What Is A No Doc Mortgage?

In order to qualify for a mortgage you usually need to have a decent credit score and at least two years worth of verifiable income.  However for individuals who are self employed, make most of their money off of commission, are living off investments or just want to have financial privacy, a no doc mortgage or no doc loans may be an option to consider.  Here is some more information on these types of mortgages.

No doc mortgages do not require you to disclose your income, although you will still be subject to a credit check and may have to produce other types of financial documents such as tax returns and profit and loss statements in some cases.  It’s basically a good credit mortgage loan, so if you’re needing a bad credit mortgage loan,  then a no-doc mortgage probably isn’t for you.  No doc mortgage loans do provide a way for individuals with insufficient income history or individuals who value their financial privacy to obtain mortgages.  However, no doc mortgage rates are higher than conventional loan rates.  A no doc mortgage provider may also require you  to put down a larger down payment and have a very good to excellent credit rating to qualify for a no doc mortgage loan.

A no doc home mortgage comes in three main forms.  There is the stated income mortgage which is most appropriate for self-employed individuals and those who primarily earn their living from commissions.  With a stated income no doc mortgage, the borrower must disclose two years worth of earnings.  They may use profit and loss statements or tax returns instead of W2 forms and pay stubs.  They still have to show income but is intended for individuals who may earn from unconventional or irregular earning sources.

A no ratio loan is appropriate for individuals living off of their investments.  With these types of no doc mortgages, the borrower isn’t required to declare their income.  However, the borrower will have to account for their assets such as the money they have in the bank, their investments, and any ownership in businesses.  The no doc mortgage rate on a no ratio loan can be anywhere from a half a point to 3 or more points higher than a conventional mortgage rate.

A NINA (which stands for no income/no asset) verification is a type of no doc mortgage loans for people with excellent credit who want to have the maximum level of privacy and are willing to pay for the privilege.  These loans require the least amount of documentation.  In order to qualify for a NINA, an individual’s credit score will need to be excellent and they will pay a high interest rate in exchange for their privacy.

In the aftermath of the sub prime mortgage crisis, no doc mortgage loans are not easy to find these days.  Many lenders have pulled back from offering them.  Even low equity loans like 95 mortgages might be difficult to find.  However, you may still be able to find one from some mortgage lenders and mortgage brokers.

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