Conventional mortgage loans are arguably the most popular choice for financing the purchase of housing, however, there are other alternatives that can be beneficial for select individuals. No-Ratio or No-Income loans allow applicants to apply for a loan without requiring the submission of income or debt documentation.
No-Income Loans
As the name suggests, no-income loans do not require applicants to provide documentation of their income. There are four kinds of no-income loans individuals can apply for, including the following:
NIVA – no income verification, verified assets
Applicants must provide verification for assets beyond traditional income in order to qualify. Individuals without an income, such as retirees or investors benefit largely from these loans.
NINA – no income verification, no asset verification
Applicants do not need to provide any documentation for income or asset value, which is especially beneficial for foreign applicants.
SISA – stated income, stated assets
Applicants’ stated financial status is accepted without documentation like a W-2, but lenders may request bank statements to support the information, especially if the loan seeker represents a small business.
SIVA – stated income, verified assets
Applicants must provide verification for their assets, but they do not need to provide documentation of their income, which is ideal for individuals whose income is difficult to document such as restaurant servers whose income comes largely from gratuity.
No-Ratio Loans
Much like no-income loans, no-ratio loans offer more flexibility and a higher acceptance rate for individuals whose income and debt do not fall into typical boundaries. No-ratio loans do not require individuals to submit income or debt information. This flexibility is notably beneficial for individuals who have a high amount of debt, such as debt from an existing mortgage, automobile loan, or student loans. A no-ratio loan instead takes into account an individual’s credit history, and individuals who are not financing the entire value of their homes have a higher chance of being approved.
With no-income and no-ratio loans, interest rates may be higher than with other loans; the more information you are able to provide to a lender, the better chance you will have to be approved and receive a lower interest rate.