No-Ratio Mortgage

A mortgage program in which a borrower's income isn't used or reported in qualifying the borrower for the mortgage under the standard debt-to-income ratio requirements. The loan is usually made based on the borrower's down payment, credit score or assets.

This type of mortgage is often chosen by individuals who don't want to disclose their incomes or who have highly variable incomes. However, this mortgage option will typically come with a higher rate than a mortgage that verifies income.

No-ratio mortgages usually fall into the Alt-A classification. Under Alt-A lending practices, certain exceptions to traditional mortgage underwriting guidelines - such as a debt-to-income ratio requirement - are made based on risk-based pricing. In other words, the lack of a debt-to-income ratio is a risk factor that is used in determining the mortgage's interest rate.