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No Doc Mortgage Loans

Definition

A no doc mortgage loan is a specialized mortgage loan where the mortgage lender does not verify employment, income or assets like they do with regular mortgage loans. The only information the lender verifies for a no doc mortgage loan is the credit information of the borrower and the value of the property being financed. Because there is a higher risk of default (foreclosure) with no doc mortgage loans, they typically have higher interest rates than regular mortgage loans.

No doc mortgage loans are available as both fixed rate mortgage loans and as adjustable rate mortgage loans. In general, lenders require at least a 5 percent down payment for no doc mortgage loans, though they typically require more for adjustable rate no doc mortgage loans. Because the lender is qualifying the borrower off just their credit and the property's value, no doc mortgage loans tend to have stricter credit guidelines than regular loans. However, there are no doc loans available for borrowers with credit issues.

Key Points

• When qualifying a borrower for a no doc mortgage loan, a lender only verifies the credit information of the borrower and the value of the property.

• No doc mortgage loans typically have higher interest rates than regular mortgage loans.

• No doc mortgage loans also typically have higher down payment requirements than regular mortgage loans.

• No doc mortgage loans are available with both fixed interest rates and adjustable mortgage rates.

• No doc mortgage loans typically have stricter credit guidelines than regular mortgage loans, but there are no doc mortgage loans available for borrowers with credit issues.

Pros

• No doc mortgage loans give borrowers whose employment, income and assets are difficult to verify the opportunity to purchase or refinance a home for a competitive rate.

• No doc mortgage loans are also a great tool for borrowers who want to avoid the hassle of employment, asset and income verification and are willing to pay a slightly higher interest rate.

• For borrowers with good credit, the interest rate for a no doc mortgage loan is still very competitive with the interest rate of a conventional loan that verifies employment, assets and income.

• For borrowers with credit issues, there are no doc programs available that they can qualify for.

Cons

• No doc mortgage loans typically have higher interest rates than regular mortgage loans that verify employment, assets and income.

• No doc mortgage loans also typically have higher down payment requirements than regular mortgage loans.

• No doc mortgage loans have stricter credit guidelines than regular mortgage loans, though there are no doc mortgage loans available for borrowers with credit issues.

Summary

No doc mortgage loans are specialized mortgage loans where the mortgage lender only verifies the borrower's credit and the property's value--they do not verify the borrower's employment, assets or income. No doc mortgage loans are great for borrowers whose employment, assets and income are difficult to verify, and they're also great for borrowers who want to avoid the hassle of having their employement, assets and income verified and are willing to pay a slightly higher interest rate.

No doc mortgage loans are available with both fixed interest rates and adjustable interest rates. In general, no doc mortgage loans have higher interest rates than regular mortgage loans that verify employement, assets and income. No doc mortgage loans also typically have higher down payment requirements.

Because a mortgage lender qualifies a borrower for a no doc mortgage loan using only the borrower's credit and the property's value, no doc mortgage loans typically have higher credit requirements than regular loans. However, there are no doc mortgage loans available today for borrowers with credit issues.

If you're interested in applying for a no doc mortgage loan with Arizona Mortgage Group, simply complete our Quick Application. One of our loan originators will then call you within 1 business day to answer any questions you have and get you started.