Financing Real Estate

Low-Doc Mortgage: The Answer for Wholesalers Looking to Become Buy & Hold Investors

By 100 Percent Financed on January, 9 2019
100 Percent Financed

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Qualifying for a mortgage loan can be challenging at times, particularly for individuals who have a tough time verifying their income. Take someone who is a wholesaler (self-employed), for example, they may have great credit and even enough money for a downpayment, but if they don't have tax returns, 1099s, bank statements or 4506 documentation, they may not be considered qualifiable.

Borrowers nationwide, whether a wholesaler, new business owner, or investor, looking for alternative funding options will be happy to hear that they can now buy or refinance a home with much more flexible qualifying requirements through Low-Doc Mortgages.

What is a Low-Doc Mortgage?
A low-doc mortgage is a flexible mortgage loan for investors that requires less stringent approval and seasoning requirements. Investors can use the loans to purchase or refinance 1-4 unit investment properties.  But the best part...income verification and tax documents are not required. Additionally, loan options can be customizable based on your exit strategy.

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What are the Advantages of a Low-Doc Mortgage?

Low-doc mortgages have some great advantages, including:

- Requires low documentation in order to get the funding required for your investment property. This includes having less than stellar credit scores (640+).
- Perfect for the buy and hold investor that wants to refinance out of a hard money loan into a less-expensive mortgage. They're also perfect for wholesalers who don't have documented income. 
- Great for refinancing properties in which you don't have six months of reserves in the bank.

Who is Eligible for a Low-Doc Mortgage?
To qualify for a low-doc mortgage, you must be able to provide a credit report (focus less on your scores and more on retrieving your credit report). Be prepared to submit 2 forms of ID and your 2 most recent bank statements. If you can't quite make this work, no worries. To help, a co-applicant's income can be added to the total household income (co-applicants must be W2 wage earners).

Great candidates for a low-doc mortgage include:

- Real Estate Agents
- Contractors
- Freelancers
- Entrepreneurs
- Small Business Owners


If you’re worried about not being eligible for a low-doc mortgage as an investor, there are a few steps you can take to increase your likelihood of qualifying. While it’s easy to say you need “good credit” and a “low debt-to-income ratio,” getting to that point may take some time.

So here are some steps you can take to increase your chances of qualifying for a low-doc mortgage:

- Reduce your tax deductions
- Keep separate business and personal bank accounts
- Use tools like Quickbooks to track and manage income and expenses
- Consider a larger down payment (tapping into your IRA or 401(k) may be a smart, long-term solution, but just make sure your consult your financial adviser first)
- Lower your debt load
- Register and license your business


If you're an investor and have a 1-4 unit rental property you're looking to purchase or refinance, we invite you to download our property deal analyzer.

Access Our Exclusive Property Deal Analyzer

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