What Is A No Income Loan?

2007-03-08 10:33:40

( Financial )



No income loans also known as no income verification, are special loans that do not require any proof of income. No income loans are available for regular wage earners, retired individuals and self employed people.

There are several types of no income loans:

A stated income stated assets loan only requires you to state your income in your application form. No verifications are made on any of the assets you own; however, higher interest rates are charged because of this. Home equity loans and second mortgages with fixed interest rates are examples of this type of loan.

The amount of money that you can borrow on a stated income verified assets loan is based on the amount of income that you state and credit record that you show on your application. A verification of certain assets that you own is made by the lender with this type of loan.

There are also no ratio loans wherein information on your income is not provided at all. The lender also does not do a verification on the assets that you own, or the income that you receive.

For an individual to qualify for a no income loan, you will need to be employed or self employed for a certain number of years. Sometimes proof of employment needs to be provided to the lender. If you are self employed, an accountant can attest to your income.

In addition, you will need to maintain a specific credit score, and have made up to date payments with any existing mortgages. A certain amount of liquid cash reserves in the form of cash in savings or current accounts, money market accounts, 401ks, IRAs and bonds may also be required.

The amount of money that will be released by the lender for your no income loan will be based on the information that you make available to the lender.


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