No document loans or no doc loans offer increased privacy and ease. Such loans are good for borrowers having problems documenting their income. Borrowers are not required to provide any income to qualify for the loan or mortgage.
No Doc Loan Requirements
Borrowers are required to meet a certain criteria to qualify. They include:
- Credit score of at least 300
- Property that is your primary residence
- Bank statements
- 10% minimum down payment
- No tax returns required
Facts About No Doc Loans
Borrowers who go for these loans do not want their entire financial history and life presented to the lender. For example, they may have fluctuating income from their business. Alternatively, they may be securing the loan using an inheritance. This means they will not be comfortable giving out this information to the lender.
Another interesting fact is the ease of getting such a loan. The process starts by the borrower providing their social security number and name. This is followed by providing information about the property being purchased. The rest is determined by the lender. Take note that some lenders may require additional information to proceed.
Types of No Document Loans
There are a number of no document loans available today. You can choose the one that best suits your needs. Keep in mind the amount of interest will vary with the amount of documentation provided. The more documentation, the lower the interest rate. The four most popular no doc loans are explained below.
Bank Statement Loans
A bank statement loan is for self-employed individuals only. Lenders ask the borrower to provide 12 – 24 months bank statements. Some lenders may require the previous year’s tax return. Average monthly deposits are used to calculate the amount you receive.
This type of loan is not like a conventional loan. A percentage of your bank’s deposits will be treated as income. Additionally, legitimate tax deductions will not be used against you. They are the best available loans for self-employed individuals.
No Ratio Loans
Borrowers who do not wish to disclose their income will prefer the no ratio hard money or mortgage loans. The lender does not have a debt-to-income ratio to take into consideration. However, there is a slight catch on this no doc loan.
The borrower needs to have good credit. They also need to have abundant assets. These two features will make up for the lender not requiring their income information. It is a loan that is easy and quick to process. Borrowers who have difficulty gathering documentation will find it attractive.
The downside is the number of lenders offering this type of loan is low. Finding a lender offering no ratio loans is a challenge. At the same time, these no doc loans come with a higher interest rate.
Stated Income Loans
Stated income loans are also referred to as low doc loans. They attract people who do not have a consistent salary. For example, people who work on a commission or cash basis.
The borrower needs to disclose their earnings. Usually, this is for the past two years. They may also be required to provide bank statements and tax returns.
Until recently, borrowers would only state their income on the loan application. Currently, borrowers have to provide proof of the income. This includes W2s, tax returns, or pay stubs. The present regulations prevent salaried individuals from getting these loans.
No Asset No Income Loans
NINA is another name for no income no asset no doc loans. It is designed for self-employed people who cannot or do not disclose assets and income. NINA also works for borrowers with assets and income that do not qualify for a conventional loan.
A borrower will need to have good credit to qualify for this loan. On the bright side, it is easy and fast to process. Furthermore, you will not have to document your assets or your income on the loan application.
Knowing the different types of no doc loans is important. It gives you an idea of what to expect. At the same time, you get to know what is required before making an application. You will be able to make an informed decision with this kind of information.
Come to AS-IS loans if you need to get more information about these loans. We are ready to work with you irrespective of your financial situation. Our company gives you the option of choosing hard money loans and no document loans. We can still help you get a loan even if you have bad credit. Contact us today to get the loan you want with the rate you deserve.