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Francis Vayalumkal
Finance | Financial advice

By Francis Vayalumkal

Financial statements, salaries, paycheck, W-2 forms, 1099’s -- there is an exhaustive list of some of the forms that you may require to provide when you apply for a home loan. Income documentation is not always easy for someone who is self-employed, retired or for any person who doesn’t have a fixed source of income. This also could be a problem when you are an investor with several properties and have loans on many of them. You may have high income and assets. Undocumented income can get good gains in the context of tax deductions. However, it might frustrate a loan borrowing attempt because the loan borrowers usually require two to three years of employment proof even for self-employed. A no-income verification loan can counter this situation when you can’t adhere to conventional loan demands.

The no-income verification loan are applicable to everyone and not just self-employed people. In fact many people apply for no-income verification loans for the simple reason that they are processed faster.

No-income verification loans have three basic types -- “stated-income loans, no-ratio loans and no-document loans or NINA (no-income/no-asset verification).

Stated-income loans are for those who work and draw wages but not regular wages like that from an employer. This no-income verification loan works for those who are self- employed or those who make their living from commissions and tips. With stated income loans, income for the past two years has to be stated. No need for pay stubs or W-2 forms but you would have to show some bank statements and tax returns. Within this type, there are stated-income verified assets and stated-income stated assets. You can choose the option that suits you best. The no-income verification loans require you to reveal debts. The lender is required to calculate debt-to-income ratio. That's the percentage of gross income used to pay off debt.

The no-ratio loan doesn’t involve you to declare your income. There is no requirement of tax returns, pay checks, W-2 forms. The loan lender doesn’t calculate debt-to-income ratio. But this “no-income verification loan” requires you to list asset such as bank balances, property, business ownership, stock and bonds. This no-income verification works well for someone who owns many properties. The loan process would prevent you from tedious assembling the papers of various properties. Significant change like retirement, job change, divorce, death of a spouse can necessitate no income verification loans.

No-income, no-asset verification -- otherwise called NINAs require least documentation for their approval. The loan lenders demands are restricted to the name of the borrower, Social Security number, down payment and the loan amount. This no-income verification loans are highly dependent on credit score. If the borrower has good credit score, it would require lesser documentation. But a borrower can be asked for job details. A continued job for two years is most likely to win the favor of the lender.

Interest rates for no-income verification loans are usually higher. The interest rates are dependent on down payment, credit history, the availability of assets and the openness in giving out information about property and job. Credit history is important. To have a no- income verification loan, you are required to have a very good credit history. It is meant for those who have been paying their bills on time. The guidelines for giving no-income verification loans vary from lender to lender.

A no-income verification loan can sometimes bring document demands from the lender during the loan process. You can prevent this situation by being honest with your loan officer upfront. Talk openly about the documents required for no-income verification loan application. Be wary of brokers who ask you to quote false income or credit score to get the loan. In case of default, your income-tax copies might be asked and if there is any discrepancy -- you can land up with fraud charges. These types of loans are not for people who really can't afford a home, rather for those who don’t have the means to document the income.

No-income verification loans are not “no-income verification” in the strictest sense. Yet, they can solve great problems for someone who has difficulty documenting source of earnings. They may come with higher interest rates but they are financially viable for those whose paychecks do not mean income. Talk to your loan officer to see how no- income verification loans can work for you.

Francis Vayalumkal is a loan officer at Market Street Mortgage and can be reached at (813) 971-7555 or via e-mail at

Francis Vayalumkal is a loan officer at Market Street Mortgage and can be reached at (813) 971-7555 or via e-mail at

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