Are No-Document Mortgage Loans Available in 2022?
A No-doc mortgage is also called a no-income-verification mortgage or a stated-income loan. It requires less paperwork for approval and often closes faster than a traditional loan. It is often a good option for self-employed borrowers that have an income that does not meet standard loan requirements or that have a different way of filing tax returns.
Today’s stated income or no-doc mortgages come with extra consumer protections and this makes them a competitive alternative to acquiring a traditional conventional 30-year fixed-rate mortgage.
How No-Doc Mortgages Make Difficult Lending Scenarios Possible?
No document mortgage lenders have a variety of different no-documentation or low- documentation mortgage products available depending upon the applicant’s particular need. Some of the most common no-documentation or low-documentation loans include:
This can also be named an asset depletion loan and it consists of a lender qualifying a borrower based on 100% of liquid assets divided by the loan term. For example, if someone has a $1 million net worth and they are looking for a 20-year fixed-rate mortgage, an asset depletion loan would require $50,000 per year of qualifying income.
This is a good option for a borrower with a large amount of income and a high net worth. An institutional bank might offer this to a customer within the bank that makes large deposits or carries a large balance.
Bank Statement Mortgage
A bank statement mortgage lender will calculate income based upon an average of deposits that have been made into a personal or business account of the applicant over a period of 12 to 24 months that are verified by producing bank statements to the lender.
A bank statement mortgage is a great product for those who receive deposits on a regular basis that are easily documented through regular bank statements.
No income no asset loan
This type of loan is available only on financing investment properties. Sometimes these loans are abbreviated to NINA loans and are approved based upon projected rental income for a property that will be purchased. If the rent covers the mortgage payment there’s no income or asset documentation required.
This type of loan is a good option for a real estate investor that has enough cash to make a high down payment and quickly build a portfolio of investment properties.
The Good and Not-So-Good About These Loans
Some borrowers get approval even if income has recently dropped lower
You won’t need income documentation to verify proof of income
You might be able to qualify with just your assets
Sometimes these loans can come with a higher interest rate
These loans often require a much higher down payment
These types of loans often require a higher credit score minimum requirement
Some scenarios where you may want to consider seeking a stated income or no income verification loan
Your income is less than it used to be
If your income has decreased even just slightly it sends off a red flag to a lender especially in the underwriting process and especially if you’re self-employed. In this case, a no- documentation home loan could allow you to get a mortgage without tax returns
You are required to file more than one tax return
The more streams of income that you obtain the more complicated it becomes to file a tax return. As such a no-tax return mortgage could be a very good option to keep things from getting confusing or having to jump through a bunch of hoops.
You have several business expense write-offs from the last tax year
Writing off large expenses such as equipment or commercial property purchases can bring your net income down. Lenders will evaluate a two-year history and average self-employed income. A low year of earnings can hurt approval chances for traditional loans.
You are a real estate investor or planning to become one
For traditional loans there is an ability to re-pay rule, meaning that the lender is responsible to ensure that you can make your mortgage payment comfortably and then some with your current income. This rule only applies to mortgages for primary residences and second homes. With a no-documentation loan program, and using projected rent for the property, an investor can purchase a property without any other asset verification or income verification.
You have a high net worth and do not need to hold a job
If you are in a state of life where working is not necessary because you have a large amount of net worth, a no-documentation loan can allow you to convert assets into qualifying income.
For more information on your loan options for your Granbury home purchase please start the process below or contact us at any time.