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What is a no-doc mortgage?

Home loans for those with atypical income

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Written by Jennifer Schurman
Edited by Cassidy McCants
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If you don’t have a traditional job with a fixed salary, it can be hard to qualify for a mortgage. Business owners or self-employed individuals may find it especially difficult to qualify because their income tends to vary month to month.

A no-doc mortgage is an option for these unique situations; with this type of loan, you might not have to show traditional proof of income. However, you will need to prove your ability to repay the loan in other ways.

Can you get a mortgage without income verification?

To qualify for a no-doc mortgage, you might provide bank statements, tax returns or other financial documents to show your ability to repay.

As a general rule, no-doc mortgages don’t require formal income verification. Also called no-income-verification loans or stated-income mortgages, no-doc mortgages are best suited for individuals with complicated self-employment situations.

With most conventional mortgages, borrowers need proof of income to show they have a steady flow of cash coming in. It’s typical to submit pay stubs, W-2s and tax returns to prove you have the ability to repay your loan. But if you’re self-employed, you might not have this documentation (or your tax return or business statements may be complex, making it difficult for a lender to interpret your true income versus the income of the business as a whole.

A no-doc mortgage allows applicants in these situations to submit other documentation to prove their ability to repay the loan. This documentation could include bank statements, investment account statements, and business or personal tax returns.

How do no-doc mortgages work?

No-doc mortgages were popular before the 2008 financial crisis, when some lenders relaxed their underwriting processes by not taking the time to verify applicants’ income information. This allowed individuals to qualify for mortgages they ordinarily wouldn’t be eligible for — and, in the end, caused a rise in loan defaults and foreclosures because many borrowers weren’t able to repay their loans.

Following this crisis, several regulations were imposed on the financial services industry (and on mortgage lending specifically) to prevent another financial collapse from occurring. One of these regulations is the “ability-to-repay rule,” which states that most lenders must take reasonable action to determine if a borrower can repay the loan. When making this determination, they should consider a borrower’s income, assets, credit history and employment.

While no-doc mortgages haven’t completely disappeared, they are much less common today due to these new regulations. These loans are more specialized, intended for individuals who have assets but difficult-to-substantiate income.

Types of no-doc mortgages

Some mortgages require no documentation; others require at least a bank statement. There are several different types of no-doc and low-doc mortgages.

SIVA loans

Stated-income, verified-asset loans (also called bank statement loans) are for individuals who have cash and other verifiable assets but don’t make a traditional income. You’ll still need to estimate your income for the application (called “stated income”).

For example, an individual who earns a majority of their income in cash tips and gratuities (like those in the service industry) may need to submit bank account statements to show their ability to repay the loan.

NINA loans

No-income, no-asset verification loans have the fewest requirements of all the financing options, which means they’re more challenging to get approved for. Typically, this type of loan is only available to real estate investors who purchase rental properties that are expected to earn enough rental income to pay the mortgage.

Compared with other types of mortgages, no-doc mortgages have higher rates, down payments and credit score requirements.

NIVA loans

No-income, verified assets loans are similar to SIVA loans: You’ll need to show proof of assets by submitting bank statements or other account statements. However, you won’t be required to state your income on the application. This may be ideal for an individual with a considerable amount of cash who doesn’t make enough income (like a retiree).

NINJA loans

No-income, no-job, no-assets loans have no lender verification requirements. Essentially, the borrower can provide their income and asset information on the application, but the lender will take little to no action to ensure that information is truthful and accurate. NINJA loans are nearly nonexistent after the 2008 financial crisis.

SISA loans

Lenders offer stated-income, stated-asset loans without verifying income or assets. The borrower still states their income and asset information on the application, however. This may be ideal for an individual who owns a business and doesn’t draw a salary or can’t supply the appropriate documentation for their pay.

If your assets fall under the business you own, for example, the lender would request a bank statement from the business checking account to verify assets.

Pros and cons

Though no-doc mortgages are ideal for borrowers with inconsistent or nonstandard income, there are some downsides to consider.

Make sure you know a lender’s policies regarding this type of mortgage from the get-go. A borrower from Virginia on our site said they were dragged through months of back-and-forth on a no-doc loan only to learn the lender wouldn’t provide this type of mortgage for a business entity.

Pros

  • Low to no documentation required
  • Ability to qualify with unstable income
  • May have faster approval decisions

Cons

  • Higher interest rates
  • Higher down payment requirements
  • Higher credit score qualifications

Pros

  • Low to no documentation required: One of the biggest hassles of a mortgage application is collecting and submitting your financial documents. No-doc mortgages let you apply for a loan without juggling multiple documents.
  • Ability to qualify with unstable income: With a no-doc mortgage, you can qualify for a loan even if your income isn’t steady each month. The lender focuses on your ability to repay by verifying other aspects of your financial profile, such as your accumulated assets.
  • May have faster approval decisions: Since there’s less paperwork for the lender to review, you may have a faster approval decision than if you apply for a conventional loan (especially if you’ve worked with the lender in the past and have proven your ability to repay). The lender will still conduct a credit check and may need to verify other forms of documentation before reaching a decision.

Cons

  • Higher interest rates: No-doc mortgages are riskier for the lender because they do have a higher rate of default than other mortgage products. As a result, lenders tend to charge higher interest rates on these loans. You can expect to pay 1% to 5% higher than the market rates on conventional loans.
  • Higher down payment requirements: Not only will you pay higher interest rates, but you’ll also have to put down more cash at the start of the loan. Many conventional mortgages allow as little as a 3% down payment, but a no-doc mortgage may require 20% or more.
  • Higher credit score to qualify: You’ll generally need at least a 700 credit score to qualify for a no-doc mortgage. This minimum is significantly higher than for conventional mortgages, which usually require a credit score of at least 620, and government-backed mortgages, which have even lower minimums.

Bottom line

No-doc mortgages let you apply for a mortgage loan with little to no financial documentation. They aren’t as common as other mortgage types, so you’ll have to meet specific requirements to qualify.

Because no-doc mortgages typically carry higher interest rates and require larger down payments, they may not be the best option for many borrowers. If you have excellent credit, you’ll end up paying more in interest than with a traditional mortgage.

However, if you’re self-employed or your income makes it hard to qualify for a mortgage otherwise, a no-doc mortgage may be a good option. Either way, you should gather multiple quotes before making a decision.

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. To learn more about the content on our site, visit our FAQ page.
  1. Consumer Financial Protection Bureau, “What is the ability-to-repay rule? Why is it important to me?” Accessed April 7, 2022.
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