Top tips to prepare loan documentation as a dentist

Lenders assess dentists differently to salaried employees because your income structure often includes base pay, clinical billing, and practice ownership components.

The documentation you provide needs to verify both your income stability and your capacity to service the loan. For associate dentists, that typically means payslips, tax returns, and a letter from your principal dentist. For practice owners, expect to provide business financials, tax returns for both yourself and the entity, and accountant statements. The exact combination depends on how you're employed and how long you've been in your current role.

Payslips and Employment Contracts for Associate Dentists

Most lenders require two recent payslips and a signed employment contract or letter from your employer confirming your position, income, and employment status. If you've been in the role for less than 12 months but more than three, some lenders will assess your income based on payslips and the contract alone, while others will wait until you've completed a full financial year and lodged a tax return. If your contract includes a retention payment or sign-on bonus, document the terms clearly, as lenders may exclude one-off payments but include retention amounts if they're structured as deferred income over multiple years.

Consider an associate who moved from a public hospital role to a private practice six months ago. Their base salary dropped slightly, but their total income increased due to a percentage of clinical billings. The lender required payslips showing the new income structure, the employment contract detailing the billing split, and a letter from the practice principal confirming the arrangement was ongoing. Because the income had been consistent across six months of payslips, the lender approved the application without waiting for a full tax return.

Tax Returns for Self-Employed and Practice Owners

If you own a dental practice or work as a contractor, lenders will request your personal tax returns and the tax returns for your business entity, whether that's a company, trust, or partnership. Most lenders look at the most recent two years, though some will consider one year if you've recently transitioned from employment to ownership. The assessable income figure isn't always the taxable income shown on your Notice of Assessment. Lenders add back certain deductions such as depreciation, interest on business loans, and some motor vehicle expenses to arrive at a serviceable income figure.

If your practice is held in a trust or partnership, you'll also need to provide the full trust or partnership return, not just your individual distribution. Lenders want to see the entity's profit and how it was allocated. If you reinvest heavily in equipment or fit-outs, those capital expenses won't increase your assessable income for loan serviceability, even though they reduce your taxable income. That's a common point of confusion. Depreciation is added back, but a $150,000 fit-out paid in cash is not.

Accountant Letters and Financial Statements

An accountant's letter is often required when you're self-employed, newly established, or when your most recent tax return doesn't reflect current income. The letter should be dated, signed, and prepared on your accountant's letterhead. It needs to state your current year-to-date income and, if applicable, confirm that your projected income for the financial year will meet or exceed the prior year. Some lenders also accept accountant-prepared profit and loss statements or management accounts, particularly if you're applying mid-year and your income has increased since the last lodged return.

If you've recently purchased a practice, the lender will want to see the sale agreement, settlement statement, and evidence of how the purchase was funded. If you took on a business loan, that liability will be factored into your serviceability assessment, so provide the loan contract and current statement.

BAS Statements and Bank Statements for Income Verification

Business Activity Statements are sometimes used to verify trading activity and GST turnover, particularly for newer practices or when your tax return is more than a few months old. Lenders don't typically assess income from BAS alone, but they may request recent statements to confirm that turnover has remained consistent or improved since the last return was lodged.

Bank statements are mandatory for all applicants, usually covering the most recent three months for transaction accounts and offset accounts linked to existing loans. Lenders use these to verify your declared living expenses, identify any undisclosed liabilities such as buy now pay later arrangements, and check the source of your deposit. If you've received a gift or family assistance, you'll need a signed letter from the person providing the funds, confirming the amount and that it's a genuine gift with no obligation to repay. Scanned copies are generally accepted, but some lenders require the original letter at settlement.

For dentists with variable income from clinical billings, three months of statements can show how regularly income is received and whether it aligns with the figures in your payslips or profit and loss. If there's a discrepancy, expect the lender to ask for clarification before proceeding.

Documents Required at Pre-Approval and Formal Approval

At the pre-approval stage, lenders typically request identification, income evidence, and details of your deposit. You won't need to provide documents related to the property yet, as the approval is based on your borrowing capacity rather than a specific purchase. Once you have a signed contract of sale, the application moves to formal approval, and you'll need to provide the contract, a copy of the section 32 or equivalent vendor disclosure statement, and proof that your deposit has been paid.

If you're buying in a strata scheme, the lender will also order a strata report or review the owners corporation records. If you're building or buying off the plan, they'll want to see the construction contract, council-approved plans, and evidence that the builder holds appropriate insurance. For construction loans, expect progress payment schedules and periodic inspections as part of the ongoing documentation process.

How to Present Complex Income Structures Clearly

If your income includes multiple sources such as associate work at two practices, locum shifts, and dividends from a practice you co-own, the key is to present everything in a structured way that makes it obvious which income is recurring and which is not. Group your payslips by employer, provide a summary table if needed, and include explanatory notes where the structure isn't immediately clear.

Lenders have standard assessment policies, but they also have credit assessors who interpret those policies. If your situation doesn't fit neatly into a salaried employee or sole practice owner category, you'll benefit from presenting your documentation in a way that anticipates their questions. For example, if you're a part-owner of a practice but also work as an associate elsewhere, make it clear what percentage of the practice you own, what income you draw from it, and how that interacts with your associate income.

If you're using low doc loan options, the documentation requirements differ. Some lenders will accept accountant declarations or self-certification of income in place of full financials, though this usually applies only to established practice owners with strong equity positions. For most dentists, particularly those in the first five years of ownership, full documentation remains the standard.

Deposit Evidence and Genuine Savings

All lenders require evidence of where your deposit came from. If you've saved it over time, three months of bank statements showing the balance is usually sufficient. If you've recently moved a lump sum from another account or received proceeds from the sale of another property, you'll need to provide statements covering the source account as well.

Genuine savings are not always required, but they do strengthen an application, particularly for first home buyers or when your deposit is below 15%. Genuine savings are funds you've held in your own name for at least three months. Term deposits, offset accounts, and savings accounts all qualify. Funds received as a gift, even if held for three months, typically don't count as genuine savings under most lenders' policies, though they can still be used as part of your deposit.

If you're relying on equity in another property rather than cash savings, the lender will value that property and calculate available equity. You'll need to provide recent loan statements for any debt secured against the property, council rates notices, and evidence of ownership.

How a Broker Helps with Documentation Preparation

Working with a broker who understands dental employment structures means you're less likely to be asked for irrelevant documents or caught out by a lender's interpretation of your income. A broker can review your situation before you apply, identify which lenders are most likely to assess your income favourably, and ensure your documentation package addresses the specific criteria that lender applies to dentists. For self-employed dentists, that preparation makes a tangible difference to both the assessment outcome and the time it takes to reach formal approval.

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