How a No Doc Loan Works

Successfully applying for loans can be a difficult process. It can be even more frustrating if your job means that your income fluctuates a lot and becomes difficult to use as proof of a reliable, steady source of income. That’s where no doc loans come in. Let’s learn everything you need to know about these low-fuss, hassle-free loans.

Loans 101

What is a no doc loan? “No doc” stands for “no documentation,” which means that this is a loan that doesn’t rely on financial documentation to be approved. This loan does not need to verify your income with countless bank statements in order to be approved. And unlike other loans, an application for this loan asks mainly for proof of good credit above all else. But that was not always the case. Let’s take a look at the history of these loans and how these loans have changed over the years.

The History of No Doc Loans

No doc loans are only recently coming back as options from lenders. Why? We can look back at the housing crisis and the financial recession back in 2008. A decade ago, applying for this kind of loan truly meant that you could apply for with no additional documentation to prove your income or your credit. Those old applications simply believed whatever was on the application with no verification at all – which meant that it was very common to lie on those applications. This is why these loans were also called “liar loans.”

Because of the lack of regulations surrounding these loans, it was too easy to be granted a loan and a lot of lenders were left empty-handed. Now, after financial regulations have been reformed and streamlined, these loans are slowly creeping back into popularity. But make no mistake, the no doc loan of today is nothing at all like the no doc loan of yesterday. While generally less of a hassle than other loans, these loans still have an application process.

Applying For The Loan

Today’s loans ask for a few things alongside your application. But unlike other types of loans, this loan is not asking for your entire financial history, including your assets and investments. To apply for a loan, you will typically be asked for:

  • Identification
  • Social Security Number
  • Proof of taxable income, such as a W-2

The only real documentation you need for a loan is proof that you do earn an income that is steady and reliable. Tax returns are used instead of bank statements because sometimes there are great fluctuations in bank statements based on your occupation. For example, those who work on commission, tips, or even overtime and holiday hours usually have bank statements that bounce back and forth quite a bit. By looking at tax returns instead of bank statements, lenders are more easily able to verify that you do earn an income.

Make Applying For A Loan Easier

There are some things you can do that will make successfully applying for a loan easier. Having a good credit history and a low income-to-debt ratio are both helpful when applying for any kind of loan, but loan applications also look for a few things in particular.

  • A credit score of 700 or higher
  • No history of defaulted loans
  • 10% or more down payment

More than anything, these loans rely on credit scores and credit history to understand the borrower’s financial stability. Credit scores of 700 or higher are preferable since it proves that the borrower can pay down any debt they already have. Lenders also like to see applications that show no defaults in your credit history, such as bankruptcy. And it is helpful is the borrower is able to make a 10% down payment on the loan right from the start in a lump sum as a sort of good faith effort. Since lenders do not verify income through a detailed account of financial history, it makes a lender more confident if a borrower can show proof of good cash flow.


Take the frustration out of the equation by applying for no doc loans. These loans are perfect for people who have difficulty proving the reliability of their income. These loans are better regulated than they have been in the past, to protect both the lender and the borrower. Applying for a loan involves a good credit score and proof of taxable income.

We want you to get the loan you need. At AS-IS loans, we’ll work with you no matter what your situation. Call today to see what we can do for your no doc loan application today!