When the Reserve Bank board left the cash rate unchanged at 4.35 per cent for a sixth consecutive meeting on 6 August 2024, it locked self‑employed borrowers into a serviceability squeeze that has reshaped low‑documentation lending. The official rate hold, coupled with APRA’s persistent 3‑percentage‑point serviceability buffer, means every basis point of assessable income counts. For sole traders, company directors and contractors who cannot produce standard PAYG payslips, borrowing capacity has been eroded by assessment rates that now sit between 8.00 and 10.25 per cent. Yet a quiet shift in mid‑2024 among the major non‑bank lenders has turned joint applications — where a partner’s stable PAYG income is blended with the self‑employed applicant’s alternative documentation — into the most viable pathway for a low‑doc mortgage. Brighten’s Near Prime Low Doc product update, released 1 July 2024, lifted the maximum loan‑to‑value ratio for combined‑income purchase applications to 75 per cent, up from 70 per cent. Three weeks earlier, Resimac’s Alt Doc product guide, effective 15 May 2024, formalised the acceptance of a spouse’s full PAYG salary verified through two consecutive payslips, while the self‑employed borrower’s earnings continued to be assessed at 60 per cent of net profit from six months of BAS. Lenders are not simply adding two incomes; they are restitching their credit policies around the reliability of one fully verified income stream. The result is a distinct joint‑application calculus that dictates how much a low‑doc borrower can access, what documentation the PAYG partner must supply, and which LVR, DTI and serviceability ceilings apply.
How Lenders Blend Incomes in a Joint Low‑Doc Application
When a self‑employed applicant and a PAYG partner appear on the same mortgage application, the underwriting engine splits the income into two streams. The PAYG income is taken at 100 per cent of base salary, provided it is permanent, supported by payslips and confirmed by a bank account showing regular salary credits. The self‑employed income is assessed through the lender’s alternative‑documentation rules — typically six months of BAS statements, an accountant’s letter or 12 months of business bank statements — and then multiplied by an inclusion rate. The inclusion rate varies by lender, but the market standard is 60 per cent of net business profit when BAS are used, reflecting the higher perceived volatility of business earnings. The blended assessable income becomes the denominator for debt‑to‑income calculations and the input for the serviceability model.
The Serviceability Calculation That Sits Behind the Blend
A lender will take the combined assessable figure, subtract an estimate of living expenses (usually the higher of the Household Expenditure Measure or declared expenses) and deduct existing debt commitments. The remaining surplus must cover the proposed loan repayment calculated at the serviceability assessment rate — not the actual product rate. For example, with a self‑employed net profit of $120,000 shaded to $72,000 and a partner’s verified base salary of $90,000, total assessable income is $162,000. After $3,800 in monthly living costs and a $600 car loan, the couple has net free cashflow of roughly $94,200 annually, or $7,850 per month. If the lender’s assessment rate is 9.79 per cent — a typical figure derived from a 6.79 per cent variable product rate plus a 3.00‑percentage‑point buffer — the maximum monthly repayment a 30‑year principal‑and‑interest loan can demand, per $100,000 borrowed, is $904. That translates to a loan ceiling near $580,000 before LVR and DTI caps are checked. Actual borrowing limits are shaped by the most restrictive of the three measures: serviceability, LVR or DTI.
Which Income Counts, and How Bonuses and Overtime Are Treated
PAYG partners who earn regular bonuses, overtime or commissions face an additional verification layer. Brighten, for instance, will accept 80 per cent of bonus income averaged over the last two years’ group certificates and payslips, provided the employer confirms it is ongoing. Resimac uses an 80 per cent inclusion rate for bonuses only if the PAYG spouse has been with the same employer for at least 12 months and the bonus appears consistently. Liberty tends to be more generous, allowing 100 per cent of proven overtime when supported by the employer’s letter, but the self‑employed half still gets the 60 per cent shading. Contractors on fixed‑term assignments present a separate challenge: La Trobe’s Low Doc PL product will accept a PAYG partner on a fixed‑term contract as long as the contract has 18 months remaining and shows a history of renewal, while Liberty requires only six months remaining and will verify via a direct employer reference.
Lender‑by‑Lender Guide: Policies That Accept PAYG Partners on Low Doc
The non‑bank sector sets the pace in joint low‑doc underwriting. Below are the specific parameters applied by the lenders most active in this segment as of August 2024. Every figure is drawn from current product guides or policy notices.
Brighten
On 1 July 2024, Brighten amended its Near Prime Low Doc framework. The headline change lifted maximum LVR for a purchase by a joint applicant with a PAYG partner to 75 per cent (including LMI), while refinance LVR stays at 65 per cent. The self‑employed borrower must supply six months of BAS and can have income assessed at 60 per cent of net profit. The PAYG partner provides two most recent consecutive payslips and a linked transactional bank statement. DTI is capped at 6.0x on the combined assessable income. The floor assessment rate is 8.00 per cent, though Brighten applies an additional 3.00‑percentage‑point margin on top of the product rate if that yields a higher figure. No maximum loan size applies for joint applications.
