Getting a No Income Mortgage Loan in 2023 – Is It Still Possible?

No income mortgage loans, also known as no doc or no verification loans, were very popular leading up to the 2008 housing crisis. These risky loans required little to no income documentation from borrowers, making it easy for people to get mortgages they couldn’t actually afford.

After the housing bubble burst, lending standards tightened up and it became much harder to get a no income mortgage. But is it still possible to get one of these loans in 2023? Let’s take a closer look.

What is a No Income Mortgage Loan?

A no income mortgage, as the name suggests, is a home loan that does not require proof of income from the borrower. With a conventional mortgage, you have to provide pay stubs, W-2s, and tax returns to verify your income.

With a no doc loan, the lender does not verify your stated income in any way. This makes it easier for self-employed, contract, or gig economy workers to qualify for a mortgage if they don’t have traditional income documents.

These are also sometimes called “NINJA” loans, which stands for No Income, No Job or Assets.

The Rise and Fall of No Doc Loans

In the early 2000s, no income mortgage loans became very popular, especially in hot real estate markets like California, Florida, and Nevada. With home prices rising rapidly, lenders and borrowers alike saw these as a way to get more people into homeownership.

At the peak in 2006, no doc loans accounted for roughly 10% of all U.S. mortgages. They were especially common among subprime borrowers with lower credit scores.

When the housing bubble burst, many no income mortgage borrowers defaulted because they couldn’t actually afford their payments This led to the subprime mortgage crisis and was a major contributor to the Great Recession

In response, lending standards tightened up considerably. The ability-to-repay rule passed in 2014 means borrowers now have to provide solid evidence they can repay the loan. No income mortgages virtually disappeared after this.

Are No Doc Loans Still Available in 2023?

While not as common as they once were, it is still possible to get a no income mortgage in 2023 in certain situations. However, the requirements are much stricter than they used to be.

Here are some key things to know:

• Very Few Lenders Offer Them – Only a small number of niche lenders still provide these loans. They are not offered by big banks and mainstream lenders.

• Large Down Payment Required – You’ll likely need at least 20-30% down to qualify. Some lenders may require as much as 50% down.

• Excellent Credit Score – Minimum credit scores of 720+ are typical for no doc loans today. Some may require scores over 740.

• Higher Rates and Fees – No income mortgages come with higher interest rates, points, and lender fees. You’ll pay more compared to a conventional loan.

As you can see, the barriers to getting a no income mortgage today are significant. These loans are really only intended for wealthy borrowers who have great credit and substantial assets but lack income documentation. The lender relies on your credit score and down payment as evidence you can repay the loan.

For most borrowers, a conventional mortgage that requires income verification is still the better and more affordable option. But no doc loans can serve a purpose for some unique cases if you meet the stringent requirements.

Types of No Income Mortgage Loans

There are a few different types of no verification mortgage loans still available today:

• No Income Verified Assets (NIVA) – The lender verifies your assets (bank accounts, investments, etc.) to determine if you can repay the loan. But they do not check your income.

• 12-Month Bank Statement Loan – Rather than tax returns or pay stubs, you provide 12 months of bank statements to show cash flow. This works for self-employed borrowers.

• No Income, No Assets (NINA) – The lender does not verify income or assets. They rely almost entirely on your credit score and down payment.

• Stated Income Verified Assets (SIVA) – You state your income without documentation, but the lender checks your assets/reserves to confirm them.

Pros and Cons of No Income Mortgage Loans

Pros

• Easier to qualify if you have limited income documents

• May close faster with less paperwork

• Allows self-employed to qualify easier

Cons

• Need excellent credit and large down payment

• Higher interest rates and fees

• Very hard to find lenders offering them

• If you overstate income, you may end up house-poor

While they can serve a purpose, no income mortgage loans are riskier and costlier than conventional loans. Make sure you fully understand the tradeoffs before pursuing this type of financing.

Minimum Requirements to Qualify in 2023

Every lender will have their own eligibility standards, but here are some typical minimum benchmarks required for a no income mortgage today:

• Credit Score: 720+ (often higher)

• Down Payment: 20-30% (sometimes up to 50%)

• Debt-to-Income: Not commonly checked, but lower ratios preferred

• Reserves: Expect to show 12+ months of mortgage payments in your accounts

Meeting these stringent requirements does not guarantee you will qualify. But they are table stakes just to be considered by most lenders offering these loans today.

Where to Find No Doc Mortgage Lenders

Since so few institutions offer true no income mortgages now, it can be difficult to find lenders providing them. Here are some options to consider if you need a no verification loan:

• Start with online mortgage brokers like LendingTree or LoanDepot – their wide network may include niche no doc lenders

• Try small local or regional banks and credit unions, which have more leeway than national lenders

• Search for non-QM lenders (non-qualified mortgages) specializing in alternative products

• Ask an experienced local mortgage broker for recommendations of lenders they know provide no doc loans

Be prepared to do some digging and make a lot of calls. These lenders exist but are not easy to find or access for most borrowers. The extra effort may pay off if you really need a no income verification loan.

Alternatives to Explore Before a No Doc Mortgage

Because no income mortgages are so challenging to qualify for today, you may want to consider some alternative options first:

Portfolio Loan – A loan held on the lender’s books rather than sold to investors. This provides more flexibility on income documentation.

DSCR Investment Property Loan – Uses the property’s projected rental income only to qualify, without any personal income review.

USDA or VA Loan – Government-backed mortgages have more flexible underwriting standards and can be easier to qualify for.

FHA Loan – Requires just 3.5% down and limited income documentation for some self-employed borrowers.

Carefully research each of these routes to see if they may meet your needs before attempting the uphill battle of getting a true no income mortgage loan.

The Bottom Line

While possible in certain scenarios, no verification mortgage loans are exceptionally difficult to obtain nowadays. You need stellar credit and a hefty down payment just to be considered. For most homebuyers, a conventional loan that requires income proof is the simpler and more affordable route.

But for a small subset of upscale borrowers with unique situations, no doc loans can still fill a niche need. Just make sure to shop extensively, as only a tiny fraction of lenders will offer these products in 2023. If you’re up for the challenge, no income mortgages remain an outside-the-box financing option.