No Doc Loans
or no documentation loans provide increased ease and privacy in exchange for a higher interest rate.
Different types of no doc loans
(low doc, stated income
, no ratio loans) are available to meet the needs of various employment and income situations.
The more documentation you provide your mortgage lender (employment, income and credit history) the lower your interest rate may be. Many home buyers choose not to offer documentation for personal privacy reasons, and willingly opt for a higher interest rate. Yet, many of these home buyers have a healthy income, or savings, and a credit history.
A No Doc loan
or Low Document loan provides increased ease and privacy when getting a mortgage in exchange for a slightly higher rate.
Buyers that opt for a No Doc loan
are typically those who don’t prefer to have their entire life and financial history presented to the lender. For instance, they might be using an inheritance to secure a loan or have fluctuating income from owning their own business.
Ease is a big factor as well. With a No Doc loan
, the borrower provides their name and social security number, along with information regarding the property being purchased. The rest is up to the lender.
No Doc loans
require the least documentation and are for buyers with good credit. The buyer provides minimal information (usually social security number and general property information) and the lender does the rest. No Doc
home loans are great for people who want maximum privacy.
Stated Income (Low Doc) Loans
, or Low Doc loans, typically attract people who work on a cash or commission basis or people who don’t draw a consistent salary. The borrower will need to disclose earnings, usually for two years, and might need to show tax returns and bank statements.
No Ratio Loans
No Ratio mortgage loans are for borrowers who do not wish to disclose their income; therefore there is no debt-to-income ratio for the lender to consider. The No Ratio borrower has good credit and abundant assets that make up for the lender not considering the borrower’s income information. This loan can be a quick and easy process for borrowers that would have difficulty gathering documentation. Keep in mind that very few lenders offer this type of loan at the moment. UPDATE - No Ratio Loans are hard to find now.
No Income No Assets
No income no asset loans are for borrowers who do not or cannot disclose both income and assets. This loan type is also for borrowers whos income and assets are typically not sufficient to qualify for a loan. In this case, the borrower will need to have good credit. This loan will also be quick and easy to process.
To find out which of these loans is right for you, contact us
or complete the free quote
and we will get back with you to discuss your options free of charge.
In a recent article by CNBC, they tell us that some banks require few mortgage documents
. In this case, they are calling it a Lite Doc Loan
where the bank does not have to comply with the Dodd Frank ATR or ability to repay rule.