NINA loans: Understanding no income, no asset financing

NINA loans were once popular for aspiring homeowners and real estate investors who wanted to fulfill their dreams of buying a property. 

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However, these loans, which don't require borrowers to disclose income or assets, have largely fallen out of favor due to their higher risks and limited avalability. 

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Fortunately, whether you're looking to purchase a home or refinance an existing mortgage, there are still viable alternatives available. This post will explore how NINA loans work and alternative options. 

What are NINA loans?

No income, no asset loans, are a financing option that doesn't require borrowers to include proof of income (such as pay stubs and tax returns) or assets in their mortgage loan applications.

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This type of loan was originally intended for borrowers whose income was difficult to verify, such as gig workers and entrepreneurs. However, following the 2008 market crash, they were discontinued for owner-occupied residences. 

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Today, NINA loans are exclusively available for investment properties. Approval is based on the borrower’s projected ability to repay their loan using future generated rental income from the property. 

NINA loan qualifications

The eligibility criteria for a NINA loan differ slightly from those of a traditional loan. Borrowers should keep the following in mind before applying for a NINA loan:

• The property you’re financing can’t be a primary residence. NINA loans are only available for investment properties. 
• Borrowers usually need to provide a down payment of 20-30% to get approved and mitigate the lender’s risk.
• Lenders typically require higher credit scores, at least 700, in lieu of income and asset verification.
• Many NINA lenders prefer borrowers with a lower LTV and DTI ratio than traditional mortgages. 
• Some lenders ask for a certain amount in cash reserves, even though those financials won’t be factored into your loan calculations.

The risks of NINA loans

NINA loans should be approached with caution. Predatory lenders often use these loans to entice aspiring homeowners or investors who would otherwise not qualify for traditional financing.

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The high interest rates and borrowing costs on the loan increase the risk of defaulting on the mortgage, leading to foreclosure. 

Alternative financing options

Depending on your situation, taking out a NINA loan may not be the best option. If you want financing without income verification or thresholds, consider: 

DSCR loans

Based on potiential rental income, not personal income 

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Debt service coverage ratio (DSCR) loans allow investors to repay their loans with the profits derived from their investment properties. Lenders typically require a DSCR ratio of 1.2 or higher. This ensures the borrower generates enough property income to cover monthly loan payments. 

Hard money loans

Based on the value of the property, not personal income

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If you plan to fix and flip a home, you likely don’t need a loan for long. Hard money loans are short-term loans with high interest rates that are used for property flips, quick purchases, and renovations. Borrowers who take out these loans do so for 6 to 36 months and go through a faster funding process. 

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These types of loans generally require borrowers to make interest payments, followed by a balloon payment when the property is sold. You can find reputable lenders by talking to a title office. 

Home Equity Investments

Based on property equity, not personal income

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If you’ve built sufficient equity in a property, a home equity investment (HEI) is one of the few ways to tap into that equity without income requirements. 

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HEIs provide homeowners with a lump sum of cash in exchange for a percentage of the property’s future appreciation.  

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There are no monthly payments. Instead, the investment is settled when you sell the home, refinance, or use another cash reserve at any time within a flexible 30-year term. HEIs can be ideal for homeowners who need a large sum of cash but don’t want to increase their monthly financial obligations.

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To qualify, you need a credit score over 500, sufficient equity in a primary residence or investment property, and to have a property in an eligible location. 

NINA refinancing options

If your wish is to refinance with no income or asset verification, you still have options. Depending on the type of mortgage you have, you may be eligible for:

FHA Streamline Refinance

Homeowners with an FHA loan may be eligible for an FHA Streamline Refinance. This type of refinance doesn’t require a credit check or home appraisal, making it easier for borrowers to reduce their mortgage rates without verifying income or employment status. 

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Qualifying borrowers should be current on their payments and need to have made at least six payments before applying. While these refinances typically have lower interest rates and favorable terms, FHA streamline refinances often come with closing costs and upfront mortgage insurance premiums. 

VA interest rate reduction refinance (IRRRL)

VA loan borrowers may be eligible for an interest rate reduction refinance loan (IRRRL). This type of refinance allows military borrowers to refinance their loans without having to go through income or asset verification. Similar to FHA Streamline Refinances, IRRRLs don’t require credit checks or home appraisals. However, you do need to be current on all of your mortgage payments.

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Borrowers use IRRRLs to secure a lower interest rate, switch their adjustable-rate mortgage to a fixed-rate mortgage, or both. However, keep in mind there are closing costs and funding fees associated with any kind of refinance.

USDA streamlined assist refinance

Rural homeowners with USDA-backed loans have the opportunity to enhance their loan terms through the USDA Streamlined Assist Refinance program. This loan program allows for refinancing without the need for a credit check or income verification, making the process simpler and more accessible.

FAQs

Are NINJA loans available today?

NINJA (no income, no job, no asset) loans don’t require borrowers to have jobs, making them even riskier than NINA loans. NINJA loans rely solely on a borrower’s credit history and down payment. Although once common, NINJA loans (or no-doc loans) are hard to find. 

What is a bank statement loan?

A bank statement loan lets borrowers qualify for a mortgage using bank statements instead of traditional income proofs like pay stubs or tax returns. It's ideal for self-employed individuals with irregular income, as lenders assess their ability to repay by averaging deposits over 12 or 24 months.

Final thoughts on NINA loans

No income, no assets (NINA) loans offer a unique solution for borrowers struggling to provide traditional proof of income or asset documentation. While these loans can be particularly helpful for some, such as self-employed workers, they also come with higher risks and typically less favorable terms.

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Be sure to consider all the potential drawbacks and explore all available options to ensure the best outcome for your financial future.

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Consider a Home Equity Investment from Point to fund a variety of financial projects. Qualifying homeowners can use the funds as needed and forgo monthly payments. Explore Point’s HEIs here.