It was easier to obtain a stated loan or a home loan without proof of income until the housing crisis hit the realty market. These loans are still available, but generally offered to self-employed people and you need to search a lender ready to offer you one.
As with any other loan, it helps to have a good credit, generally over 700, to be approved for a home loan without income proof. So, it may be difficult to find a bad credit no income verification mortgage. If you have bad credit, it’s best to improve your credit before applying for no income verification mortgage loans. Apart from your credit score, lenders also consider your credit history and may reject applications that show bankruptcies, foreclosures, collections, and at times delayed payments. This is because lenders want to ensure that you are responsible with your finances and will be able to repay the loan.
As mentioned before, self-employed persons typically opt for no income verification mortgage loans. Since they do not draw monthly salary from a company, they do not have documents such as proof of employment or pay stubs to prove their income. In such a scenario, lenders require tax returns for the last two years as proof of income. A lot of self-employed persons show deductions on taxes to bring down their gross income which is used to determine the loan amount they can qualify for.
If you do not have enough documents to support your application, you should opt for a home loan without income proof. Remember, however, that each of these loans is different from the other and the requirements vary from one lender to the other as they are ‘portfolio loans’. While some lenders may require you to make a significant down payment, others may ask you to have a lot of reserves in hand.
In order to increase your chances of getting approved for a home loan without income proof, maintain a low balance typically 20% on your credit cards. Regular deposits in your bank indicating a steady flow of income will assure lenders of your capability to repay the loan. Apart from these, a letter from your CPA certifying that you are self-employed and make steady income, a statement of profit and loss for the last three to twelve months, proof of experience in the industry, etc also provide enough assurance to the lender to aid approval.