Are you self-employed, have irregular income, or can’t provide proof of income? You might think that getting a mortgage is impossible. However, there are mortgage lenders that don’t require proof of income. In this article, we’ll take a closer look at these lenders and what you need to know before applying for a mortgage without income verification.
What is Proof of Income?
Proof of income is any documentation that shows how much money you earn. This can include pay stubs, tax returns, bank statements, and other financial documents. Lenders typically require proof of income to verify that you can afford to repay the mortgage.
Why Do Some Mortgage Lenders Not Require Proof of Income?
Some mortgage lenders don’t require proof of income because they offer alternative ways to qualify for a mortgage. For example, they may use your credit score, savings, or assets as a way to determine your ability to repay the mortgage. These lenders may also offer higher interest rates or require a larger down payment to offset the risk of not verifying your income.
Types of Mortgages That Don’t Require Proof of Income
There are several types of mortgages that don’t require proof of income, including:
- Stated Income/Stated Asset (SISA) Loans
- No Income/No Asset (NINA) Loans
- Bank Statement Loans
- Asset-Based Loans
- Hard Money Loans
Stated Income/Stated Asset (SISA) Loans
A SISA loan is a mortgage that requires you to state your income and assets but doesn’t require you to provide documentation. These loans are typically offered to self-employed borrowers or those with irregular income. The lender will still verify your credit score, employment history, and other financial information, but won’t require proof of income.
No Income/No Asset (NINA) Loans
A NINA loan is a mortgage that doesn’t require you to disclose your income or assets. These loans are typically offered to borrowers with excellent credit scores and a large down payment. The lender will still verify your employment and other financial information, but won’t require proof of income or assets.
Bank Statement Loans
A bank statement loan is a mortgage that uses your bank statements to verify your income. Instead of providing pay stubs or tax returns, you’ll need to provide several months of bank statements. The lender will use these statements to calculate your average monthly income and determine your ability to repay the mortgage.
Asset-Based Loans
An asset-based loan is a mortgage that uses your assets, such as stocks, bonds, or real estate, as collateral. These loans are typically offered to borrowers with a large amount of assets but little or no income. The lender will use your assets to determine your ability to repay the mortgage.
Hard Money Loans
A hard money loan is a mortgage that’s typically used for short-term financing or for borrowers with poor credit. These loans are offered by private lenders and typically require a large down payment. The lender will use the property being purchased as collateral and won’t require proof of income.
Things to Consider Before Applying for a Mortgage Without Income Verification
Before applying for a mortgage without income verification, there are several things you should consider:
- Higher Interest Rates: Lenders that don’t require proof of income typically charge higher interest rates to offset the risk of not verifying your income.
- Larger Down Payment: Lenders may require a larger down payment to offset the risk of not verifying your income.
- Shorter Repayment Terms: Some lenders may require shorter repayment terms, such as 15 or 20 years, to reduce their risk.
- More Stringent Credit Requirements: Lenders may require a higher credit score or a lower debt-to-income ratio to qualify for a mortgage without income verification.
Conclusion
If you’re self-employed, have irregular income, or can’t provide proof of income, getting a mortgage may seem impossible. However, there are mortgage lenders that don’t require proof of income. Before applying for a mortgage without income verification, make sure you understand the terms and conditions of the loan and consider the potential risks and benefits.