No income verification mortgages are home loans for which the lender doesn’t require you to prove that your income meets certain requirements. Generally, when you apply for a mortgage, you’re required to show proof of income through pay stubs and W-2 forms. However, income verification can be difficult for some borrowers, especially those who are self employed or who receive a commission based salary. In this case, these stated loans i.e. home loan without income proof aid you in procuring a loan of your dreams.
Who Gives No income Verification Mortgage Loans?
No credit check no income verification loans were very popular in the early 2000’s. They provided loans to anyone with a certain credit score without verification of income. These loans are high risk and many borrowers entered into loans that they were unable to repay. As a result, many lenders have now removed no income verification loans as loan options.
There are still lenders available that can provide home loan without proof of income but they are hard to get. Typically, these loans are only available to the self employed borrower. And require a significant down payment. Additionally, the credit score of the borrower must be impeccable.
These loans are offered at much higher interest rates, many times making them unaffordable. For example, if rates are 6 percent, no income verification loan rates can be 10 to 12 percent and thousands of dollars more to acquire.
Can You Get a Home Loan Without Income Proof?
Not every self employed borrower can get these “stated” loans- only those who meet specific requirements.
Great Credit Is Important: The first and the most important step is having great credit, which means a score over 700. You also need to have an impeccable credit history. This means no bankruptcies, foreclosures, collections or even late payments. Lenders need to see that you are financially responsible and are able to handle your debts without issues. So if you have a bad credit no income verification mortgage becomes really difficult.
These self-employed borrowers make money in “real life” but not on paper. They might not have proper documentation to prove their income. Since there is no W-2’S or paystubs, you need to provide to your lender two years worth of tax returns. Now self employed people take many deductions on their taxes, which are legal, but it lowers the adjusted gross income. This is where these “stated loans” or “alternative documentation loans” come in play. Here you provide other documentation to prove your income apart from a good credit, for example, your bank statements.
Ways to Enhance Your Chances of a No Income Verification Loan:
Before you apply for these stated loans make sure that your affairs are in order. So take out the time to make things look as good as possible. Don’t apply for a stated loan if your present income is inconsistent. Wait until you have a good cash flow.
Show regular deposits on your bank statements showing a steady flow of income. This helps in assuring your lender about your credibility. Provide a current profit and loss statement for the last 3-12 months if possible. If you have some business contracts provide them to your lender. Your CPA can provide you with a verification letter stating your income credibility. In short, the more documentation you provide to show your income flow, the more are your chances of getting a no income verification loan.
The more reserves you have in a liquid account, the least risky you will seem to your lender. This reserve can be used for times when your business income falters and you cannot make your mortgage payment.
If you have a proof stating that you have worked for years in the same industry before starting your own business, it will aid you in procuring a mortgage with no proof of income needed. This experience of yours assures the lender that you have increased chances of success.
In today’s era, due to downsizing, closure of companies or with the boom of startup industries, self-employment continues to be on the rise and as such no income verification loans are becoming quite popular. Home loan without income proof is not an easy thing to find but they are out there. The smaller, privately owned operations are typically the ones who have these stated loans. So if you have the required qualifications, shop around with various lenders before taking a final call.