No-verification mortgages — also called stated-income mortgages — allow borrowers to qualify for loans using non-standard documentation. Unlike most loans which require proof of income or tax returns, no-verification mortgages allow borrowers to use financial factors such as assets, home equity, and net worth to qualify. This is helpful for the self-employed, those who have unique financial situations, or those who might have had a recent decline in income.
If you’re considering a no-income verification loan for your home purchase, The Schutze Team can help determine if it’s right for you and walk you through the details of the process.
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What is a No-Income Verification Loan?
Generally, most types of mortgages require financial documentation to prove income — such as pay stubs or W-2 forms — to qualify. However, not everyone has traditional sources of income. If you work on commission, have an income that’s reliant on seasonal work, or are self-employed it may be difficult to provide traditional proof of income.
That’s where no-income verification loans can be helpful. With a no-verification mortgage, the lender doesn’t require the borrower to prove their income. Instead, they utilize other aspects of your financial situation to back the loan.
Types of No-Income Verification Loans Available
There are four types of no-income verification loans available. Each has different requirements to get borrowers approved. These mortgage types are:
SISA (Stated Income, Stated Assets)
Ideal for borrowers with significant but difficult to document income and assets
SIVA (Stated Income, Verified Assets)
Ideal for borrowers with hard to document income and verifiable assets
NIVA (No Income Verification, Verified Assets)
Ideal for borrowers with income that cannot be verified and verifiable assets
NINA (No Income Verification, No Asset Verification)
Ideal for borrowers who do not have documentation for income or assets
What are the Benefits of a No-Income Verification Loan?
The primary benefit of a no-income verification loan is that it can help borrowers in unique financial situations. Whether you have no income, limited income, or unique sources of income, a no-verification mortgage can be the ideal home buying solution. Those who most benefit from a no-income verification loan include:
- Business owners with large expense write-offs
- Self-employed borrowers
- Borrowers with a recent decline in income
- Borrowers who file multiple tax returns
- Borrowers with irregular income, including freelancers, seasonal workers, and contractors.
- Real estate investors
- Borrowers with high net worth but no form of employment
It’s important to know that no-verification loans should not be used by borrowers with insufficient income or unhealthy financial situations as a way to qualify for a mortgage. Only borrowers who can afford to make their mortgage payment and cannot qualify for conventional mortgages should use no-income verification loans.
No-Income Verification Loans
Things to Consider
As with any type of loan, there are drawbacks to no-income verification loans to consider before moving forward. First of all, interest rates for no-verification loans tend to be much higher than that of conventional loans. In addition, many lenders offering loans with no income proof require higher down payments — upwards of 40 percent higher than conventional loans. Lenders also tend to require higher credit scores from borrowers to qualify because no-income verification loans are riskier for lenders.
Additionally, borrowers are more limited in their choices of lenders — you’re not likely to find these types of mortgages through standard banks and credit unions–but you will with The Schutze Team.
The History of No-Income Loans
The history of loans with no income proof is complicated, as they were widely misused in the years leading up to the 2008 housing crisis. At the time, many lenders used no-income verification loans to push unqualified buyers quickly through the borrowing process.
Once the real estate crash occurred, the risks associated with this loan type became clear, and no-income verification loans became unpopular with many lenders and investors. As a result, qualifying for no-income verification loans has changed and these types of loans are only available through certain lenders, like The Schutze Team, who are not tied to the rules and regulations set by government institutions.
Qualifying for a No-Income Verification Loan
The process of applying and getting approved for a no-income verification loan is similar to that of other loans, with the exception of financial documentation. You’ll start by researching your lender and the types of no-verification loans they offer. Then, your lender will instruct you on the criteria they need to get you approved. This can vary dramatically by lender and is often based on the borrower’s specific financial circumstances.
Generally speaking, lenders will require higher credit scores, higher down payments, and lower debt-to-income ratios than other types of conventional mortgages.
Some of the unique documentation lenders may ask for during the no-income verification loan process include one year of bank statements, property appraisals to prove equity, or proof of assets.
Let The Schutze Team Help
Whether you are self-employed, a seasonal business owner, or have a unique financial situation that is keeping you from getting approved for a conventional loan, a no-income verification loan might be the right option for you. Although a no-verification loan is not for everyone, our experts can help you determine if it’s the best choice for you and your unique needs.
With our easy-to-use mortgage calculator, borrowers can easily get an idea of the loan options available to them. And our team is always ready to help. Contact us to see how a no-income verification loan can help you qualify for a home loan despite having a unique financial situation.