NO-INCOME LOAN

No-Income loans are used by customers who actually earn enough income to qualify for a mortgage loan, but do not “show” this income by means of IRS #1040’s, W-2’s or Pay stubs.

There are several types and variations of these loans. 

1.  No-Income

2.  Stated Income

3.  No Doc

The NO means just that, NO verification.  However, if the loan program is a STATED loan, you must “state” your income to the loan officer (which should be enough to qualify for the loan).   This “stated” income must be reasonable for the job you hold.

The underwriter will verify employment via a phone call to your employer.   If self employed, the underwriter will call 411 to determine if there actually is a business.  You may also provide a business license (remember, you must be in business or at your job for more than 2 years).

Either loan does not required Income documentation such as the #1040’s, W-2’s and Pay stubs mentioned above.

No-Income and Stated Income loans WILL verify assets.  This means that your bank accounts will be verified (normally by the last 3 months bank statements).  The underwriter is looking to see that you have enough money in the bank for the past 3 months for your down payment, closing costs and then a reserve (cushion of cash) equal to 3 months of mortgage payments.  The reason an underwriter wants this money to be in the bank for 3 months is to support a positive savings pattern.

Some people have money at home in a safe.  Since this money can not be tracked (another word would be sourced), you will need a NO or STATED “ASSET” loan too.  You need enough money to cover your down payment, closing costs and normally 4-6 months reserves.  You will need to provide a bank account and state enough assets to cover the above.  Your account will NOT be verified, but you do need a source to transfer the money when you close your loan.

So, now we have a few variations of these loans.  They are…

Stated Income/Verify Assets

No Income/Verify Assets

Stated Income/Stated Assets

No-Income/No-Assets

The No-DOC loan means that the underwriter will not verify Income, Assets or EMPLOYMENT.  Credit scores must be good.

These loans obviously are a higher risk and therefore will cost more than a fully verified loan (Full Doc). 

Speak to one of our loan officers to help structure a loan that is perfect for you.   800-817-8743.

Dan Palumbo, Licensed Mortgage Banker

Dan is the published author of the Mortgage Loan Officer Training Manual.  You may order one by visiting www.mortgagetrainingmanual.com

Licensed Mortgage Banker - New Jersey Department of Banking and Insurance;

Licensed by the Pennsylvania Department of Banking; Virginia Licensed Mortgage Lender