes.

Requirements For A Low-Doc Home Loan

To qualify for a low-doc home loan, you must meet the following key requirements:

At least 12 months of self-employment

Typically, you must be self-employed for at least 12 months. Some lenders accept six months if you have 12 months of prior experience in the same industry. More competitive loans often require 24 months of self-employment.

ABN and GST registration

Your ABN must be active for at least six months. Some lenders require a minimum of 12 or 24 months.

Income verification

Instead of traditional payslips, you can provide BAS statements (6-12 months), business bank statements, or an accountant’s letter.

Credit history

For refinancing, you must have no dishonours or arrears on your credit file in the last three months and maintain a strong credit score.

Deposit

Low-doc loans may require a larger deposit, as they often come with an LVR cap of 60% to 80%.

Low-Doc Self-Employed Home Loan Vs Full-Doc Self-Employed Loan

Low-doc loans are designed for borrowers who can’t easily provide standard proof of income (which can include small-business owners), while self-employed loans specifically cater to business owners who can verify their income through alternative means.

Self-employed loans can either be low-doc or full-doc loans, depending on document availability. On the other hand, low-doc loans are great for not only self-employed borrowers but also for retirees, commission-based workers, and foreign income earners.

Here are the major differences in these loan types:

To learn more, why not give our blog on Low-Doc vs Full-Doc loans a read?

Pros and Cons of Low-Doc Home Loans

Pros

• Accesible for self-employed and non-traditional earners

• Flexible documentation (BAS, bank statements, etc)

• Faster approval process

Cons

• Higher interest rate

• Large deposit required

• Risk fee required for 70% LVR and above

• Restricted loan features

• Some lenders charge additional fees

5 Tips to Boost Your Approval Odds

Choose the right lender

Not all lenders offer low doc products or understand your situation. Work with a broker or lending platform that specialises in this niche.

Know what matters

Your taxable income plays a big role in your borrowing power. Ask your accountant to prepare a tailored report that highlights your true financial strength.

Check your credit score

Know your credit standing and be ready to explain any red flags. A good score makes a big difference in getting approved.

Show savings discipline

Lenders want to see a steady savings history, ideally over three months, to show you can manage repayments.

Be honest

Don’t inflate your income on declaration forms. The ATO can cross-reference this information, and any discrepancies can cause trouble later on.

Final Words

Low doc home loans offer a flexible path to homeownership for self-employed Australians and others without traditional paperwork. While they may require a higher deposit and interest rate, they’re a practical option if you understand the requirements.

With the right documents, a clean credit history, and expert guidance, getting approved can be simpler even without full financials.

If you want to apply for a low-doc loan, feel free to call us on 1300 889 743 or complete our free online assessment form.