No-Documentation (No Doc) Mortgages

What is a no-doc mortgage?

A no-documentation (no-doc) mortgage is a home loan that does not require traditional income verification such as W-2s, pay stubs, or tax returns. Instead, approval was historically based on a borrower’s declaration of income or on the property’s resale potential. These loans carry higher risk because they do not fully verify a borrower’s ability to repay.

How no-doc mortgages worked (and why they changed)

Before the 2008 financial crisis, lenders sometimes issued mortgages based largely on borrower statements about income. Those practices contributed to high default rates. In response, laws and rules introduced after the crisis—most notably the Dodd‑Frank Act and the Ability‑to‑Repay/Qualified Mortgage standards—require lenders to verify borrowers’ finances. As a result, true no-doc loans are now effectively obsolete or illegal in most circumstances.

Current alternatives that resemble no-doc loans

While lenders no longer accept only a borrower’s declaration, some loan options ease conventional documentation requirements by accepting alternative proofs of income, such as:
* Bank statements or brokerage statements (bank‑statement loans)
* Asset statements in lieu of regular income (stated‑asset loans)

These alternatives still require documentation and verification; they do not return to the pre‑crisis “just tell us” model.

Who used no-doc loans and who might use alternatives today

No-doc or limited‑doc products historically appealed to:
* Self‑employed borrowers with nonstandard income reporting
* Real estate investors and house flippers whose taxable income is reduced by write‑offs
* Borrowers with substantial assets but little W‑2 income

Today’s limited‑documentation loans are typically for borrowers with strong credit profiles and substantial cash reserves who can document ability to repay through nontraditional records.

Key features, costs, and risks

• Higher rates and fees: Limited‑doc and Alt‑A products usually carry higher interest rates than fully documented prime loans.
• Larger down payments: Lenders often require 30% or more down for these loans; some require 35–50% for investment properties.
• Lower loan‑to‑value (LTV): Maximum LTVs are commonly around 70% or lower.
• Stronger borrower profiles: Lenders expect excellent credit scores and significant liquid reserves.
• Greater lender reliance on equity: Many limited‑doc loans are underwritten based on the borrower’s equity position in the property.

Common types and industry terms

These loan types fall into the broader Alt‑A/limited‑documentation category:

• Low‑doc (low‑documentation): Minimal paperwork; underwriting weights credit history and reserves more heavily.
• Bank‑statement loans (stated‑income, verified‑assets or SIVA): Approve borrowers based on bank or brokerage statements showing cash flow and assets.
• No‑income, verified‑assets (NIVA): Approval is based on verified assets rather than income.
• Stated‑income, stated‑assets (SISA): Borrower states income and assets without independent verification (rare and risky).
• NINJA loans (no income, no job, no assets): Pre‑crisis product that ignored verification; largely extinct and illegal under current rules.

Proof of income examples (standard mortgages)

For conventional mortgages, lenders typically accept:
* W‑2s and pay stubs
* Federal tax returns (1040s)
* Employer verification letters
* Bank statements, pension or Social Security statements (when applicable)

Related questions

Can you get a HELOC without a job?
* Possibly, if you can document another reliable income source (pension, investment income, rental income) or demonstrate sufficient equity and creditworthiness. Lenders still require proof that you can service the debt.

Are true no-doc loans legal?
* No. Lenders must reasonably verify a borrower’s ability to repay. Products that ignore verification are not permitted under current federal rules.

Bottom line

True no‑documentation mortgages—loans made solely on a borrower’s statement—are effectively a thing of the past. Today’s lenders may offer limited‑doc options that accept alternate forms of verification (bank or asset statements), but they still require evidence of ability to repay and typically impose higher down payments, higher rates, and stricter credit and reserve requirements. Borrowers should weigh the higher cost and risk of limited‑doc products against other financing options and be prepared to provide alternative documentation when necessary.