- A mortgage that requires less verification of income or assets (or both) than a conventional loan. Low-documentation loans are designed for the entrepreneur or self-employed, for recent immigrants with money in foreign countries or for borrowers who cannot or choose not to reveal information about their incomes. You need a substantial down payment, excellent credit history and will usually pay a higher interest rate.
low-doc loan, low-doc mortgage, low-documentation mortgage
Low doc, Low doc loan, Low-doc, Low documentation loan, Low documentation, Low-doc loan
Related Terms and Acronyms
- Creative Financing — Definition,
- An innovative or unusual way of structuring a home loan that allows the buyer to buy the house.
- Credit Rating (CR) — Acronym, Very Important,
➥ A metric to measure the credit worthiness of a debtor.
- A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
- Document Needs List — Definition,
- An inventory of papers a lender needs to underwrite a loan, usually including pay-cheque stubs, bank statements and tax returns.
- Full Income Verification — Definition,
- A requirement for fully documented proof of income; loans of this type usually offer lower interest rates than no-income or "no-doc" verification loans.
- Loan Application — Definition,
- A document in which a prospective borrower details his or her financial situation to qualify for a loan.
- No Credit History — Definition,
- To have no record of an individual's credit worthiness.
- No-documentation Loan — Definition,
- A mortgage in which the applicant provides a minimum of information -- name, address, Social Insurance number (so credit reports can be pulled), and contact information for an employer, if there is one. The underwriter decides on the loan based on the applicant's credit history, the appraised value of the house and size of down payment.
- Non-Resident Alien (NRA) — Acronym,
- A person who is not a permanent resident or a citizen of Canada, and who is generally taxed on income from Canadian resources.
- Private Lender — Definition,
- A lender not associated with a traditional lender.
- Resident Alien — Definition,
- A person who is a legal permanent resident, but not a citizen, of Canada.
- Self Employed Person (SEP) — Acronym,
- A person who runs a trade or business, rather than working as an employee for someone else. You are self-employed if you are a sole proprietor or a partner working in a business. You can be an employee and self-employed at the same time if you have an independent business outside your regular employee hours. To qualify for many business tax exclusions and deductions, the enterprise must make a profit in three of five years. In most cases in order to qualify you must take and average of the last 2-3 years tax assessments.
- Small- and Medium-sized Enterprises (SMEs) — Abbreviation,
➥ A term widely used by the World Bank and the World Trade Organization (WTO).
- Limits banks place on businesses to determine there size.
- Verification of Employment (VOE) — Acronym, Important,
- Confirmation that a loan applicant is telling the truth about where he or she works and how much he or she makes.