No doc and low doc loans are very difficult to qualify for in today’s mortgage and financial markets. Because of this, most mortgage companies (including Quicken Loans) don’t offer them at this time. For more information, talk to a Quicken Loans home loan expert. We’ll show you how to obtain the necessary documentation so you can qualify for a full doc loan. Call us today at (800) 654-0068.
The more documentation you provide your mortgage lender (employment, income and credit history) the lower your interest rate may be. Many home buyers choose not to offer documentation for personal privacy reasons, and willingly opt for a higher interest rate. Yet, many of these home buyers have a healthy income, or savings, and a credit history. A no doc (documentation) or low doc loan provides increased ease and privacy when getting a mortgage in exchange for a slightly higher rate.
Buyers that opt for a low doc home loan are typically those who prefer not to have their entire life and financial history presented to the lender. For instance, they might be using an inheritance to secure a loan or have fluctuating income from owning their own business.
Ease is a big factor as well. With a no doc or low doc loan, the borrower provides their name and social security number, along with information regarding the property being purchased. The rest is up to the lender.
The Three Main Types of No Doc & Low Doc Loans
No Doc Loans
No Doc loans require the least documentation and are for buyers with excellent credit scores. The buyer provides minimal information (usually social security number and general property information) and the lender does the rest.
Stated-Income (Low Doc) Loans
Stated-Income, or low doc loans, typically attract people who work on a cash or commission basis – people who don’t draw a consistent salary. The borrower will need to disclose earnings, usually for two years, and might need to show tax returns and bank statements.
No Ratio Loans
No Ratio mortgage loans are for borrowers who do not wish to disclose their income; therefore there is no debt-to-income ratio for the lender to consider. The no ratio borrower has good credit and abundant assets that make up for the lender not considering the borrower’s income information. This loan can be a quick and easy process for borrowers that would have difficulty gathering documentation.