No-doc mortgage, also known as no-income or stated-income mortgage allows an applicant to qualify for lending using non-standard documentation. A no-doc mortgage does not require income verification from the borrower. Instead, lenders approve this loan based on the declaration that the borrower can afford to make the loan payments. No doc mortgages come in handy for borrowers whose income is not easy to verify. While most mortgage lenders request for certain documents like tax returns, a no-doc mortgage focuses on other factors like home equity, available assets, and overall cash flow.
How a No-doc Mortgage Works
To qualify for a mortgage, many lenders require buyers to submit proof of income. Proof of income comprises of documents like:
- W2s forms
- Employment letters
- Pay stubs
- Recent tax returns
- Bank statements
The proof of income helps lenders to know that the borrower has stable and reliable sources of income and will afford the mortgage payments.
The no-doc mortgages do not require any proof of income. With a no-doc mortgage, a borrower only needs to provide a declaration indicating that they can afford to repay the loan. The no-doc mortgages are mainly suitable for applicants who do not have a regular income source including new immigrants, self-employed individuals, and temporary workers.
Types of No-doc Mortgage Loans
There are four main categories of no-doc mortgage loans. Each loan category has its level of requirements:
- Stated income, stated assets (SISA)
- Stated income, verified assets (SIVA)
- No income, verified assets (NIVA)
- No income, no assets (NINA)
- No income, no job, no asset loans (NINJA)
SISA loans are issued without a buyer’s income or assets verification. The SISA loans aren’t currently available.
For SIVA loans, a lender accepts a borrower’s assets as the basis of approval. SIVA loans are also known as bank statement loans. NIVA loans are similar to SIVA loans but income is not included in the application.
The NINA loans are only available to real estate investors purchasing rental properties. For you to qualify for the NINA loan, you must have ample rental income to cater to the new mortgage payment.
With the NINJA loan, the lender does not verify a buyer’s income, assets, or employment. An employer only considers the buyer’s word and assumes that the loan application is accurate.
When to Consider a No-doc Mortgage
A no-doc mortgage would be a great option if you can’t verify your monthly earnings. This loan would also be ideal if you want to avoid the hassle of providing your earnings documentation and if you have complicated tax returns. The no-income verification loan is under the following circumstances:
- Borrowers who file multiple tax returns
- Borrowers with irregular income
- Borrowers whose income declined recently
- Real estate investors
- People with high net worth but with no jobs
Lenders provide different types of no-doc mortgages depending on a borrower’s specific needs. The common programs are:
- Bank statement mortgage – This option is ideal for borrowers who receive income regularly and the income is documentable through bank statements.
- Asset-based mortgages – These are ideal for wealthy borrowers with a high net worth.
- No-income, no-asset loans – These loans are ideal for real estate investors with enough money for down payments.
No-doc mortgages are safe and you can still get a no-doc mortgage depending on your financial situation. Contact ABO Capital if you need a no-doc mortgage.