This is a great program for getting around ratio issues. Especially if the borrower cannot "state" income or convincingly "state" sufficient amount of income due to the type of profession.
This is also great for investors that have good income but ratios are out of whack due to "negative rent" on other investment properties.
A no ratio loan typically carries a slightly higher interest rate due to the fact your income is not a factor in the loan qualification process.
These loans are usually only available to borrowers with very good credit scores or borrowers who are borrowing a lower percentage of the value of their property. The underwriting theory would be that the added risk associated with not factoring the income ratios is offset by the good credit or low loan to value.
Many property rehab projects, or quick construction projects are financed with no ratio loans.
You are responsible for providing an accurate figure when the loan officer asks for your income amount. The loan officer cannot coach you or fill in the amount for you. If the loan is audited and fraud is discovered you and or the loan officer can be held accountable under the law.
Even though incomes are not disclosed by the homeowner or verified by the lender, the source of income, the homeowner's employment, is still verified.
No Ratio Loans are actually much easier to process for everyone involved in the transaction because there is less paperwork. You have no income documentation/verification along with no assett documentation/verification.