NINA is an acronym for No Income, No Assets. A NINA loan is a specialized type of mortgage that is approved without the standard income requirement and asset documentation paperwork. NINA loans do not require any form of documentation for income or assets, unlike traditional mortgage programs.
This typically means that you will be asked to provide stubs, tax forms, broad statements, or any other related documents before the loan is approved.
History of NINA Loan
In recent years, NINA Loan has emerged as one of the best alternative lending programs that gives lenders the opportunity to use a 12- to 24-month average cash deposit to prove their eligibility for the loan amount instead of tax returns.
Before the housing crisis began, NINA loans were in existence and were commonly used to refinance or buy self-employed borrowers. NINA loans gained exposure and popularity during the same period when state income home loans made their debut. Both of these lending programs had a great influence on the housing crash.
The target audience for a NINA loan was self-employed borrowers. However, the loan officers abused their authority and the main aim of the loan by offering loans to borrowers without verifying their ability to repay their loan amount.
It was then that government officials and regulators enacted a law that mandated every lender to verify the eligibility of their borrowers. This is done to assess the borrower’s ability to repay their loans and other requirements that necessitate loan approval.
How Does a NINA Loan Work?
As the name implies, NINA loans do not require income or asset documentation. As of then, anyone who intends to get a NINA loan does not even need to write down their monthly income on the loan application form. You could even leave the asset section blank without filling it with the appropriate information.
Nevertheless, there are certain requirements specified for those who intend to take our NINA loans. These requirements have to be met in order to qualify for a NINA loan. The most important thing to factor in when getting a NINA loan is reviewing the downsides and risky features attached to this type of loan.
With a NINA loan, you can only finance investment properties. The only exception is if you are financing a property to flip or build a portfolio of investment properties. If this is not the case, you won’t qualify for the loan.
Also, borrowers are required to have a fair or higher credit score before they can qualify for NINA loans. Currently, the credit score required is a minimum of 575. If you have a lower credit score, there’s every tendency that some lenders will charge you a higher rate.
Borrowers are also expected to make a down payment of at least 20% of the loan amount they are requesting. Note that, for those with a credit score lower than 600, you will be required to make a 30% down payment.
In addition, NINA loans come with very high interest rates. Most low-income mortgage lenders charge higher rates compared to traditional loan programs. If you have a low credit score, be prepared for the high interest rate.
Summarily, NINA loan features a prepayment penalty where borders are charged for paying off their loan too early. The ideal thing to do is to adhere to the payment schedule and not default on your repayment.
Alternatives to NINA loans
What other lending programs can be considered aside from the NINA loan? Unlike traditional loan programs that require verification of income and assets, we have helped to curate other credible refinance programs with non-income verification, which include the following:
FHA streamline refinance
FHA streamline refinance is an ideal option for borrowers who have a current loan insured by the Federal Housing Administration (FHA). Here, borrowers are allowed to reduce their rate without undergoing a verification of employment, income, and other criteria.
USDA streamlined assist refinance
This is also another alternative to NINA loans that borrowers can consider. Typically, rural homeowners who have loans insured by the U.S. Department of Agriculture (USDA) are given the privilege of improving the terms of their loan through a USDA-streamlined assist refinance.
With USDA-streamlined assist refinance, you won’t be required to provide income paperwork or a credit review.
VA interest rate reduction refinance loan
This is specifically for military borrowers who have a loan backed up by the U.S. Department of Veterans Affairs (VA). If you are diligent with your payment, you can refinance your loan without income or waste documentation.
While NINA loan has lost its popularity recently, it has undoubtedly played a crucial role in the mortgage landscape. While it is known to offer loan opportunities to borrowers with limited documentation and assets, the risk involved is on the high side.
Now, the loan industry has revolutionized; hence, there are laws and regulations that guide the approval of loans. Great emphasis has been placed on income and asset verification across most lending programs.
