How does a no income verification mortgage work?

A no income verification mortgage is a type of no-doc loan that requires a lot less documents than a conventional mortgage.

Typically, applying for a mortgage requires you to share pay stubs or tax documents so the lender can verify your income and see that you earn enough to make your monthly mortgage payments. (A lender determines this using a debt-to-income ratio, generally looking for a ratio of below 36%.)

In lieu of tax documents, a lender offering a no income verification mortgage could accept bank statements or a signed statement as confirmation of your income and ability to repay the loan.

You may remember discussion of no income verification mortgages during the early 2000s. At that time, nonprime lenders expanded their criteria for who could qualify for a no-doc loan and approved mortgages borrowers were unequipped to repay, leading to the housing crash and Great Recession starting in 2008.

Thanks to the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 that added tons of regulations to financial services, lenders can no longer make this type of loan in the way they were being issued ahead of the crash. Borrowers need to prove creditworthiness through means, such as a good credit score and bank statements now.

Where to Get a No Income Verification Mortgage

As a designated community development financial institution (CDFI), Quontic offers Community Development loans¹ for nontraditional borrowers who’ve been underserved by the lending industry.

The CDFI Fund under the U.S. Department of the Treasury supports programs by organizations like Quontic that encourage economic growth in immigrant and emerging communities around the country.

Who Is Eligible for a No Income Verification Mortgage?

No income verification mortgages are designed for people who may have trouble providing documentation of regular income because of nontraditional employment or irregular income, including:

• Self-employed workers.
• Gig workers and freelancers.
• Small business owners.
• Low-income families.
• Seasonal workers.
• Commission-based workers.
• Workers paid in cash or tips.

To qualify for a Community Development loan¹ from Quontic, you need a minimum credit score of 660 and a substantial down payment. We provide loans up to $3 million with a minimum score of 700 and a down payment of 30%. With a minimum score of 720, the required down payment is 20%, and a qualified applicant may qualify for a loan up to $1.5 million.

Pros and Cons of No Income Verification Mortgages

A no income verification mortgage can be a unique path to homeownership for folks who have traditionally been left out. Be sure to weigh the pros and cons before pursuing this kind of loan.

Pros

• No or light documentation required to prove income.
• Considers a variety of factors in an applicant’s financial profile, not just income documents.
• Access to homeownership for nontraditional borrowers with stable financial circumstances.
• No strict debt-to-income ratio requirement.
• Modern regulations prevent lending to borrowers who can’t afford to repay.

Cons

• Requires a down payment of 20% to 30%.
• Requires a higher credit score than a conventional mortgage.

See Your Options Today

Don’t let the traditional mortgage underwriting process scare you away from homeownership. Institutions like Quontic are driven by a mission to serve those underrepresented by other financial services.

To learn more about Community Development loans¹ and how you can achieve your dream of homeownership, speak with a Quontic mortgage specialist today.