What Is a No Income Verification Loan?

Quicken Loans notes that no income verification loans (or NIVs) are loans that do not require applicants to prove income through pay stubs and W-2 forms. These loans are often mortgages and are primarily for the self-employed and those paid through commission.

Properties by Gold reports that because no income verification loans are underwritten based primarily on what the applicant reports as earnings, they often carry higher interest rates than traditional loans to compensate for the additional risk of the financial institution. These loans allow applicants to use cash flow rather than net income to obtain the money they need.

Bankrate notes that no income verification loans may also be called stated income loans. A traditional home loan may not be available to self-employed or commission-based salary individuals because a traditional home loan is based on credit worthiness and at least two years of tax returns.

No income verification loans allow an applicant to prove income through other means, though it may require a high credit score, a higher down payment and proof of liquid assets to cover all expenses, including the proposed mortgage, for up to six months, reports Bankrate. Applicants must be prepared to prove their ability to repay the loan through letters from an accountant or employers, 1099 forms or other methods of verification.