No Income Verification Line of Credit on Our Second Home

We have a second home in a state different from our primary home, and the second home is clear. We would like to get a line of credit on the second house and since we are self employed (for over 30 years), we were thinking about looking into a no income verification loan so we don't have to show the last two years taxes. Our credit is excellent. Can we get a no income verification line of credit on a second home?

1 Answer

While various legislation passed over the last year in some states has eliminated loan products that allowed for no verification of income, the answer to your question is not a resounding no.

The lending arena has changed vastly over the last two years when no income documentation loans and stated income documentation loans were the norm. Even with great business longevity and acumen, as well as excellent credit, the majority of lenders are requiring borrowers to prove they have financial capacity to pay back any loan made to them. 

However, if there are enough compensating factors involved in your total credit worthiness you may find a no income verification loan available from a hard money lender or a portfolio bank.

A hard money lender is a person or business entity that has money they would like to invest (lend) at certain terms they can stipulate because they are the ones who will service the loan. These loans are usually at much higher rates than you would find with a lending institution if you were to show your last two years income taxes. The reason for this is because the loans that hard money lenders make are not loans that can typically be done by banks or other lending institutions given their higher risk of default in the hard money lenders desire for a higher rate of return on their investment. 

A portfolio bank is a bank that lends their own money and services all their own loans because they want the to not only collect the interest payments but decide which types of loans they will make. Besides being a bank the two main difference between them and a hard money lender are that they would have more money to lend and their rates might be a little more favorable.

If I was in your shoes, I would start my search by contacting local community banks in the area of the second home. If that produces no results, I would search for hard money lenders in your area.