Lease-Doc vs Full-Doc Commercial Loans
Lease-doc and full-doc describe how lenders prove serviceability. Lease-doc leans on the lease income; full-doc leans on borrower financials. The right path depends on your lease strength, DSCR and asset type.
Start with the Commercial Property Finance Guide, then model DSCR in the Commercial Property Calculator. For lender-fit policy advice, speak with a Commercial Mortgage Broker.
General information only — not financial, legal or tax advice. Always confirm assumptions, fees and lender policy for your scenario.
Get documentation requirements clarity
1) Lease-doc vs full-doc: what these terms mean
In commercial property finance, “lease-doc” and “full-doc” describe how a lender proves the income story. They’re not marketing labels — they influence what documents you’ll need, how the lender calculates serviceability, and how conservative the structure may be.
Lease-doc generally means the lender’s servicing assessment leans heavily on the property’s lease income. Full-doc generally means the lender uses borrower financials (tax returns, financial statements, BAS, management accounts) as the primary servicing evidence — with the property and lease still assessed as security.
If you’re unsure which pathway fits your situation, start with the broader Commercial Property Finance Guide and model serviceability in the Commercial Property Calculator.
2) Quick comparison: what changes between lease-doc and full-doc
| Feature | Lease-doc | Full-doc |
|---|---|---|
| Primary income proof | Executed lease + rent evidence | Borrower financials + global cashflow |
| Typical use case | Investment property with reliable tenancy | Owner-occupier, vacancy risk, complex income |
| Serviceability lens | Property NOI and lease strength drive DSCR | Business/borrower cash flow drives servicing |
| Documentation | Still document-heavy: lease pack is critical | Heavier financial pack + lease/security docs |
| Where it can tighten | Short WALE / weak tenant → rent haircuts, lower LVR | Weak financials → servicing fails regardless of lease |
Terminology varies by lender. The important part is which evidence the lender will accept for serviceability, and how conservative their assumptions are.
3) What lenders look for on a lease-doc style deal
Because income is anchored to the lease, lenders focus on lease certainty and rent sustainability. A lease-doc deal can be strong — but only if the lease is credit-ready.
- Executed lease (not draft terms)
- WALE / expiry profile (shorter term = higher risk)
- Options, make-good clauses, rent review mechanics
- Incentives and effective rent (rent-free periods matter)
- Tenant strength and industry risk
- Concentration risk (single tenant vs diversified)
- Evidence rent is being paid (ledger or statements)
- Arrears history and lease disputes (if any)
Lease strength feeds directly into DSCR and valuation. A short lease or weak tenant can reduce the income lenders accept, even if headline rent looks strong.
4) When full-doc (financial verification) becomes essential
Full-doc is common when the property income alone doesn’t provide enough certainty, or when the deal is effectively a business cashflow loan secured by property. Examples include:
- Owner-occupied property (the business pays the loan, not an external tenant)
- Vacant or short-leased property (lease risk is too high to rely on rent-only)
- Related-party tenancy (rent may be treated conservatively)
- Cash-out or restructure where the lender wants deeper comfort on capacity and purpose
Full-doc assessment is where borrower financial quality can make or break an approval. If you’re trying to work out whether servicing passes under stress, start with DSCR explained and then confirm requirements via the Business Loan Eligibility Check.
5) Common pitfalls (and how to avoid them)
- Draft leases or missing variations: lenders want executed documents and clear rent schedules.
- Confusing outgoings: unclear recoverables can force conservative NOI treatment.
- Incentives not disclosed: effective rent matters more than face rent.
- Short WALE at high leverage: can tighten both DSCR and valuation.
- Assuming lease-doc means fast: the lease pack and valuation still take time.
Most pitfalls are solvable with better documentation and realistic modelling. The valuation process is often where the lease details are stress-tested — see how commercial valuations work.
6) How this links to DSCR, LVR and covenants
Lease-doc versus full-doc is not a standalone decision. It flows into:
- DSCR: how the lender calculates income and repayments under stress (see DSCR explained).
- LVR: how the lender protects downside risk and how much deposit you need (see deposit and LVR guide).
- Covenants: what you must maintain after settlement (see covenants & annual reviews).
If you want to compare lenders on policy fit (lease acceptance, rent haircuts, WALE sensitivity), speak with a Commercial Mortgage Broker.
7) Tools & next steps
Use the Commercial Property Calculator to model DSCR and repayments under stress.
Read how commercial property loans work to understand documents and lender priorities.
Review a real structure pathway in our SMSF commercial property case study.
Want to know whether your deal is better assessed lease-doc or full-doc (and which lenders match your lease profile)? Talk to a Commercial Mortgage Broker Australia.
FAQs
What is a lease-doc commercial loan?
Lease-doc is an underwriting approach where serviceability relies primarily on the property’s lease income rather than detailed business financials. Lenders still require documents (lease pack, rent evidence, borrower ID and asset/liability position), but the lease is the main driver of the income assessment.
Is lease-doc the same as low-doc?
Not exactly. ‘Low-doc’ usually refers to limited income verification for borrowers. Lease-doc is specific to leased commercial property and is still document-heavy — lenders want a strong executed lease, rent evidence, and comfort on tenant and lease terms.
Do I still need financials for lease-doc?
Often you’ll need fewer operating financials than a full-doc application, but lenders may still request financial statements, BAS, bank statements, and an assets/liabilities position to understand the broader risk. The exact requirement depends on lender policy and deal risk.
What is a full-doc commercial loan?
Full-doc generally means the lender assesses serviceability using borrower financials (tax returns, financial statements, BAS, management accounts) alongside security and lease information. It’s common for owner-occupier loans or where the lease income alone doesn’t provide enough certainty.
How does WALE affect lease-doc lending?
WALE and tenant strength are central. Short WALE, high tenant concentration, or weaker tenants can lead to rent haircuts, lower LVRs, and stricter DSCR targets because the income is less reliable. Strong lease evidence can materially improve the outcome.
Is the maximum LVR different for lease-doc vs full-doc?
Often, yes. Lease-doc deals may attract more conservative LVRs if income risk is higher, while strong long-lease assets can support higher leverage with some lenders. LVR still depends heavily on asset type, valuation, and lender appetite.
What if the tenant is related to the borrower?
Related-party leases can be treated more conservatively because the rent may not be ‘arms-length’. Lenders may require stronger financial verification, adjust rent assumptions, or move the assessment toward full-doc/global servicing depending on the structure.
Can SMSFs use lease-doc style assessment?
Some SMSF lenders focus heavily on lease income, but SMSF policy is lender-specific and documentation requirements can be stricter. If an SMSF is purchasing a property with a lease, confirm LRBA policy early and ensure lease terms and rent evidence are robust.
How do I choose between lease-doc and full-doc?
Start by modelling DSCR and leverage under conservative assumptions, then assess what documentation you can provide and how strong the lease is. A broker can run a lender-fit comparison because policy differences between lenders are often decisive.