LoDoc Loans

Stated Income: (a.k.a. No Income Verification, Quick Qualifier, QQ)

This is a type of LoDoc loan wherein you provide less information (or documents) than "Full Documentation" loans (see FiQuestís Loan Submission Checklist for standard requirements). A good rule of thumb is that as the documentation level goes down, the rate goes up. The base rate is not always the lowest conforming loan rate, it is generally the Jumbo loan rate, because LoDocs by their very nature do not "conform" to FNMA underwriting standards.

The Stated Income or QQ product is ideal for the self-employed, or for people whose income fluctuates from year to year. For a full-doc loan, lenders generally require proof that your income has been stable or growing for the last 24 months. They use W-2ís, paystubs, and tax returns to do this. For the self-employed, or employees on commission, they average the last two years 1040 income. In many cases, this does not accurately reflect what the typical entrepenuer is earning in the current year. So, the stated income loan product is offered, where you state your income on the loan application (1003/URLA), but it will not be verified. It is important to bear in mind that employment stability over the last 24 months IS verified, via a business license (for self-employed borrowers) or a phone call to the employer (for salaried borrowers), only dates of employment will be verified, not salary.

Requirements: 1) The interest rates charged for Stated Income loans are generally about 0.50% higher than a FullDoc Jumbo rate for the same term. 2) you must have at least 10% downpayment (or equity for refi's), with additional reserves in your name (20% would be even better). 3) your credit record must be clean. 4) there is a form that you might be asked to sign, called an IRS 4506 or IRS 8821 or an IRS 95-01. These forms give the lender permission to request a copy of your tax returns from the IRS. FiQuest believes that this requirement defeats the purpose of the product, so we find lenders that will NOT require this form.

 

No Ratio

This is a type of LoDoc loan wherein you provide less information (or documents) than "Stated Income" loans (see above).

For a no ratio loan, neither employment nor income is disclosed on the application. No Ratio means that the lender cannot compute the ratio of your gross income to housing, or to your overall debt payments. This product is slightly more expensive than the Stated Income product described above.

Requirements: 1) The interest rates charged for No Ratio loans are generally about 0.25%-0.50% higher than the rate on a stated income loan (or about one full percent higher than a FullDoc rate) for the same term. 2) you must have at least 20% to put down (or in equity),. 3) your credit record must be exemplary, 4) your documented assets (bank deposits, CDís, money markets, stock brokerage accounts, retirement accounts, etc.) must be at a level high enough to show at least 6 months of the expected housing payments.

 

NINA: No Income/No Asset Verification (a.k.a. The Fog A Mirror Loan)

This loan requires very little documentation. Neither employment, income, nor assets are verified. Normally, these loans are used for purchases since the source of the downpayment is not verified. It requires at least a 20% down payment, and very good credit. Naturally, the interest rates are higher than the base Full Doc product, and this type of loan may have a pre-payment penalty.