LowDoc AU — the self-employed borrowing handbook

Section I

Three tiers, and what each one costs you

These are levels of evidence, not different products. You start at the top and move down only as far as your documents force you — every step down narrows the lender panel and raises the price.

I Full doc Your income proven from lodged tax returns and the ATO notices of assessment that confirm them, for two financial years. Trade-off: Nothing. This is the tier with the widest lender choice, the best pricing and the highest loan-to-value ratios available. Every other tier exists because someone cannot reach this one. The document list › II Alt doc Your income evidenced from business activity statements and business bank statements instead of lodged returns, usually with a declaration you sign and an accountant confirms. Trade-off: A higher rate than full doc, a lower maximum loan-to-value ratio, and a narrower panel of lenders willing to look at it. The gap between full doc and alt doc pricing is real and worth quantifying before choosing. The document list › III Low doc The least documentary evidence a lender will accept while still meeting its responsible lending obligations — typically a self-declaration supported by one corroborating source rather than several. Trade-off: The highest pricing of the three, the tightest loan-to-value ratio, often a risk fee, and the smallest lender panel. It is a route, not a shortcut — and a lender still has to reasonably verify your position, so "no documents at all" is not a thing that exists. The document list ›

Section II

Five documents, and what an assessor reads in each

Every document answers a specific question. Knowing which question means you can prepare the answer instead of handing over a folder and hoping.

Section III

Six reasons these files get declined

Five of the six are fixable, and four of them are cheaper to fix before you apply than after. The sixth has nothing to do with you at all.

01
Tax lodgements outstanding, or an ATO payment arrangement in place
An unlodged year means the income cannot be verified at all, and an active payment arrangement is a current liability to the Commonwealth that ranks ahead of a new mortgage. Most lenders will not proceed while either is open.
Typical time to clear: Two weeks to three months, depending on how far behind the lodgements are
02
ABN active for less than the lender's minimum trading period
Policy minimums exist because the assessor has no history to read. Below the threshold the file is not weak, it is simply outside policy, and no amount of supporting material moves it.
Typical time to clear: Until the ABN reaches the threshold; there is no shortcut
03
Declared income does not service the loan at the assessment rate
Capacity is calculated on your declared income after recognised add-backs, assessed at a buffer above the actual rate, minus every existing commitment. A card limit you never use is counted at its limit.
Typical time to clear: Two to eight weeks, mostly waiting for limit reductions to appear on file
04
Business and personal transactions run through one account
Turnover becomes unverifiable, and living expenses get read at their highest plausible level because nothing separates them from business costs. This is one of the few problems that makes a strong business look like a weak file.
Typical time to clear: Six months to build clean history, which is why it is worth doing before you need it
05
Debts, guarantees or ATO liabilities that were not disclosed
The credit check finds them regardless, so the practical effect of non-disclosure is not the debt — it is that the file now has a credibility problem, which is much harder to fix than a number.
Typical time to clear: Immediate, and always cheaper than the alternative
06
The property itself is outside lender policy
Nothing to do with your income. Small apartments, rural acreage, specialised commercial security, some postcodes and some strata buildings carry restrictions that apply no matter how strong the borrower is.
Typical time to clear: Days, if you check before you sign

Check which of these applies to me

Section IV

What a lender may actually count as your income

Declared taxable income is the starting figure, not the finishing one. Add back what the lender recognises and the assessable number can look very different.

Assessable income after add-backs

Start with the taxable income on your notice of assessment, then add back only what a lender recognises. Two years is the usual basis; where the two differ materially, many lenders take the lower year or an average, so both are shown.

Most recent year

Taxable income$ Depreciation$ Interest being refinanced$ One-off expenses$ Extra super contributions$

Prior year

Taxable income$ Depreciation$ Interest being refinanced$ One-off expenses$ Extra super contributions$

Most recent year, after add-backs: —
Prior year, after add-backs: —
Two-year average: —
Lower of the two years: —

Which add-backs a lender may recognise

Depreciation. A non-cash deduction. Commonly added back in full because it reduced taxable income without reducing available cash.
Interest on debt being refinanced. Added back where the debt in question is being paid out by the new loan, so the expense will not continue.
One-off or non-recurring expenses. Accepted where you can show the expense genuinely will not repeat. Needs evidence, not an assertion.
Additional superannuation contributions. Voluntary contributions above the compulsory rate are often added back, as they are discretionary.
Director or trust distributions to the borrower. Counted where they flow to you and are consistent across periods.
Rent paid to a related entity. Sometimes added back where the property is owned by you or a related party. Policy varies widely between lenders.

Which of these apply, and whether the average or the lower year is used, is lender policy and it differs between lenders. Your accountant can tell you which add-backs your returns actually support; that conversation is worth having before an application rather than during one.

An estimate for orienting yourself, not a quote, an approval or financial advice. Declared income and lodgement status come from the ATO — check your notice of assessment.

Section V

Guides and worked examples

All guides

Questions

Asked before the first appointment

What does 'low doc' actually mean?

It is an evidence tier, not a product. Full doc means your income is proven from lodged tax returns and ATO notices of assessment. Alt doc substitutes business activity statements and bank statements. Low doc relies on a signed declaration supported by one corroborating source. Less evidence means higher pricing and a lower maximum loan-to-value ratio — and a lender still has to reasonably verify your position, so no-evidence lending does not exist.

How long does my ABN need to have been active?

Two years is the common threshold for full doc policy. Below that you are usually looking at alt doc or low doc, on a smaller lender panel and at a higher rate. Check the actual registration date on ABN Lookup rather than going by memory — the difference between 22 and 24 months changes which lenders can even look at the file.

My tax return shows very little income. Can I still borrow?

It depends on which figure a lender can use. The starting point is your declared taxable income, then recognised add-backs are applied: depreciation, interest on debt being refinanced, one-off expenses, additional superannuation contributions, and distributions that flow to you. Ask your accountant which of those apply before assuming the answer is no.

Why do lenders care about my BAS?

Because it shows turnover across consecutive quarters, whether lodgements are current, and whether the money you say the business earns actually arrives in the account. A missing quarter is read as either a lodgement problem or a hidden bad period, and the assessor has no way to tell which.

What is the single most common reason these applications fail?

Outstanding tax lodgements or an active ATO payment arrangement. It is not a judgement about the business — an unlodged year simply means the income cannot be verified, and an ATO arrangement is a current liability to the Commonwealth. Both are fixable, and both are far cheaper to fix before an application than during one.

General information about how Australian lenders assess self-employed income. Lender policy differs and changes, and tax and lodgement rules are set by the ATO; each page links to the body that sets the rule. Reviewed 17 August 2026.

Borrowing when youpay yourself