What does alt doc mean?
'Alt doc' is short for alternative documentation. It describes how your income is proved: through paperwork that replaces the usual pair of lodged returns and company accounts. In practice it's the same family as low doc lending, and many lenders now use alt doc as the official product name, partly because 'low doc' still carries baggage from the pre-2010 days.
Some lenders also draw a line between the two: 'alt doc' for borrowers with strong alternative evidence such as 12 months of BAS that match their bank statements, and 'low doc' for thinner evidence at a higher cost. Our guide to low doc vs no doc vs alt doc sets out the differences.
Alt doc income evidence lenders accept
- BAS statements, commonly the last 12 months, sometimes compared with the year before.
- Business bank statements, usually 6 to 12 months, where lenders use your average deposits to work out income.
- An accountant's declaration confirming your income, on the accountant's letterhead and in the lender's required wording.
- A signed income declaration from you, always backed by at least one of the above.
Who alt doc lending suits
It's built for people whose income is real and steady but whose paperwork lags behind:
- A business that's grown fast, so last year's return understates what you earn now.
- Returns not yet lodged for the latest year, or behind because of an accountant change.
- A recent move from employee to contractor or business owner in the same industry.
- Investors with income from several sources that's slow to document.
If your issue is credit rather than paperwork, see bad credit home loans instead, or as well.
Alt doc and bad credit together
Clean credit plus alt doc income is a common, well-served combination. Alt doc plus defaults or arrears is harder but not impossible: a smaller group of specialist lenders handle it, usually asking for more deposit or equity and charging more.
This is where comparing lenders really matters. The difference between the first lender who says yes and the right lender can be significant over the life of the loan.
From alt doc to a standard loan
Plenty of borrowers use an alt doc loan for one or two years, catch up on their returns, then refinance to a full doc loan. If that's your plan, ask about exit fees and any early repayment costs up front, so moving later stays cheap.
How lenders turn BAS into income
Lenders don't simply take your BAS turnover as income. A common approach is to take your annual GST-exclusive turnover and apply a percentage to estimate profit, sometimes varying by industry. Others average your business account deposits over 6 or 12 months and then make a similar adjustment.
Your signed income declaration then needs to sit comfortably within what the BAS or bank statements suggest. If you declare far more than your documents support, the lender will use the lower figure, or decline.
| Your business | Strongest evidence |
|---|---|
| GST-registered with quarterly BAS | 12 months of BAS plus matching business statements |
| Not registered for GST | 6 to 12 months of business bank statements |
| Complex structure (company or trust) | Accountant's declaration plus statements |
| Seasonal business | 12 months or more, so the full cycle shows |
Alt doc for investors
Property investors who are self-employed can often use alt doc lending for investment purchases too. Rental income is usually assessed from the lease and statements, and the lender will add it to your alt doc income. Expect the deposit requirement for investment to be similar to or higher than for a home you live in.
Mistakes that slow alt doc loans down
- Mixing personal and business spending in one account, so the lender can't see true business income.
- BAS lodgements that are late or missing quarters.
- An undisclosed ATO debt that shows up in the lender's checks.
- Declaring income that doesn't match your evidence.
- Applying to several lenders at once.
What you’ll need
- Photo ID
- ABN and GST history
- BAS statements (usually 12 months)
- Business bank statements (6 to 12 months)
- Accountant's details
- Loan statements if refinancing
Who it usually suits
- Self-employed, contractor or company director
- ABN active for at least 6 to 12 months
- A deposit or equity
- Income that covers repayments
- Clean or explainable credit