Resimac
Resimac’s Alt Doc product guide, effective 15 May 2024, allows a spouse’s PAYG income to be verified with two payslips and a bank statement, plus the most recent ATO income statement. The self‑employed income is assessed on 60 per cent of the lower of the trailing 12‑month net profit or the average of six months of BAS. LVR is capped at 70 per cent for purchases and 65 per cent for refinances, with LMI required above 60 per cent. DTI limit is 6.0x. The serviceability assessment rate is the higher of the variable product rate plus 3.00 per cent, or 8.25 per cent. A self‑employed applicant with an ABN registered for less than two years will need an accountant’s letter in addition to BAS.
Bluestone
Bluestone’s Low Doc Prime product, documented in its April 2024 credit manual update, accepts a PAYG partner’s full base salary verified by two payslips and one bank statement showing the same amount. The self‑employed portion can be supported by either six months of BAS (60 per cent of net profit) or an accountant’s declaration. LVR reaches 75 per cent for purchases with LMI and 65 per cent for refinances. DTI is strictly enforced at 6.0x. The assessment rate is set at the greater of the product rate plus 3.00 per cent, or 8.25 per cent. Bluestone does not accept fixed‑term contractor PAYG income on low‑doc applications unless the partner has been in the role for 24 months and can show two years of tax returns.
Pepper Money
Pepper’s Essential Alt Doc product, as outlined in its product guide updated 1 March 2024, can include a partner’s PAYG income provided the partner is a co‑borrower. The PAYG income is verified with two payslips and bank statements; the self‑employed income is determined by six months of BAS and an accountant’s declaration, shaded to 60 per cent of net profit. Pepper permits LVR up to 80 per cent for purchases (including LMI) and up to 70 per cent for refinances. DTI is capped at 6.0x. The assessment rate floor is 8.50 per cent. A notable feature: for LVRs below 60 per cent, Pepper offered a no‑LMI option in early 2024, which remains available for joint low‑doc applications where the property value supports it.
La Trobe Financial
La Trobe’s Low Doc PL, revised in June 2024, takes a different approach to self‑employed income, calculating it as 50 per cent of gross business turnover from six months of BAS, rather than a net profit figure. A PAYG partner’s salary is assessed at 100 per cent using the standard payslip and bank statement method. LVR is allowed up to 75 per cent for purchases and 65 per cent for refinances, with LMI applicable above 60 per cent. DTI can stretch to 6.5x, the highest among mainstream low‑doc lenders. The serviceability buffer is lower at 2.50 per cent above the product rate, subject to a floor of 8.00 per cent, making La Trobe particularly attractive when the self‑employed income is large but the PAYG component is moderate.
Liberty
Liberty’s Freedom Low Doc product, which has remained largely unchanged through 2024, relies on 12 months of business bank statements to determine self‑employed earnings, assessed at 65 per cent of net profit. A PAYG partner’s income can be included through two payslips, a linked bank account and the most recent ATO income statement. The maximum LVR is 70 per cent for purchases (with LMI) and 60 per cent for refinances. DTI is capped at 6.5x. Liberty applies a serviceability buffer of 3.00 percentage points, with a floor assessment rate of 8.00 per cent. Uniquely, Liberty will accept a PAYG partner on a fixed‑term contract with just six months remaining, provided the employer can confirm the arrangement in writing.
The Numbers That Decide Approval: LVR, DTI and Serviceability Buffers
A joint low‑doc application lives or dies on three hard thresholds. A borrower can satisfy serviceability but be refused because the LVR for the specific property breaches the lender’s limit. Alternatively, the DTI ratio may push past the cap even though the surplus income looks comfortable on a monthly basis. Understanding how the caps interact is essential before selecting a lender and a property price.
How a 3.00‑Percentage‑Point Buffer Changes Borrowing Capacity
APRA’s prudential practice guide APG 223, issued 26 October 2021 and still in effect in 2024, recommends a serviceability buffer of at least 3.00 percentage points above the loan product rate. While non‑bank lenders are not directly regulated by APRA, they benchmark their assessment closely to this standard. For a joint low‑doc applicant, the product rate might be 7.14 per cent, but the assessment rate pushes to 10.14 per cent. This single adjustment can reduce a couple’s maximum borrowing capacity by roughly 20 per cent compared with an assessment at the actual rate. On an assessable combined income of $150,000, the buffer can trim the loan ceiling from around $800,000 to $640,000, before any DTI or LVR restrictions are applied. Every lender in the earlier guide applies a buffer that moves the dial in a similar fashion; the only variation is the floor rate.
DTI Caps as a Separate Constraint
Even if a borrower passes the serviceability test comfortably, a hard DTI cap may block the application. Most lenders in the low‑doc space enforce a 6.0x multiple on total credit limits, though Liberty and La Trobe allow 6.5x. The denominator is the blended assessable income — the self‑employed income after shading plus the PAYG base. Suppose a couple wants a $720,000 loan and their assessable income is $115,000. The DTI would be 6.26x, which exceeds Brighten’s or Pepper’s 6.0x cap and would result in an automatic decline, regardless of free cashflow