What loan does not require proof of income? | Valor Lending Group
What loan does not require proof of income?
Keep reading to find out!
Non-QM Loans are beneficial for self-employed borrowers and real estate investors.
What loan does not require proof of income?
Non-QM loans use an alternative method to qualify you for your loan. Tax returns are NOT required for a loan of this nature, instead they use bank statements to confirm that you have the ability to repay the loan. This alternative option of qualifying is commonly used for self-employed borrowers. They are able to document their ability to repay based on business deposits into their personal or business bank accounts, i.e., their true cash flow.
It is an incredible and expanding area of mortgages that levels the playing field for self-employed borrowers, providing the opportunity to qualify without tax returns.
Non-Qualified Mortgage (“Non-QM”) Loans
Non-Qualified Mortgages (“Non-QM Loans”) have different underwriting guidelines than a typical conventional or government-backed loan. Non-QM loans provide self-employed borrowers and real estate investors an alternative income qualification method. Qualified Mortgages are prohibited from having “risky” loan features such as interest-only payments, negative amortization, balloon payments, terms beyond 30 years, or excessive points and fees. Thus, anything with one of these features would be a non-QM loan. Significantly, non-QM loans for owner-occupied properties (i.e., primary residence, second and vacation homes, etc.) must still follow Dodd-Frank’s Ability-to-Repay (ATR) Rule. You can acquire financing for conforming loans using tax returns and financing for non conforming loans through alternative methods.
(a) Bank Statement Loans
Bank statement loans have become the best California home loan option for self-employed borrowers to purchase or refinance a home loan. Bank statement loans are for self-employed and other non-salaried persons who make sufficient income to support a mortgage payment but whose tax returns don’t accurately reflect this.
Traditional mortgage lenders require tax returns, W-2s, and paycheck stubs in order to determine monthly income. For salaried and hourly borrowers, the lenders look at gross income for qualifying purposes. But for self-employed borrowers, traditional mortgage lenders look at net income, the adjusted gross income showing on tax returns. This puts self-employed borrowers at a disadvantage.
With bank statement loans, lenders still want to ensure borrowers can repay their mortgages, they just use bank statements to verify income as to opposed to tax returns. Self-employed borrowers are able to document their ability to repay based on business deposits into their personal or business bank accounts, i.e., their true cash flow.
This is an incredible and expanding area of mortgages that levels the playing field for self-employed borrowers, providing the opportunity to qualify without tax returns.
(b) Asset Depletion Loans
Like bank statement loans, a borrower’s ability to repay must be documented with asset depletion loans. However, the ability to repay is calculated based on a borrower’s net worth and liquid assets, not monthly or yearly income.
If a person has very strong assets but limited income, then an asset depletion loan would be a good fit for them. Instead of looking to annual income to demonstrate ability to repay, asset depletion lenders will look at a borrower’s total liquid assets, and divide by 60-72 months. If this amount is sufficient to cover the monthly mortgage payment (and all other debts), a borrower can get qualified for the loan.
(c) No-Tax-Return Investment Property Loans
No-tax-return investment property loans the best California home loan option for real estate investors, which allows qualification based entirely on the cash flow of the property being financed. If the rental property is cash flow positive, that will constitute sufficient qualifying income.
Because these loans are for investment properties only (non-owner occupied), lenders are not required to document a borrower’s ability to repay. However, lenders still want to ensure their loan will be repaid, and they do this by looking to the income of the property, and not the borrower.
Sometimes called “landlord loans” or “rental loans,” no-tax-return investment property loans do not consider a borrower’s income in the traditional sense. Instead the cash flow of the property is the income factor.
Whereas traditional mortgage lending requires tax returns during the loan approval process, no-tax-return investment property loans do not. With these loans, real estate investors are able to purchase or refinance a property with no employment required, no personal income considered, and no debt-to-income ratio developed.
Choosing The Right Home Loan For You
When choosing the best home loan option for your situation, the primary question is how best to demonstrate your ability to repay the loan. On owner-occupied, 1-4 unit residential properties, ability to repay is based on a borrower’s income. The income of a salary and hourly employee is determined by reviewing tax returns, W-2s and 30 day pay stubs. Self employed income can be verified using bank statements and profit & loss statements. Current liquid assets to make payments over 60-72 months determines a high net worth individuals ability to repay. To learn more about qualifying for non-owner occupied properties, check out no tax return investment property loans, hard money loans, and commercial property loans. Contact your local mortgage broker to discuss the options available.
VALOR LENDING GROUP HAS NON-QM MORTGAGE LOANS AVAILABLE TODAY!
WE ARE NON-QM SPECIALISTS!
NO TAX RETURNS REQUIRED!
Recap of our Loan Products:
- Hard Money Loans (20% down / minimal documentation) Typically Fund in 7-10 days.
- Stated Income Loans (Great for business owners and self employed ) No tax returns!
- 100% financing is available (we can cross collateralize other properties if there is enough equity)
- Valor VA Home Loan 100% financing up to $1.5MM
- Rental Property Loan – No tax returns or DTI calculation! Based on subject property cash flow – No DSCR Coverage needed!
- Flipper & Rehab Loans (Flip a property with one of our many options)
- 2nd Position Loans up to $5mm
- Raw Land & Lot Loans
- Ground up Construction for spec homes, custom homes and commercial ground up.
- Farms, Vineyards, Ranches and Agricultural Properties (25-30% down)
- Manufactured Housing / Mobile Homes (20% down / 600+ credit score)
- Acreage Properties
- Commercial Loans up to $500mm
- 3% & 5% down Conventional Loans– LPMI (Lender paid mortgage insurance)
- Foreign Nationals Loans (no social security or residency required)
We Also Offer
- Conventional Conforming Loans
- High Balance Conforming
- Jumbo Loan Financing to $10 Million / 10% down Jumbo to $1.5mm
- FHA, USDA
- Reverse mortgages up to $1 Million Value
- Cash Out Refinancing
**Rates and terms subject to change without notice
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