The No-Income Verification Mortgage is a unique product that doesn't require the borrower to provide any income documentation.
The No-Income Verification Mortgage is a unique product that doesn't require the borrower to provide any income documentation. The borrower doesn't even need to be employed to utilize this product. This product is strictly for Primary Residences and Second Homes.
After the 2008 crash, many thought that there was no alternative for borrower's who may not be able to document enough income to meet the debt to income ratio requirements of a conventional loan. This product not only exists, but has been in place and thriving for many years. There have been safeguards put into place to protect the borrower, the lender, and to avoid any semblance of what occurred in 2008.
For the right borrower, this product is the perfect fit allowing them to purchase or refinance a home when they might otherwise be unable to.
This product is best suited for these types of borrowers:
- Self-Employed / Small Business Owners
- Volatile or Irregular Employment
- Retired
- Seasonal or Gig Workers
- Owners and Employees of Cash Businesses
- Change of Industry or type of Employment
- Recent Immigrants
A minimum credit score of 640 will be required for all borrowers. In addition you will need to document 1 credit tradeline that has been active for the last 24 months. As an alternative, 2 years of documented rental payment history can be utilized or 2 credit tradelines with a 12 month history, will also be acceptable.
A 30 day verification of funds for down-payment, closing costs, and reserves will be required. Funds for down-payment and closing costs can be in the form of a gift. Up to 24 months of reserves may be required depending on credit score and Loan to Value.
A full interior and exterior appraisal is required for all transactions regardless of the Loan to Value.
Homeowner Education Course completion is required.
In order to maximize the Loan to Value up to 80%, a minimum credit score of 740 is required. Eligible Borrowers include: US Citizens, Permanent Residents, Non-Permanent Residents with a valid social security number and Visa that meet lender's requirements.
Allowable Visa Types are E-1, E-2, E-3, EB-5, G-1 through G-5, H-1B, L-1, NATO, O-1, R-1, & TN NAFTA
We offer the following loan types for this product:
- 1 Year Fixed Rate ARM
- 5 Year Fixed Rate ARM
- 7 Year Fixed Rate ARM
- 10 Year Fixed Rate ARM
- 30 Year Fixed Rate
*All ARM products have a 6 month adjustment period after the initial fixed period and ARM Index based on 30 day average of SOFR*
This product is NOT offered in the state of Maryland or in the District of Columbia.
There are other loan requirements depending on circumstance, please reach out to a loan officer for specific loan questions.
Stated income loans were created for self employed buyers and homeowners that do not qualify for a home loan due to the low income on their tax returns. Self employed individuals use the IRS tax code to write off expenses, however by doing that their income is much lower than the amount needed to qualify for a loan. If using the full income documentation to qualify for a loan, it would not show enough income after deductions and write-offs. Investors and banks created the stated income loan program to help self employed individuals buy or refinance their home. Stated income loans are higher risk and the interest rates will typically be on the higher side of the spectrum, however it is a great option to those that wouldn’t have any other avenues to go down.
These are not the type of loans that were prevalent in the pre-2008 financial crisis, and no longer are the days in which loan applicants can simply state their income on a loan application with virtually no due diligence conducted by the lender.
After the 2008 financial crisis, the sweeping provisions of Dodd-Frank changed the industry substantially, at least in the owner-occupied residential context. Since 2010 Dodd-Frank has required lenders to document a residential borrower’s ability to repay the loan.
It is much more difficult to find the best stated income loans as many of the brokers and lenders have ceased to fund these unique programs Bank statement lenders still want to ensure borrowers can repay their mortgages; they just use bank statements to verify income as to opposed to tax returns. Self-employed borrowers are able to document their ability to repay based on business deposits into their personal or business bank accounts, i.e., their true cash flow.
The Difference
Traditional mortgage lenders require tax returns, W-2s, and paycheck stubs in order to determine monthly income. For salaried and hourly borrowers, the lenders look at gross income for qualifying purposes. But for self-employed borrowers, traditional mortgage lenders look at net income, the adjusted gross income showing on tax returns. This puts self-employed borrowers at a disadvantage because the typical self-employed or 1099 employee will write off as much expense as possible from their gross income on their tax returns to minimize how much they owe once tax season comes around.
Qualifying
This is an incredible and expanding area of mortgages that levels the playing field for self-employed and 1099 employee borrowers, providing the opportunity to qualify without tax returns. These types of loan programs can be used for both owner-occupied, and non-owner-occupied 1-4 unit properties, the same as traditional financing allows.
The best bank statement loans, borrowers still must qualify based on the income deposited over a given period, typically verified on 12 or 24 months of bank statements. The gross amount deposited in the given amount of time is then considered their “gross income”. Once this number is established, the debt to income ratio or DTI is derived (based on the income against the new mortgage payment and current monthly minimum debt obligations i.e. credit card, car loan, student loans, etc.) to ensure the borrower can afford the addition of the mortgage loan payment. If all aspects of the borrower’s financial is within the program requirements and a DTI no higher than 55%, the lender will be able to underwrite and finance the loan.
These loans are repackaged and sold on the secondary market just the same as traditional mortgage financing. This is an incredible and expanding area of mortgages that levels the playing field for self-employed and 1099 employee borrowers, providing the opportunity to qualify without tax returns. These types of loan programs can be used for both owner-occupied, and non-owner-occupied 1-4 unit properties alike the same as traditional financing allows.
