Whether you’re retired, between jobs, or working irregular hours, there are times when you need extra cash. You may search for a personal loan with no income verification or use your home’s equity by applying for a home equity loan. While a home equity loan is a potential way to free up funds, it can be difficult to obtain one if you can’t document a steady income stream. 

If that’s the case, you might wonder, Can I get a home equity loan with no income?

The answer is maybe—depending on your liquid assets, credit score, loan amount, and other factors. Today, we’ll discuss the ins and outs of home equity loans and discuss your other options. 

Can I Get a Home Equity Loan Without Income? 

Most loans function on a basic principle—the lender provides a lump sum in exchange for repayment on the initial balance as well as interest on the loan. This can be a risky proposition for lenders, even with the interest incentive. Should the borrower default, they have little recourse for recouping the lost money. 

Because of such inherent risk, lenders typically want verification that the creditor will be able to repay their debts. 

A home equity loan, sometimes referred to as a second mortgage, enables homeowners to borrow against the equity accrued in their homes. Home equity loans may be used for several reasons, including: 

• Debt consolidation
• Purchasing of next home, investment property, or real estate
• Funding a business venture
• Paying for a major life event
• Paying for medical treatment
• Funding education
• Renovating the home

Whatever the reason, that accrued equity can serve as collateral that backs the home equity loan. Most of the time, the lender requires income documentation to prove you can make a monthly payment. 

But that isn’t always the case. No income verification home equity loans also exist. There are four primary types of home equity loans with no income check required: 

1. Stated income, stated assets (SISA) – The first type of stated income loan is a SISA loan. They are commonly used by people—often a business owner or self-employed borrower—that may have income and assets tied up in a business account. This type of loan looks at the business account bank statements over a one- to two-year period to verify cash flow. 
2. Stated income, verified assets (SIVA) – The second type of stated income loan is a SIVA loan. They are designed for people who have verifiable assets on hand but don’t have a steady income or have income that’s difficult to document. People in heavily tip-based occupations, such as valets or bartenders, might need a SIVA loan. 
3. No income, verified assets (NOVA)  – A NOVA loan functions similarly to SIVA except that income and employment aren’t considerations for loan approval. Instead, the lender looks at each asset the borrower has, using those as collateral. This type of loan is ideal for retirees. 
4. No income, no assets (NINA) – In the wake of the 2008 housing crisis, all of these types of loans can be hard to come by.  But that’s especially true for NINAs. On the off chance that a lender is willing to give a NINA or no income verification home equity loan, they will typically base it on the property’s value and calculations of its potential to produce income. Additionally, the borrower should expect that they’ll be asked to make a more substantial down payment and demonstrate a high credit score.     

How to Get a Home Equity Loan with Low Income or No Income? 

So, how do you apply for a home equity loan with no income check? Here are three tips to qualify:

• Have at least 30% equity in your home and a CLTV below 80% – A lender needs to know your equity, loan balance, and the appraised home value calculate the total loan amount they are willing to provide. This combined loan-to-value (CLTV) ratio is calculated by adding the desired amount you wish to borrow to the current loan balance and dividing it by appraised value. The higher your equity and the lower the CLTV, the less difficulty you’ll have in obtaining a loan, income notwithstanding. 
• A higher credit score is better – You don’t always need to show a higher credit score, but it provides assurance to lenders that you’ve established a history of repaying your debts. The better your FICO score, the more likely a bank will be willing to provide a no-income loan.

Sale-Leasebacks— An Alternative Solution

Are you worried about your income levels and think you’ll get denied a home equity loan? Perhaps you’re looking for a better way to obtain a no income home equity loan.

If you have equity in your home, a sale-leaseback program enables homeowners to convert that equity to cash without many of the strict lender qualifications that are so commonplace. A sale-leaseback works by selling your home, receiving the cash you need and a lease to rent the home back.

If you're interested in looking into a sale-leaseback program to plan your financial future, reach out to a financial advisor.

Key Takeaways

If you're looking for a way to get a home equity loan without any proof of income, a sale-leaseback may be the solution for you. If you are still unsure of options to getting this specific loan after reading this article, consult a financial advisor to discuss your options.

Sources:

1. National Association of Mortgage Underwriters. https://www.mortgage-underwriters.org/mortgage-underwriting-news/2012/12/21/siva-sisa-nina-and-option-arm-programs-highly-responsible-mort