How to Qualify for Low Doc Loans with Bad Credit

Getting a low doc loan can be a great way to get the funds you need with minimum verification. With most mortgage loans, you will need to fill out a lot of paperwork and have the information verified. They will need to verify your income, your employment and everything else on the application. However, with a low doc loan, most of these steps are skipped, as a result, you can get the money that you need, much quicker. This type of loan is great for those that are self-employed and have a tough time verifying all of their income. These loans allow you to state your income and the lenders will take you at your word as long as you have decent credit. However, if you have bad credit, things can get a little complicated. Getting approved for a low doc loan with bad credit can be really difficult. Here are a few tips for qualifying for a low doc loan with less-than-perfect credit.

Get a Cosigner

One of the best ways to help yourself get approved for a low doc loan with bad credit is to get a cosigner. Getting a cosigner can really help improve your loan profile. When you have someone that is willing to sign the loan with you, it improves your chances that the lender will approve you. They will look at both credit scores instead of just yours. When you get a cosigner that has a good credit score, the lender is going to feel much better about giving you the money that you need. 

Instead of just assessing the loan based upon your bad credit score, they are going to look at both of them cumulatively. The lender knows that they are getting someone that is good at handling money. The good credit score tells them that they have done well in handling other loans in the past. Therefore, they have good reason to believe that they will make sure the loan is paid off correctly. If the primary borrower can not afford to make the monthly payment, the lender knows that the cosigner is going to step in and make the payment for them. Since they are obligated to guarantee the loan, they will make sure all the payments get made. If you can find a cosigner with a good credit score, this is going to be your best option.

Subprime Lending Market

The subprime lending market is designed for those that have bad credit histories. Subprime lenders make a business out of lending to those with bad credit scores. Therefore, if you want a low doc loan with bad credit, this is the place to go. Many mortgage brokers have access to subprime mortgage lending sources. Therefore, if you are working with one and they determine that your credit is too bad to lend to with a regular program, they may present you with a subprime mortgage option to consider.

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