Most homeowners will refinance many times throughout their lives, they may never hear about the other, less common doc types. In this article we’re going to dive into NINA, No Doc, and No Ratio doc types and explore their roles in the mortgage industry. So let’s get to it.
No Income, No Asset (NINA)
This is just like it sounds…no income or asset documentation required. Sounds great, right? Well, these type of loans aren’t very common, especially in today’s market.
I didn’t state it explicitly in the last doc type article, but the different doc types represent different levels of risk for the lender, and, as a result, the more relaxed the documentation requirement for a given loan, the higher the interest rate will be. The NINA doc type, all things being equal, represents a significant risk for the lender, since there is no way to verify whether the borrower has the means to afford a given property at all. The borrower’s employment is verified, but neither the income amount or liquid assets are even reported on the Mortgage Application.
Since the NINA doc type represents a relatively high risk for a lender, these types of loans generally require a number of compensating factors. For instance, these loans are usually reserved for borrowers with very high credit scores, a large amount of equity in their homes, and many times they cannot be first time home-buyers.
This doc type is only second to No Doc in the level of risk it poses to the bank. Interest rates will generally be higher on this doc type than all but No Doc, and other loan qualification requirements will be much more strict.
No Doc
No Doc is very similar to the NINA doc type, with one small difference…No Doc means no income, asset, or employment documentation whatsoever, whereas NINA does not require income and asset documentation, but does require verification of two years of employment in the same field. Other qualification requirements will be very strict.
This doc type carries the most risk for the bank out of those we’ve covered and generally offers the highest interest rates.
No Ratio
The No Ratio doc type requires all the same income and asset documentation as a Full Doc loan, but where this loan differs is in the fact that there is no Debt-to-Income ratio (DTI) limit. So, whereas a borrower may be turned down for a Full Doc loan if his or her DTI is over 50% or so, with a No Ratio loan, the bank won’t even take DTI into consideration. Obviously, this type of loan presents certain risks to the bank, and because of this, there must be compensating factors like good credit, low LTV, etc, before one could expect an approval on this doc type.l
Between NINA, No Doc, and No Ratio, No Ratio definitely represents the least amount of risk on the part of the bank. The fact that assets are considered as a qualification requirement differentiates the No Ratio doc type from the others covered in this article. Nonetheless, it’s still a risky loan and interest rates and qualification requirements will generally be higher with this doc type than the more common doc types covered here.
Doc Type Breakdown and Usage
As with any loan through any lender, a given lender is going to have specific requirements for each doc type that may deviate slightly from the explanations here…that’s ok. Keep in mind, these are general standards and the specifics of a given loan are usually going to change from lender to lender. In the spirit of presenting all these details in an easy to understand format, here a side-by-side comparison of the three doc types covered in this article .
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