How to qualify for a mortgage when you're self-employed.
Contract employees who want to get a home loan can sometimes find it challenging. Traditional mortgages often lean towards an income that can be verified easily with W-2s. Income taxes for contract employees can sometimes get complicated and can further compound the problem.
Fortunately, there are alternatives available to help self-employed or contract workers in these situations.
A no-doc mortgage, also known as a no-income verification, requires less documentation and may even close faster! While these loan products were considered risky in the past, today's growing independent workforce has made no-doc loans more common.
No-income mortgages now come with extra protection for consumers and are a viable alternative to conventional loans.
How do no-doc mortgages work?
A no-income verification mortgage is a type of loan that doesn't require borrowers to submit the standard income requirements such as W2s and tax returns. Lenders allow you to provide other proof of income, like bank statements, to show that you are a reliable borrower.
No doc mortgages are popular among self-employed home buyers since they could easily access the docs of whatever income was needed to qualify.
Types of No Document Mortgages
Bank Statement Mortgage
With bank statement mortgages, lenders determine a borrower's income based on average deposits made into personal or business accounts over a 1 to 2-year period.
This is a good option for people who get deposits regularly and can be easily documented using bank statements.
This type is also known as an asset depletion loan, wherein lenders qualify you based on 100% of liquid assets divided by your loan term. To illustrate, a person who has a $2 million net worth applying for a 20-year fixed asset depletion loan would have $100,000 per year of qualifying income.
This is ideal for homebuyers with a high net worth.
No Income No Asset Loans
NINA loans are suitable only for investment properties and are approved based on estimated rental income for the property you plan to buy. Usually, no income or asset proof is needed as long as the rent covers monthly mortgage payments.
This is a good choice for real estate investors with enough savings for large down payments.
When should you get a no-income verification mortgage?
A no-income verification mortgage is a good option if you plan to buy a house and can't verify your monthly income, have complicated tax returns, or can't stand the hassle of providing tons of paperwork.
Keep in mind that lenders underwrite self-employed income differently than salaried earnings since income isn't guaranteed. They take extra caution about a borrower's earning history and income stability.
Are today's no doc loans safe?
No-doc mortgage lenders must follow federal laws to verify if a buyer can repay a loan with proof of cash flow or assets.
Ask our loan officers if a no-doc mortgage is the right loan product for you.
Home Financing Inc. - NMLS 60506 Accessibility Statement
Home Financing Inc. - NMLS 60506 strives to ensure that its services are accessible to people with disabilities. Home Financing Inc. - NMLS 60506 has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Accessibility on Home Financing Inc. - NMLS 60506 website
Home Financing Inc. - NMLS 60506 makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows www.hfiloans.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Enabling the Accessibility Menu
Home Financing Inc. - NMLS 60506 accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Home Financing Inc. - NMLS 60506 continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Home Financing Inc. - NMLS 60506 website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
Here For You
If you are experiencing difficulty with any content on Home Financing Inc. - NMLS 60506 website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: email@example.com