Low Documentation (Low-Doc) Mortgage Loans

Lenders today are offering a wider and wider selection of mortgages for self-employed home buyers (or borrowers who simply can't or won't document their income and assets). However, with recent tightening in the credit markets, these loans are tougher to obtain.

This page:

  • Clarifies lender positions on mortgages for self-employed buyers

  • Describes how to earn the lowest rate on a low doc mortgage

  • Matches you with a lender to fit your low doc home loan needs

In this section we take a look at special mortgages, jumbo mortgages and express mortgages.

Refer to the table of contents if you're looking for specific information.

In the past, banks have been hesitant to lend to home buyers who were self-employed or owned new small businesses, because of the difficulty in proving a steady income. Not so true anymore.

Banks now compete more aggressively for customers and that makes it easier for those who are not salaried employees to qualify for a mortgage (and at competitive rates). But borrowers looking for no or low doc mortgage loans still need to keep a few things in mind.

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If your credit score is at least 620, we urge you to first apply at our top-rated prime lender, Eloan. It won't hurt you to try, and if you do not qualify, FullSpectrum Lending guarantees the lowest sub prime rates in the country, so you'll still have an opportunity to save.

Where lenders stand on no or low doc mortgage loans

Mortgage lenders still like to see a steady source of income in any borrower. If you're self-employed or work on commission, you may have to work harder to prove you're a good credit risk.

The longer you've supported yourself independently or the steadier (and higher) your variable income has been, the better. Lenders also often use tougher credit standards for self-employed borrowers, so a good credit score helps.

If you're new to your business, or your credit is less-than-perfect you can still qualify for a mortgage, but the rates may be higher.

For the lowest rate low doc mortgage loans

If your credit is strong and your income steady, you will probably qualify as a prime borrower. But still, make sure your credit report is accurate and clean.

And, for the most part, any piece of documentation on assets or income you can (or are willing) to provide can only help your borrowing profile.

Our recommended prime lender, Eloan, offers a very low interest rate on this type of loan (as little as 1% higher than a standard, fully documented loan) so it's worth applying for even if you're not sure you'll qualify.

But there are still options even if you don't . . .

Other low doc mortgage loans

If you are new to your business or have a checkered credit past, you'll probably have to settle for a higher-rate low doc home loan. This isn't all bad, because you'll have virtually no documentation requirements and no business requirements (like having to show profitability for at least two years).

Many homeowners who buy with this type of low-doc loan find it profitable to refinance into a lower rate later on when their credit profile is stronger. So manage the mortgage responsibly. Refinancing into a lower rate is a lot easier and cheaper with a strong payment history.

Next: A look at express mortgages.

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