Getting a house is an exciting step in your adult life. It’s a major milestone that unfortunately comes at a major cost. When looking into mortgage options, you may soon realize that there is a lot of documentation required to get a standard loan. If that documentation isn’t available, or not something you want to share, no doc loans may be the best option for you.
But what exactly are no doc loans? How do they work and how do you get them? At AS-IS loans, we’ll provide you with everything you need to know about no doc loans so you can make the right loan decision for you.
What Are No Doc Loans?
Anyone who’s ever gotten a traditional loan will tell you that there is a ton of paperwork involved. Not only do you have to fill out boxes and sign your name a hundred times, but you’ll also need to provide documentation about your income. This can include things like pay stubs, W2 forms, account statements, tax returns, and more.
For some people, this documentation is their biggest setback. For one reason or another, they may be unable to provide the documentation necessary for these types of loans. And for years, this meant that people would be unable to invest in a home or business.
Thankfully, there are now no doc loans, also known as low documentation loans. For those without that documentation who are still able to pay, no doc loans allow you to skip over the proof of income. Lenders will allow you to qualify with other proof of income or assets and bypass the hefty paperwork.
Why Might You Need No Doc Loans?
There are quite a few reasons why you may need to consider no doc loans over a standard mortgage. One of the main reasons is that new business owners don’t have the years of earnings needed to show they are successful. Typically, they will ask to see several years worth of profits to be considered, but if you’re only in your first year of sales, that would be impossible.
Young workers also have a hard time showing off their income because they don’t have the history to back them up. They either have no work history or history from low-income jobs, who have only just started a new, more reliable, position. Their youth sets them back because they have no proof of reliability.
Those who are self-employed often try to show a lower income for themselves for tax reasons. While this is great at the moment, it often makes it difficult to apply for loans, since the money accrues from the business, not your “paycheck.” Retirees with investment income also struggle here because their money is not coming in the form of a weekly check.
For others, it may just be as simple as privacy. Certain privacy needs indicate that you should keep your income level to yourself, and you do have the right to do that.
Is It Possible to Get No Doc Loans?
It all sounds too good to be true, right—being able to skip over the proof and get straight to the money? However, it is possible to qualify for loans without documentation. Lenders will instead look at other aspects of your financial situation without the need for paperwork.
Having a great credit score is a good place to start. This score shows that you are reliable and have been able to continuously pay back the money you have borrowed from other sources.
Although you may not have the documentation to prove your income, or may not want to, proving that you have a steady flow of cash coming in other ways will likely sway the lender to evaluate your situation individually. This can include other forms of income like assets or reserve bank accounts. They will feel more secure knowing there is money set aside if your income flow slows.
It will also help if you can put down a larger down payment than what is typical. They will see that your talk of money isn’t a bluff, which can make it easier for them to feel confident lending to you.
No Doc Loans make loans possible for those who cannot provide full documentation. They are a great way to get you into the house you love without all the hefty paperwork. At AS-IS loans, we’ll help guide you through the loan process, no matter what your current situation may be. Give us a call today to see what we can do for you.