What is a Full Doc Loan?

A Full Doc Loan, short for full documentation loan, is a type of mortgage that requires borrowers to provide extensive documentation of their income and assets in order to qualify for the loan.

This type of loan is typically used by borrowers who have stable income and assets, and who are able to provide the necessary paperwork to prove their financial stability.

In this post, we’ll take a deep dive into Full Doc Loans and everything you need to apply for one to maximise your investment property.

Understanding Full Doc Loans

Full doc loans, also known as full documentation loans, are a type of mortgage loan where borrowers are required to provide full documentation of their income and assets in order to qualify for the loan. This type of loan is considered more traditional and stringent compared to alternative options such as lite doc loans.

Borrowers seeking a full doc loan will typically need to provide documents such as pay stubs, tax returns, bank statements, and other financial records to verify their income and assets. Lenders use this information to assess the borrower’s ability to repay the loan and determine their creditworthiness.

One of the main advantages of a full doc loan is that it typically offers lower interest rates and better terms compared to alternative options. Lenders are able to accurately assess the borrower’s financial situation, which reduces the risk of default and allows them to offer more competitive rates.

Additionally, full doc loans are often a requirement for certain types of mortgages, such as conventional loans or government-backed loans like FHA or VA loans. Borrowers who choose a full doc loan may have access to a wider range of loan options and potentially higher loan amounts compared to alternative loan programs.

While full doc loans require more paperwork and documentation from borrowers, they can be a good option for borrowers with stable income and assets who are looking for competitive interest rates and terms. By providing full documentation of their financial situation, borrowers can demonstrate their creditworthiness to lenders and increase their chances of approval for a mortgage loan.

It’s important for borrowers considering a full doc loan to gather all necessary documents and be prepared to provide extensive documentation of their income and assets. This can include recent pay stubs, tax returns for the past few years, bank statements, investment account statements, and any other relevant financial records.

Key Features of Full Doc Loans

Key features of full doc loans include:

1. Eligible Properties: Full Doc loans caters to a variety of commercial assets, including properties with 5 or more units, mixed-use spaces, retail spaces, strip centers, warehouses, and more.
   
2. Purchase and Refinancing: Full Doc loans are suitable for both purchase and refinance transactions, provided the properties are rented out or owner-occupied.
   
3. Extensive Documentation: While Full Doc loans require more documentation compared to Lite Doc loans, the trade-off comes in the form of better interest rates, making it an attractive proposition for qualified borrowers.

Pros and Cons of Full Doc Loans

Pros

Lower interest rates: Full doc loans typically come with lower interest rates compared to alternative options like low or no-doc loans. Lenders are able to accurately assess the borrower’s financial situation, reducing the risk of default and allowing them to offer more competitive rates.

Structured Payments: With principal and interest payments, Full Doc loans offer clear and predictable payment structures, giving borrowers peace of mind and financial stability.

Flexible Amortization: Our program allows for a 30-year amortization, which is a significant advantage over many traditional bank offerings that provide shorter amortization periods.

Stable Fixed Rate Options: Full Doc loans come with fixed-rate options, ensuring that the interest rate and payment remain constant over the loan’s life, guarding against potential market fluctuations.

Qualification Ease: Full Doc loans offer easy qualification without requiring Debt-to-Income (DTI)/Debt-to-Unit (DTU) ratios, making it accessible to a wider range of qualified borrowers.

Newbie-Friendly: Full Doc loans are not solely experience-based, making it welcoming to new investors who have the credit and financial qualifications to support their endeavors.

Efficient Processing: Compared to traditional bank closings, Full Doc loans from Express Capital Financing offer faster closing time, enabling investors to capitalize on opportunities quickly.

Portfolio Expansion: Unlike traditional banks, which often impose limits on the number of properties one can finance, our Full Doc loans offer the flexibility to finance a larger number of properties, supporting ambitious growth strategies.

Cons

More paperwork: Full doc loans require borrowers to provide extensive documentation of their income, assets , and employment status, which can be time-consuming and tedious.

Stricter requirements: Because full doc loans require thorough documentation of the borrower’s financial situation, they may have stricter eligibility criteria compared to low or no-doc loans. Borrowers with less stable income or assets may struggle to qualify for a full doc loan.

Prepayment Penalty: Express Capital Financing’s Full Doc loans may carry a prepayment penalty, with a maximum term of 5 years. Borrowers should be mindful of this when considering early repayment options.

Comparative Interest Rates: While our Full Doc loans offer more competitive rates than Lite/no Doc options, they may still be higher than those offered by traditional banks.

Who Can Benefit from Full Doc Loans?

Full Doc loans can be an ideal solution for a wide range of borrowers, including experienced investors looking to expand their portfolios and newer investors who meet the program’s rigorous credit and financial qualifications.

Additionally, borrowers who prefer stable, predictable payments and are seeking long-term financing options may find Full Doc loans an attractive choice. These loans offer fixed-rate options with predictable principal and interest payments over a 30-year amortization period, which means that borrowers can enjoy a steady stream of income without worrying about rate hikes or unpredictable payment structures.

Other borrowers who can benefit from Full Doc loans include those who:

• Need to finance larger commercial real estate assets
• Have significant equity and cash reserves
• Want to take advantage of favorable market conditions
• Are planning to hold on to their properties long-term and are comfortable with potential prepayment penalties

Investors who are new to the commercial real estate space but have a strong credit profile and can provide extensive documentation to demonstrate their financial qualifications can also take advantage of Full Doc loans, making it a particularly welcoming option for those starting in the industry and looking to build their investment portfolios.

How Do I Qualify for a Full Doc Loan?

To qualify for a full doc loan, borrowers must meet certain requirements set by the lender. Some common criteria for qualifying for a full doc loan include:

Stable income: Lenders typically require borrowers to have a stable source of income that can be verified through pay stubs, tax returns, and/or bank statements. Self-employed individuals may need to provide additional documentation, such as profit and loss statements or business tax returns.

Good credit score: Borrowers with higher credit scores are more likely to qualify for a full doc loan, as they demonstrate a history of responsible financial behavior. Lenders may have minimum credit score requirements for this type of loan.

Low debt-to-income ratio: Lenders want to ensure that borrowers have enough income to cover their monthly mortgage payments, so they typically look for a low debt-to-income ratio. This ratio is calculated by dividing the borrower’s monthly debt payments by their gross monthly income. Lenders may have specific thresholds for this ratio in order to qualify for a full doc loan.

Extensive documentation: As , full doc loans requmentioned aboveire borrowers to provide extensive documentation of their financial situation. This includes pay stubs, tax returns, bank statements, and other financial records to verify income, assets, and liabilities. Borrowers should be prepared to provide all necessary documentation in a timely manner to increase their chances of approval for a full doc loan.

Employment history: Lenders may also look at the borrower’s employment history to ensure they have a stable job and income. Having a steady job for at least two years is typically preferred by lenders when qualifying for a full doc loan.

Apply for a Full Doc Loan with Express Capital Financing

Express Capital Financing‘s Full Doc loans provide a flexible and accessible financing option for a broad range of borrowers, from experienced investors looking to expand their portfolios to newer investors with strong credit profiles and a commitment to building their commercial real estate businesses. Our team is here to help you navigate the process and find the perfect financing solution tailored to your unique needs.

Contact us today to learn more about how our Full Doc loans can provide the stability and flexibility you need to grow your business.