What Is the Low Doc Loan Definition?
Several variations of the conventional mortgage exist in 2022. The low doc loan is one variation. Lenders designed this mortgage for self-employed home buyers. Self-employed individuals cannot provide traditional financial documentation. Therefore, lenders designed a mortgage that considers their reality.
Instead, low doc loan applicants must provide alternative forms of financial documentation such as:
- Bank statements
- Financial statements
- Signed affidavits
- Letters from accountants
Therefore, the low doc loan definition outlines the parameters of the mortgage. Only self-employed individuals qualify for low doc home loans. Then, they must prove their working status through financial documentation. Once applicants provide the necessary financial documents, lenders verify their ability to repay the mortgage.
Lenders fund between 60% to 80% of the loan-to-value ratio. Thus, the self-employed applicant must fund 20% to 40% of the outstanding home value. Placing a 20% deposit toward the mortgage improves the applicant’s financial position; it also helps them avoid the lender’s mortgage insurance fee.
Mortgage House helps self-employed home buyers become homeowners. We issue low doc loans to several applicants. We work with your financial situation to find the best loan terms. Our loan specialists have the tools to find the best mortgage products.
When you become a Mortgage House, you receive access to our other loan products including our business loan.
Low Doc Loan Definition Conclusion
The low doc loan definition includes the parameters of the mortgage. It defines who can apply and the loan’s requirements. Self-employed homebuyers interested in applying for this mortgage can contact our Mortgage House loan specialists. Contact our team today.