No income verification mortgages, sometimes called stated loans or low documentation loans, were very popular in the mid-2000s and offered a loan to virtually anyone with an average credit score without verification of employment necessary. These loans were risky to lenders and wary borrowers, and many lenders have since eliminated these loans as less-than-ideal options for many borrowers. Still, there are still plenty of no income verification loans available for people who are ready to buy a home. However, these types of loans require a great deal more information from borrowers than are typically required of no income verification mortgages. If you are planning to apply for a mortgage and are having trouble getting a no income verification loan because you don’t have the income you need, keep reading for tips that can help you get a no income verification loan.
First, know your assets. Assets include all your fixed assets like your home, stocks and bonds, furniture, appliances, vehicles, jewelry, clothing, vehicles, and furniture and personal items. Your financial assets can be outlined in a detailed financial statement that you can receive from a financial institution when applying for a no-doc mortgage loan. Include everything in your financial statement so that the lender can see what they’re dealing with.
Second, know your tax status. Some lenders will only allow verification mortgages if you have at least one year of tax returns. However, even if you don’t have a year of tax returns, a complete financial statement will still help them process your loan. To get no doc loans, you can also mention if you have tax liens, bankruptcies, or foreclosures on your records. This will show them that you are willing to handle the risk of bad credit loans by showing them your current income and financial state.
Third, create a solid plan of attack. If you have no income, no assets, and bad credit, then you are going to have a very hard time getting approval for these kinds of loans. Lenders will want to see that you have something to use for collateral or security. Have your pay stubs and a list of assets ready so that the lenders can see what you have to offer. It is also helpful to have a few savings accounts because many lenders will want to see at least six months of salary. If you don’t have enough income to cover all of your bills at the end of the month, then you may not be approved for these mortgages.
Some lenders will accept faxed pay stubs as proof of income. Other lenders will require a letter from your employer verifying that you are employed. Lenders will look at the equity in your home and consider the value of other property owned by you. This is called the “equity” factor and has a big effect on whether or not these mortgages will be approved.
If you have a steady job and are working on a regular basis, this will have an impact on the “Equity” factor. The higher your “Equity” factor is, the better. In order to have an “EQ”, there must be steady employment and a decent amount of money coming in each month. Lenders like to see some of these things in place. They are looking for people who are able to make their payments on time and will have a sufficient amount of assets to support themselves.
The “Cash Flow” is the last factor, and these factors determine if the lender will approve the loan. If the borrower has a consistent income but is not paying their bills on time, then this will have an impact on the “cash flow”. Cash Flow is affected by the total amount of money coming in and going out, the amount of interest paid, the length of time the loan is open, and any associated fees and costs.
Some of these types of loans are called “Served”, “First Time Home Buyer Mortgages” or “First Time Home Owner Mortgages”. These loans have a higher interest rate as the borrower’s income may not be high enough to qualify for prime rates, yet they still need to have the funds available to go ahead with the purchase. A “Homeowner Refinance” on a property also falls into this category. These loans were made to allow the borrower to refinance after a certain period of time. It is the borrower’s choice to either use the equity already built up in their property to purchase a new one or to pay off the existing loan and save themselves the fees.