Documentation requirements for a mortgage. March 7
Full Doc, No Doc, Stated/Verified… Sometimes the documentation requirements for a loan can be very confusing. What these basically mean is the type of documents required by the lender to apply for a loan.
For example suppose you apply for a loan with Full Doc (which means full documentation) then you will need to state your income and your assets and the lender will verify both your income and your assets.
Likewise in the No Doc (which means no documentation) you will not have to disclose your income or your assets.
And in a Stated income/Verified Assets you state your income and your assets but only your assets are verified by the lender.
There is also a Stated income/Stated assets in which, as your might have guessed, only requires you to state your income and assets and they is not verified by the lender.
Now you may ask: if you could go with a No Doc loan then why go through the trouble of a Full Doc loan. The answer is credit and down payment. A Full Doc loan is generally less risker for a lender so the down payment requirement might be less and your credit report does not have to be great to qualify. On the other hand for a No Doc loan be prepared with a A+ credit report and at least a 20% down payment plus other fees to qualify for the loan.
Traditionally a Full Doc loan was the only way to get a loan. But this left many people out who couldn’t document their income and assets and they could not buy a home. For example some people who are self-employed may have trouble verifying their income so they may choose to go with a Stated Income/Verified Assets loan. This enables a lot more people to buy a home who would have been previously unable to apply for a loan.