When you apply for a mortgage loan or refinance, lenders typically require several things to prove your creditworthiness and ability to repay the large loan. In addition to authorizing a credit check, you usually have to provide proof of income, assets, savings, or all of these.
Unfortunately, this type of underwriting can pose problems for people with non-traditional income, such as those who work on commission or who write off income by claiming losses when filing taxes.
No income verification offers a type of mortgage that can solve this problem for some borrowers with non-traditional income. Getting one of these mortgages is not always straightforward. This guide will explain how these loans work and how to find one.
In this review:
- What are no income verification mortgages?
- Why no income verification loans have become uncommon
- How to get a mortgage with no income verification
What are no income verification mortgages?
When applying for a no income verification mortgage, you don’t have to provide all of the same paperwork mortgage lenders typically require to show proof of income and assets. These would include items such as tax returns, pay stubs, and bank statements.
Because these loans often require less documentation, they are also called no-doc mortgages, no-documentation loans, or simply no-doc loans.
With a no income verification mortgage, the bank would simply take your word that the income you state on your application is accurate. It may also require you to show proof of assets or alternative documentation to demonstrate your ability to repay the loan.
No income verification mortgages often come with higher interest rates than conventional mortgages. And while they were common for a brief period in the early 2000s, they are now typically restricted to people with high credit scores, substantial assets, or both.
Types of no-doc loans
Several types of mortgage loans used to be available to borrowers without proof of income, but new regulations introduced since the housing crisis have limited the types of no-doc loans available. You might have heard of these types of no-doc loans:
- SISA: SISA stands for a stated income–stated asset mortgage. Borrowers could declare both income and assets without providing verification of either.
- SIVA: SIVA stands for stated income, verified assets. While you won’t have to provide proof of the income you declare, you will have to show proof of declared assets.
- NIVA: NIVA stands for no income, verified assets. The lender won’t take income into account when deciding whether to approve your loan. Only your assets will be considered.
- NINA: NINA stands for no income, no assets. Lenders look at neither income nor assets and instead consider collateral and other non-income factors when deciding whether to allow you to borrow.
With newer regulations, SISA and NINA loans have disappeared. It is still possible to borrow without proof of income if you have assets to secure the loan (SIVA and NIVA loans), but these loans are typically short-term loans that are costlier than traditional mortgages.
Why no income verification loans have become uncommon
While no-doc loans were meant for well-qualified borrowers with sufficient but non-traditional income, irresponsible lenders in the early 2000s extended these loans to subprime borrowers with little income.
In some cases, borrowers lied about their income and assets—often with encouragement from mortgage brokers—taking out loans they couldn’t afford to repay.
The default rate skyrocketed, contributing to the 2008 financial crisis. As a result, regulators cracked down and passed requirements that lenders verify borrowers can afford the loans they take out.
Because of this, you won’t find a true no-doc loan anymore. Mortgage options still exist for people without W-2 income, but lenders are always going to need verification that you can repay the loan.
How to get a mortgage with no income verification
If you’re looking for a mortgage that doesn’t require proof of income, you’ll want to research which lenders offer no-doc loans.
Typically, these come in the form of hard money loans made by investors, rather than banks or mortgage lenders. Your property will guarantee the loan, and these loans usually come with a shorter term and higher interest rates than traditional mortgage loans.
You may also find a few options with traditional or online mortgage lenders that require proof of assets but not income. To qualify for one of these, you’ll likely have additional requirements to meet to demonstrate your ability to repay.
Apply with an excellent credit score and low debt
After subprime borrowing largely precipitated the financial crisis, it’s much harder to find a mortgage loan if you have a low credit score, particularly without income verification. Before applying for a no-doc loan, build your way up to excellent credit—a score in the 700s.
Showing lenders you have little other debt could also help. The maximum debt-to-income ratio for mortgages is typically around 43%. This means your monthly debt payments equal less than that portion of your monthly income.
But a much lower DTI could help your odds of qualifying for a no income verification mortgage.
Work with a local bank or mortgage broker
If you have a non-standard pay situation, try to work with a local broker, bank, or credit union. If you have an established banking relationship, the lender may be willing to help you find a loan program that works for you.
A familiar bank may help you qualify for a loan using alternative methods to prove your cash flow. For example, bank statement loans allow you to document your income with statements from either your personal or business bank account, rather than tax returns.
Save up for a large down payment
A larger down payment reduces your lender’s risk, because it reduces the loan amount and increases your home equity, which makes it easier for the lender to recoup funds through foreclosure if you can’t repay.
This reduced risk may make it easier to be approved for a mortgage without income verification when you put more money down.
Get a quote from an online lender
Some online mortgage lenders use non-traditional underwriting to determine creditworthiness, which could improve your chances of being approved. Lenders willing to look beyond tax returns usually advertise that they cater to self-employed home buyers or others without W-2 income.
Get prequalified quotes from our top-rated best online mortgage lenders to see whether you have a better chance of borrowing online than from a traditional institution.
Don’t borrow more than you can afford
Even though regulations make it less likely than it used to be, be cautious of lenders offering to lend you more than you can afford to repay.
Use our mortgage calculator to determine what your monthly payments for a home loan would be to ensure you can comfortably work the payments into your budget.