Low Doc Loans
An alternative doc loan is a mortgage carrying more flexible documentation requirements than a traditional loan. If you have a high credit score and a stable income but do not have access to the bank statements and tax returns required to qualify for a traditional loan, your lender may offer you an alt doc loan.
Primarily this loan category advantages those who need flexibility since it saves having to solicit home buying funds from friends or family when they do not qualify for a traditional loan. Shooting for an alt doc loan can liberate self-employed professionals, seasonal workers with fluctuating incomes, or small-business owners from jumping through hoops to secure their home loans.
While they offer greater flexibility for borrowers, they come with a higher interest rate than their full documentation counterpart, as the borrower has the potential to carry greater risk in the eyes of the lender.