Home loan documents for PAYG employees: the application checklist

Every document request in a home loan application traces back to one place: the responsible lending conduct obligations in Chapter 3 of the National Consumer Credit Protection Act 2009. Under ASIC’s guidance, credit licensees must make reasonable inquiries about your financial situation and your requirements and objectives, take reasonable steps to verify your financial situation, and assess that the credit contract is “not unsuitable” for you — a broker makes a preliminary assessment, a lender a final assessment. Your paperwork is the verification.

The obligations cut both ways: if you request it, a broker must be able to give you a written copy of the preliminary assessment, and a lender a written copy of its final assessment. ASIC’s detailed views are set out in Regulatory Guide 209.

This checklist is for PAYG (salaried and wage-earning) employees. If you are self-employed or contracting, the income evidence works very differently — see our self-employed home loan documents guide instead.

For PAYG applicants, income evidence centres on two things: recent payslips and the ATO income statement. If your employer reports through Single Touch Payroll, your end-of-year record is an income statement in ATO online services — your employer does not have to give you a payment summary. It shows year-to-date salary and wages, tax withheld and super, which is exactly what a lender wants verified.

Two wrinkles worth knowing. If an employer is not yet reporting through STP, it must still give you a payment summary by 14 July; and if you have more than one employer, you will have more than one income statement or payment summary — gather them all. A registered tax agent can also access your income statement information for you through their software or Online services for agents.

If your lender asks for further income history, your notice of assessment — the statement the ATO issues when your tax return is processed, showing tax on your taxable income, credits for tax already paid, and any refund or amount payable — is delivered to your myGov inbox, and copies of tax documents (notice of assessment, income statement, lodged return) can be reviewed and printed through ATO online services.

Statements for the accounts holding your deposit do double duty: they prove the money exists, and they show your savings history — which Moneysmart notes lenders read as evidence you can budget and commit to repayments. Some lenders also apply a “genuine savings” policy, distinguishing money you saved over time from gifts or windfalls. Definitions and thresholds are set by individual lenders and mortgage insurers — there is no single government standard, so ask your lender or broker how your deposit source is treated.

Your deposit also sets your loan-to-value ratio (LVR) — the loan compared with the property’s value. Moneysmart’s example: borrowing $450,000 against a $600,000 home is a 75% LVR. Above 80% LVR you may pay lenders mortgage insurance (LMI) — a one-off fee protecting the lender, not you or your guarantor — while a 20% deposit avoids it. We unpack the mechanics in lenders mortgage insurance explained.

Lenders work out whether you can afford repayments from your income, your debts and your everyday expenses — so expect to document all three. Gather statements and current limits for every credit card and loan, and prepare an honest breakdown of living expenses. How lenders turn those numbers into a borrowing figure is covered in how lenders assess serviceability — the serviceability assessment is where these documents land.

Your credit report is the one document the lender obtains itself — but you can get there first. Moneysmart confirms you have the right to a copy every 3 months, at no cost, from each of Australia’s two main credit reporting bodies, Equifax and Experian, which can hold different information. A report includes your credit products, repayment history, financial hardship information, defaults, past credit applications and any bankruptcy or debt agreements — and credit providers and mortgage insurers can access it when assessing a home loan application. Reviewing it before you apply lets you spot wrong or out-of-date entries early.

For pre-approval, the lender asks for evidence of your current financial situation to assess your ability to repay — essentially the checklist above. Moneysmart notes pre-approval lasts 3–6 months, shows you are eligible to apply for a loan up to a certain amount, and does not commit you to a loan. Full approval comes later, once you have a specific property, and your lender or broker will confirm what further documents are required at that stage.

If you apply through a broker, the broker must act in your best interests when suggesting a loan — the best interests duty — and makes the preliminary assessment described earlier, which you can request in writing. You can confirm any broker’s standing on ASIC’s Professional Registers Search, which covers both credit licensees and credit representatives. Unresolved complaints about a lender or broker can be taken to the Australian Financial Complaints Authority (AFCA), the external dispute resolution scheme.

On remuneration: in most residential lending scenarios, the lender pays broker commission. We explain remuneration in our Credit Guide. Moneysmart notes brokers must give you information about the commissions they may receive, and any fee charged to you directly must be set out in a written quote you sign before services are provided.