What is a No-Ratio Loan?

A no ratio loan is a type of loan that does not require a borrower to present his or her debt to income ratio to a lender. A debt to income ratio shows the percentage of a person's income that goes towards paying debts, monthly.

No ratio loans are perfect for people who have a larger than normal amount of debt. With this type of loan, the borrower does not need to provide any type of income information in order to secure a loan. These loans are also perfect for people with incomes that are hard to document, such as those that are self-employed or work on a commission.   

Whether or not you approved for a no ratio loan depends on your credit history. You will pay a higher interest rate on a no ratio loan because this type of loan poses a higher risk to insurance companies. The less information that the company has, the more likely they are to suffer from you defaulting.

Another way that you can be approved for a no ratio loan is if you are not financing your entire home. If you are borrowing less than the value of your home you will most likely be approved. This type of loan is used to finance smaller projects, not to purchase big ticket items.