Typical low-doc loans carry a rate premium over standard full-doc loans, and the maximum LVR you can borrow is usually lower – commonly capped at 80% (or even 60% with some lenders) depending on the documentation you can supply. Lenders Mortgage Insurance (LMI) still applies when you borrow more than 80% of the property value, which means low-doc borrowers face a tighter equity requirement from the outset.
Why low-doc rates are higher
Because a low-doc loan relies on alternative income verification – a BAS statement, an accountant’s letter, or business activity declarations rather than two years of tax returns – the lender takes on more uncertainty. They price that risk into the interest rate, which typically sits 0.5% to 2% above an equivalent full-doc variable rate. The exact margin depends on the strength of your application, the deposit size, and the particular lender’s appetite for self-employed credit.
Maximum LVR by documentation type
- BAS or accountant’s letter (strongest alt-doc): up to 80% LVR with many lenders; a handful may go to 85% with LMI and strong business performance.
- Business Activity Statements only: often 60–75% LVR.
- Asset‑lending or very-light-doc products: usually capped at 50–60% LVR, if available.
A larger deposit not only widens your choice of lenders but also reduces the rate premium you’re quoted.
LMI and low-doc loans
LMI protects the lender, not you, and is generally required when you borrow more than 80% LVR. For low-doc borrowers this means LMI is rarely avoided unless you have a 20% deposit (or more, where a lender caps LVR at 70%). The premium is added to your loan balance or paid upfront, and it rises with the borrowed percentage. Some specialist lenders offer LMI-free low-doc loans if you meet a higher equity threshold, but these are the exception rather than the rule.
How to compare low-doc offers
Small differences in rates and fees can add up over the life of a home loan. The tools on the ASIC MoneySmart website can help you run the numbers. Beyond the headline rate, pay attention to:
- Comparison rate – bakes in most upfront and ongoing fees.
- Fees – application, valuation, settlement, and ongoing service charges.
- Documentation flexibility – if your income structure will change, check whether the lender will let you refinance to a full-doc rate later without punitive exit costs.
- Lender policy – some lenders count only a percentage of overtime or business income; how they treat your specific situation will change the borrowing power.
Finding a loan that fits
LowDoc AU helps you navigate the self-employed lending landscape. We don’t lend money or promise an approval or a particular rate – we work alongside you to understand which loan features align with your business setup. Once the picture is clear, we can talk through the range of products on the market.
At every step, remember that small actions count. Comparing just a few offers and understanding the LVR rules can put you in a stronger position to manage your home loan over the long term.