No Doc Mortgage Loan Types Explained

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A no doc mortgage loan is funds borrowed for the purchase of property with little or no verified income source, assets, or debt information. These types of mortgages are designed for individuals who do not have a typical employer and who need privacy, like a retiree, self-employed individual, or a celebrity. A no doc mortgage loan requires the borrower to have excellent credit. Depending on the type of no/low documentation loan, only certain information needs to be disclosed to the lender for approval.

Types of No Doc Mortgages
Stated income - Individuals who are self-employed or earn a majority of their money from commission or tips will only need to supply a profit-and-loss sheet, tax return or bank statement.

No-ratio - People with substantial income and excellent credit can expedite their approval process by showing only proof of assets, such as business investments, funds in the bank, real estate, stocks and bonds. This may also be an appropriate loan type for a surviving spouse or individual entering retirement.

No income/no asset verification - The only information required for this type of no doc mortgage is the down payment amount, credit report, and property appraisal. The borrower's line of work and length of time with that career is often asked in this case. This type of loan is most appropriate for a person who needs extreme privacy.

Each of these types of loans will have a generally higher interest rate due to the fact that lenders consider limited documentation a higher risk. An appraisal of the property is always needed.