Those who are self-employed or else commission earners have always struggled to prove their financial worthiness when obtaining a home mortgage or home equity loan. Their income is so varied and often reported much lower than what they actually take home. If you fit into this category of income earner, you will be happy to learn that you can get a no-income verified mortgage loan. If you have numerous deductions that shows your "on paper" value much lower than your actual holdings and earnings, a no-income verified mortgage can help you get into the house you deserve. Most lenders use your average taxable net income for the last 2 years to determine your qualification limit. Your net taxable income is the amount of money you pay taxes on each year, after all deductions are taken out. With a no-income verified mortgage, your gross (before deductions) income is used for qualification purposes. A no-income verified loan is often called a stated income loan, with or without verified assets.
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Request a copy of your credit report and credit score. Since fixing any adverse listings on your credit can take months, this should be your first step. A credit score of 675 or greater is commonly required.
Fix any adverse credit listings if possible. Some things that will help raise your credit rating include:
- Pay down credit cards and other debts.
- Close any accounts that are not in use.
- Request changes to accounts that are bringing down your score.
- Add comments to any accounts that are disputed for one reason or another by contacting the three big credit reporting agencies.
Accumulate copies of tax returns, income statements, bank account statements and check stubs from clients or employers for the past 2 years.
Collect copies of statements from five positive credit accounts you have.
Compile a list of all assets, including their current market value.
Compile a separate list of all debts, including vehicle loans, mortgage, lease agreements, installment plans and credit cards.
Check your bank or credit union first. They may offer a preferred customer rate for established customers.
Look online for mortgage brokers and lenders that offer stated income loans.
Go through the phone book for reputable lenders.
Make an appointment for an application interview or fill out the application online.
Arrive at the appointment on time and with your organized documents.
Bring along a plate of goodies for your loan officer as a token of goodwill. It can't hurt.
Tips and warnings
- Don't attempt to take out a no-income verified loan in the hopes of receiving a lower interest rate. You are likely to pay more (a few percentage points more in some cases) for a stated income loan compared to a verified income loan.
- If you can't afford the house of your dreams, don't try to qualify for it by lying about your income via a stated income loan. In addition to being fraudulent, you will likely end up in more debt than you want.