NINA and NINJA mortgage in Houston TX: All you need to know

Are you looking for a home loan in Houston which doesn’t require you to disclose your income or assets? If the answer is yes, you must have probably heard of NINA and NINJA mortgages. These loans used to be very popular among credit-challenged home buyers, particularly self-employed individuals. They are however no longer available for owner-occupied properties. It means that you can’t obtain NINA or NINJA loans in traditional residential real estate transaction. If you are an investor looking to get a loan for the purpose of purchase of an investment property, refinance and cash-out refinance, you can use these two options.

Here at Shop Owner Finance, we help self-employed buyers to acquire the home of their dreams with owner financing. It is better and safer option than NINA and NINJA mortgages (you can’t get them these days anyway). In our program, you can buy any Houston home with owner financing. Before reading further, you can browse the Houston home listings below or use our free MLS search functionality to find your dream home. We will help you acquire it with owner financing.

What are NINA and NINJA mortgages?

‘No Income – No Assets’ loans are known as NINA loans.

You can get a NINA loan even if you can’t document your income and don’t want to supply verification of any asset on your loan application. No evidence of collateral is required.

What it basically means is that these loans are extremely easy to obtain, particularly for self-employed borrowers who can’t document their income. Many first time home buyers will also fall in this category.

NINJA loans are a notch better than NINA loans in terms of flexibility in the underwriting standards. You can get a NINJA loan even if you don’t supply any verification of employment. So the acronym NINJA stands for ‘No Income – No Job – No Asset’ loans. In a NINJA loan arrangement, you don’t need to document your income and supply verification of any assets. More importantly, you don’t need to supply verification of any current or past employment history. In other words, you can get a NINJA loan even if you don’t have any employment.

Both types of mortgages were popular among self-employed because many buyers from this segment can’t prove their employment history and document their income. But these loans disappeared from the market after the 2007-08 housing crisis.

When you take out a traditional loan, you need to have a stellar credit score, more than 720 in most cases and supply verification of your employment history, income, liabilities and assets. NINA and NINJA loans don’t have this requirement.

Advantages of NINA and NINJA loans

The pros of NINA and NINJA loans in Houston are self-explanatory; however, here are some of advantages to consider:

• These are completely hassle-free financing options for self-employed home buyers as no documentation is required.
• It’s extremely easy to qualify for these loans due to flexible terms compared to a traditional mortgage. You can qualify even if you can’t supply verification of income, assets and employment history.  
• The loan approval process is super fast because you don’t need to supply any documentation as evidence of collateral.

Disadvantages of NINA and NINJA loans

The biggest disadvantage is that you may end up paying an extremely higher interest rate compared to a traditional mortgage.

NINA and NINJA loans are risky for the lenders because the borrowers don’t put anything as collateral. The lenders cover the risk by charging a high interest rate.

You also pay a slightly higher interest rate in an owner financing arrangement also, but it is usually far less than a NINA or NINJA loan interest rate (depending on your negotiation with the seller).

The fact is that NINA and NINJA loans are no longer available for owner occupied residential properties in Houston. The 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act caused these types of loans to discontinue because the law clearly states that the lenders must obtain more comprehensive information about prospective borrowers.

Owner financing is a no-credit-check or no-income-verification financing method, but it still requires the borrowers to prove their ability to repay the loan.

Here at Shop Owner Finance, we recommend our clients to arrange for a large down payment – somewhere between 15 percent and 20 percent. We also recommend that our clients show commitment to homeownership.

(See also: owner financed homes in Houston TX: Complete Guide)