No-Doc Loans in 2022 – A Myth or a Reality?Tatyana Artemova
It’s not a secret that getting a mortgage may be a time-consuming and challenging process if you’re doing it on your own or going with a program that doesn’t fit your needs.
And if you’re self-employed with a lot of write-offs on taxes, or you’re the one, who can’t show stable work history, or you’re unemployed or retired – you know how hard it is to get your file approved.
Also, there are a lot of cases when people would like to purchase the property but just don’t want to show their financial history and entire life to the lender. What to do in this situation?
Luckily, we have the answer for you guys. A No-Doc program – the mortgage program will save you time, effort, and stress.
What is a No Doc Mortgage
The Non-Doc program is the easiest way to get a loan and one of our unique programs which don’t require documentation or income verification upon approval.
LBC Mortgage clients call it one of the most outstanding mortgage programs available on the mortgage market for a reason.
Why so? Because you don’t need to provide any documents, no taxes, no CPA letters. At LBC Mortgage, we also don’t require any proof of income and do not disclose your employment info as well.
Going with the Non-Doc program will save you a lot of time and power, which you’d typically use for filling and collecting all of those required documents. Instead, you should simply provide a declaration that indicates that you can repay the loan.
Background: If we check the history of No-Doc loans, we’ll see that before the 2008 housing crisis, this program was a popular alternative since lenders didn’t have to verify the borrower’s ability to repay the mortgage. We all know the result – many people lost their jobs and had loans that they were unable to repay.
And answering the question ‘Are 2022 No-Doc loans the same as 2008 No-Doc loans?’ – no, they are different. Since its inception, those types of loans have developed significantly. Nowadays, all mortgage lenders are required by federal law to check borrowers’ income and/or assets to ensure they are able to repay.
In addition, owing to the real estate crisis of 2008, today’s no doc mortgage in Los Angeles, California, has more consumer protection than ever, giving you peace of mind as you secure financing for your home.
Pros & Cons of No Doc Mortgage
Let’s talk real here – a No-Doc mortgage exists for a reason. Perhaps you cannot quickly show your earnings, or you just do not want to present a ton of paperwork to a stranger. Life is life, right?
There are situations where a No-Doc loan would be the best choice and there are situations where it would be the best to skip it for a conventional loan. So, let’s talk about this.
Pros of No Doc Mortgage:
- They make it easier to become a homeowner. If you were previously unable to get a conventional loan because of strict documentation requirements, a No-Doc loan might help you qualify.
- They are faster to apply for. The underwriting procedure for a regular mortgage often takes several weeks. But, because there is less to verify, a no-doc loan might bring you to the closing table much faster.
Cons of No Doc Mortgage:
These kinds of loans are rare. Yes, it may be not easy to find a lender who provides no-doc or low-doc mortgages. But no worries about that, you’re already at the right place 🙂
They are followed by less favorable loan terms. That’s true that No-Doc loan has slightly higher mortgage rates than traditional loans. It depends on the size of your down payment, credit score, assets, and how much information you are willing to provide about your employment.
Higher credit score and down payment requirements. Minimum credit score requirements for no-doc loans are around 700. They may also request a down payment of 30% (But here at LBC Mortgage, we require min. 20% of the down payment, and your credit score should be min. 640)
But still, they do offer the same benefit as regular mortgage loans by allowing people to borrow the amounts needed to purchase the house.
Now, let’s discuss whether you should consider or skip the No-Doc loan.
You should consider No Doc loan if:
- Your income is inconsistent, or you’re earning in cash.
- You have a High Net Worth
- You are self-employed, an independent contractor, a freelancer, can’t show stable work history, or have your own business, and the majority of your money is kept in a business account.
- You have a rather high debt-to-income ratio.
- You can pay a minimum of 20% of the house price.
- You have a great credit score.
- Looking for maximum privacy.
You might skip No Doc mortgage if:
- You can prove your income via W2s, pay stubs, or other standard documentation.
- You can prove your ability to repay your debt.
- You want a qualified mortgage with additional consumer protections.
- You want the lowest possible interest rate or don’t have enough down payment for a Non-QM mortgage.
No Doc Loan requirements
To qualify for a non-documentation mortgage program, you will be asked to:
- put a minimum 20% down payment
- show three months’ reserves (we want to see that you have money for a minimum of 3 months to pay your mortgage after closing).
- show that your credit score is a minimum of 640
If you got the money to purchase a property as a gift or want to use an income from your Airbnb for the downpayment, you will qualify for this program.
And just like that, in up to 3 weeks – you can become the owner of your dream house!
Steps to apply for a No Doc mortgage
This loan’s application process is similar to mortgage programs or asset-based loans. However, unlike conventional loans requiring extensive documentation, this program requires less underwriting, making the process faster.
Now, let’s see how you can apply for a No-Doc loan at LBC Mortgage, step by step:
Step 1. Applying for a free consultation
Before looking for a real estate or buyer’s agent – start by applying for a free consultation or submitting your application on our website to begin the pre-approval process. Within 24 hours, a loan officer from our team will contact you to review your loan application and discuss the details.
Step 2. Submit your documents
Start working on all of the papers and requirements for your No-Doc Loan. No worries, we’ll send you the list of the required papers that you’ll need during the loan process. You can bring them to the office personally or just submit them on your website.
Step 3. Get your pre-approval letter
After reviewing your documents – we’ll send you the pre-approval letter with all of the details such as the terms of the offer, including the maximum allowable purchase price, any applicable lending fees, and the interest rate.
With that letter, you can contact your real estate agent and start looking for a property!
‘Most sellers are getting multiple offers right now. And most won’t even entertain an offer without a pre-approval letter included.’– Peter Warden, editor of The Mortgage Reports
If any of these potential homeowner scenarios seem familiar to you and you want to learn more, LBC Mortgage may hold the key to your homeownership goals.
We are the mortgage lender for people who have been denied a mortgage, were rejected due to documentation problems, or need help qualifying based on their financial situation.
Please, speak with a mortgage specialist today to get started on your home buying adventure, learn about our mortgage rates, start your loan application, or discover whether one of our unique lending programs might fit you and your family.