Updated: May 19
The world of real estate investing is always fluctuating, it seems that every day there is a new real estate term or change in the marketplace. If you are a borrower, looking to obtain financing for your investment property, it’s easy to get lost researching on google for the term “real estate loan.”
First-time borrowers should know that real estate investing is broken into two categories; traditional lending and private lending. When looking on behalf of an investment property, you’ll be searching for a private lender for direct private money or a NON-QM loan.
A NON-QM (non-qualified mortgage) is a type of loan designed for borrowers that are self-employed and those who do not meet traditional lending standards.
The leading loan types in real estate are; hard money loans, bridge loans, soft money loans, traditional loans, and NO-DOC loans.
To avoid the headache of conventional financing, like banks, a NO-DOC or no-documentation loan could be the perfect fit for your loan scenario.
What is a NO-DOC Loan?
A NO-DOC loan is a type of term loan offered by private lenders that require no income verification from the borrowers. This type of mortgage loan program is based on the borrower’s credit history, real estate investment experience, and liquid assets - which are all then processed through underwriting.
A loan program like this one is advantageous for real estate investors who tend to be self-employed and do not have a stable cash flow.
When a borrower is looking to qualify for a mortgage for their investment property, they normally are required to submit proof of income, such as; pay stubs, employment letters, bank statements, and tax returns. As a non-documented loan program is also a NON-QM (non-qualified mortgage) loan, the borrower is not required to provide any proof of income.
Due to the structure of this type of loan program and other NON-QM loans, they are only available through direct private money and non-qualified mortgage lenders.
If you have all of the above and a credit score higher than 650, you’re a great candidate for a NO-DOC loan.
Unlike conventional investment property loans that max out at 70% LTV, a NO-DOC Soft Money Loan Program maxes at 85% LTV and with no PMI - allowing the borrower to put less money down on their purchase.
Additionally, they have lower interest rates and fees compared to bridge loans or hard money loans
NO-DOC Mortgage Loan Summary
Investment Properties Only: Single-Family, Condos, Townhomes, Multi-Family, Commercial, Mixed Use, Office, Retail, Industrial, Warehouse
Rates Starting at 6.74%
$100K – $5M
Up to 85% LTV
Blanket Loan Options Available
5/1 ARM, 7/1 ARM, 30-Year Fixed
Interest Only Option Available
Foreign Nationals Eligible
No Prepayment Penalty Option Available
Is a No Documentation Mortgage Loan Right for You?
In conclusion, a NO-DOC real estate investment loan is a great choice for first-time or seasoned real estate investors.
If you are looking to apply for a no documentation (NO-DOC) or a no-income-verification, or a stated income loan, here is a brief overview of tips to consider when applying:
If you are self-employed, have an irregular income, or have money in the bank but your income fluctuates, then a no documentation mortgage could be the right choice for you as a borrower.
If you are a prospective borrower or an experienced real estate investor - when working with a mortgage lender on a NO-DOC loan program, the approval process will be based entirely on the property's value.
When you’re purchasing a home or commercial building as an investment property, your projected rental income can help you get approved without any other income or asset documentation.
If you are a real estate investor, then a NO-DOC is ideally suited for you as it requires no proof of income or tax documentation.
The approval process is fast, making it well suited to the quick turn-around associated with real estate investing.
This type of mortgage loan program can be used on the following investment property types, including, Single-family, Condos, Townhomes, Multi-Family, Commercial, Mixed Use, Office, Retail, Industrial, and Warehouse.
There are Fixed rate and Adjustable-rate options. Foreign Nationals are also eligible, making it ideal for real estate investors based outside of the United States as well.
You can apply for a NO-DOC loan by working with a nationwide direct private money lender. Find one today and fulfill your real estate investment goals!
Apply now at www.strattonequities.com or call us at 800-962-6613 and speak to one of our Loan Officers.