[Note: As a result of the 2007/2008 mortgage crisis many lenders have scaled back on offering less than full documentation mortgages or have tightened underwriting guidelines significantly. Banks are constantly reevaluating there programs in response to a variety of uncertainties about the housing market and the economy in general. If your are applying for anything less than a Full Doc loan, the best thing you can do to improve your chances of being qualified is to watch your FICO score (for more about FICO scores click here). Most lighter documentation loans require a middle FICO score of somewhere between 660 and 720 . We have left the older descriptions below for historical reference (some products may return in newer forms when the mortgage market recovers). Most lenders have discontinued their Stated Income/Stated Asset programs and their true No Docs/NINAs. The handful of banks that still offer No Docs require much higher down payments (at least 25-30% or more). Stated Income programs when they are offered usually require a 20-25% down payment. A borrower with very, very, good credit (720+, multiple tradelines) and substantial cash reserves may be able toqualify for 90% financing with a Stated Income/Verified Asset program.]

When applying for a mortgage the degree and type of documentation you provide is very important when determining the rate you receive and whether you will be approved at all. The mortgage industry is filled with an array of different terminology to describe a number of basic albeit different types of loan programs. Knowing the doc type of the mortgage you are applying for is very important because most of what is advertised on TV, newspapers and the Internet is deceptively geared toward full doc borrowers, (individuals who fully document and verify income, assets and employment). Meaning lenders and brokers will advertise easy approvals at low Full Doc rates until you get to their office or happen to read the fine print in the ad, if it is there at all (the fine print). There is so much false advertising that it has skewed the reality of how rates work and loans are priced. Rates are based on risk. The less documentation provided, the greater the risk for the bank/lender the higher the rate will be. It can be an increase of anything from 1/2%-1% on a Lite Doc program to a bump of 3 or 3.5% (or more) on a SIVA (Stated Income/Verified Asset). This is the truth nationwide and is obscured by the competition for your loan application in misleading real estate ads.

Below are generally accepted definitions of different alternate documentation types. Individual banks may have slightly different definitions or use their own branding when describing the same product (Stated Incomes are often called, Ez Docs, Express Docs, etc)

Full Doc - The most commonly advertised and quoted both by lenders and in the media. Full Docs typically require at least a 2 year employment history with either verbal or written verification from an employer (depending on the bank). Income is verified and documented with tax returns or 2 years of W2's and 30 days of paystubs. Assets are documented with bank or investment statements and are usually verified.

Lite Docs - Lite Docs are similiar to Full Docs except they usually require only 1 year employment history and verification and 1 year of tax returns or W2's. Some banks may accept 12 months of bank statements showing income in lieu of W2's or tax returns.

No Income Verifcation (NIV) - 2 year employment history that is typically verified. Income is stated but not verified. Assets are documented with bank statements and most likely verified (depending on the bank). Sometimes also called Stated Income/Verified Asset (SIVA).

No Asset Verification (NAV) - 2 year verified employment history. Income is stated and verified simliar to Full Doc above. Assets are either stated or shown with bank/investment statements but not verified.

No Ratio - 2 year verified employment history. No Income is stated or verified therefore no Debt To Income ratio (DTI) is calculated. (See Mortgage Qualifying Basics for explanation of debt ratios). Assets are stated and usually verified.

Stated/Stated - This term is used many different ways by different lenders. Employment is Stated, usually but not always verified. Income is stated but not usually verifed. Assets are stated, often proven with statements, but not always verified with VODs (Verification of Deposits obtained from borrower's bank). Often confused with No Docs. Many banks stopped funding Stated Income/Stated Asset loans after 2007. They few that still do will probably will require down payments of at least 20%

No Doc - Qualifying is heavily dependent on good credit, down payment and interview with loan officer. Banks may ask to see employment history, but it will not be put down on application. Income may need to be explained but not put down on application. Assets may or may not need to be proven with statements. No Docs are much riskier for banks therefore rates are often much higher than Full Docs. No Docs are much harder to obtain after the 2007/2008 mortgage mess and credit crisis. The very,very, very small number of banks that still offer them require much bigger down payments of at 25-30%.(Before the 2007/2008 crisis, good credit borrowers were able to get No Docs for as little as 5% or 10% down if they were willing to pay the much higher rate.)

As of April 2008 it still remains to be seen how many lenders will continue to offer less than Full-Doc documentation and to what degree. The current trend for most companies is a move away from most of the above doc-types. Banks are waiting for the mortgage bond market to recover and for a bottom in the housing market to make itself evident. Investors who previously invested in mortgage backed securities backed by Alt-A products (Alt-A is the general category under which most less than Full Doc loans with good credit fall) have lost confidence in the underlying housing as collateral and the old guidelines under which many lighter documentation loan types were underwritten. It will probably take major changes in underwriting standards and a reevaluation of the way loans are securitized for more investors to come back to the mortgage bond market. Investors may demand more rewards for more risk (which means higher rates for consumers on less than full doc loans) or improved forms of mortgage insurance (which borrowers will have to pay) to offset the risk.

Some Lenders that still carry Stated Income products and have scaled back offerings are no longer advertising them as aggressively as they once did and are not leaving it to consumer choice to pick the program. Meaning borrowers simply apply without a specific doc type in mind and if they do not qualify for a Full Doc loan, it is up to that particular lenders underwriters or underwriting system to suggest a Stated Income program for an individual borrower. This allows banks to cherry pick customers who will fall under their Stated programs and eliminate some of the fraud and risk that had previously become more and more associated with Stated/No Income check programs.

June 2008 Update

Some readers of this site have again asked why mention Stated/No Doc programs when they are almost not available or nearly completely discontinued?

The reason we at LSPros continue to mention Stated Income or No doc programs even though many banks have largely discontinued them is twofold. The first as mentioned above is for historical reasons. Some browsers and readers of this site are simply interested in the type of products that were available before the 2007/2008 credit crisis. The nationwide crisis itself has created many questions in the public mind of the varied contributing factors that led to the current situation. Stated Income/No Doc programs were available long before the present mortgage market breakdown and became discontinued when they became overly abused in the last few years. They existed far longer without becoming vehicles for fraud in the hands of responsible individuals and banks. The refi and credit boom of 2002 to 2006 lead to an influx of of unscrupulous and often times poorly trained brokers and loan officers into the mortgage market who took advantage of these programs and put making a quick buck above all else. There are still a few banks funding Stated/Reduced doc with much bigger down payments and higher rates. The higher rates are the result of a revaluation of the riskiness of these loans. Before the 2007/2008 credit crisis the rates on SIVA mortgages were typically between .75% to 1.5% higher than Full Doc rates. Today they tend to be at least 3 to 3.5% higher (depending on credit score, down payment, and whether they are fixed rate or adjustables) as result of the revaluation and rethinking of the risk inherent in these programs.

In the hands of the right underwriters and professional loan officers who know how to properly interview and qualify borrowers there is a very high possibility more Stated/Reduced doc programs may return in newer/modified forms. The mortgage market is constantly changing and there are still thousand of banking insitutions in the United States. At LoanShoppingPros we are constantly meeting and interviewing lenders. Should we come across a lender with good, responsible Lite Doc programs we will include them in our network and send properly qualified referrals to them if it makes sense for the borrower and the lenders involved It may be a year before we get another bank willing to do some type of Stated/Reduced doc loan or it can happen tomorrow. They may continue to remain a very, very, very small part of the multi-trillion dollar mortgage market for the forseeable future yet some banks will continue to fund them for the right borrower.