Full Doc Loans

These days there are so many options for mortgage borrowers it can often be quite baffling. One source of confusion is the requirement to produce proof of income, and the effect this can have on your interest rate. In this article we’ll take a quick look at the difference between no doc, lite doc and full doc loans, and why you should always try to go the full doc route.

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As you may have already guessed, doc is an abbreviation of documentation. Lite doc loans and no doc loans are essentially loans which require either no documentation of the borrower’s income, or simply very little. While these loans are typically easier to get than other types of loans and take less time to process - the interest rates tend to be higher. They are usually only used by borrowers who can’t prove their income in any way or people who are relying on quick access to funds.

For this reason, a borrower should always try to qualify for a full doc, or conforming loan. This is a loan that requires the borrower to provide full documentation to prove their income either with W-2s or pay stubs for salaried borrowers, or with tax returns and bank statements for the self-employed.

Now, we all know it can be a hassle to collect your pay stubs and bank statements - and nobody enjoys rummaging through paperwork, but the long-term benefits of a full doc loan far outweigh the hassles of preparing the documentation. Over the life of a mortgage loan, a full doc loan could save you many thousands of dollars in interest charges. For this reason, going the full doc route will always be the smartest way to borrow.