Welcome to Dream Home Financing

Dream Home Financing


What is a stated income loan or stated income loan? Does this type of mortgage still exist in 2018?

Below I will explain what types of stated income loans exist in 2018. This includes true stated income loans, where you do not have to prove your income at all, as well as what are known as "alternative income documentation loans" or Alternative Documentation loans. These types of loans are coming back since the market crash in 2008 and are great for self employed borrowers.
If you are ready to speak with a stated income lender, we recommend viewing a list of the best stated income lenders. These lenders are actively issuing these types of loans, and may be able to help you get a mortgage without having to provide tax returns. Possibly only having to provide a bank statement.
Many people used to call stated income loans or mortgages “liar loans”. The credit score requirements were not very strict and the LTV or loan to value ratios were flexible. However, today that is not necessarily the case.
                                                        Stated Income Rate Quote

Under normal circumstances, you would have to provide income documentation for your mortgage. A stated income mortgage loan requires you to STATE what your income is on the mortgage application but does not require that you prove it. Meaning, you do not show W2’s, pay stubs or tax returns. Banks’ underwriters will look at the type of employment or business a borrower is in and will compare the stated income against a national salary or income database. If the income does not make sense, then the loan can still be denied by stated income lenders. For example, if you are a barber and you claim to make $750,000 per year…then that will most likely raise a red flag and will result in a loan denial. The reality is that it should never get that far. Your loan officer should guide you to providing accurate income information. It is not legal to lie on a mortgage application. In addition to simply stating the income, the banks will usually require the borrower to sign IRS form 4506 which grants the bank the ability to check your tax returns afterwards. Although it is highly unlikely that the bank will ever request copies of the returns, signing this form typically scares borrowers into being truthful on the mortgage application as they should.

In exchange for the additional risk referenced above, stated income lenders will typically have higher interest rates for these loans. There are lenders in the northeast who provide excellent rates for stated income mortgage loans states such as: New Jersey, New York, Pennsylvania, Massachusetts, and Connecticut. There are many requests for stated income mortgage loans in California and other states, but the rates are not nearly as competitive. In fact, California has big problems right now because there are many self employed borrowers there, and only a handful of mortgage lenders who are into the stated income lending business.

Who are stated income mortgage loans meant for? For the most part, this loan is for the self employed borrower who cannot document all of the income or shows a very low net income on the tax return. In addition, a stated income mortgage loan is great for a person who earns some salary but also cash that is not documented anywhere. An example would be a waiter, bar tender, valet parking attendant, limo driver, etc   One other type of borrower who may opt for a stated income mortgage loan is someone who collects rental income but does not have signed leases to verify that income stream.

                                                       Stated Income Rate Quote
Stated Income Loan Requirements

Most stated income lenders require a minimum of 20% down or equity in the property plus a credit score greater than 640. Some stated income mortgage lenders may accepted a lower down payment, and lower credit score requirements. Stated income lenders in California may require a larger down payment and the rates will most likely be a bit higher. 

Many people feel they need a no doc loan or a stated income loan but that may not necessarily be true. You should understand your mortgage loan options before doing anything. Then speak with a loan officer to get a free stated income rate quote based upon your particular scenario.

Most stated income lenders require a minimum of 40-50% down or equity in the property plus a credit score greater than 700. Some stated income mortgage lenders in New Jersey, Connecticut and Pennsylvania only require 30% down and there are no minimum credit score requirements. Stated income lenders in California may require a larger down payment and the rates will most likely be a bit higher.
Many people feel they need a no doc loan or a stated income loan but that may not necessarily be true. You should understand your mortgage loan options before doing anything. Then speak with a loan officer to get a free stated income rate quote based upon your particular scenario.
Alternative Income Documentation Loans

In addition to stated income loans that do not require any income documentation at all (not even pay stubs), there are some other programs you may want to consider.  This includes what are known as "alternative income documentation loans".  These programs are intended for self employed borrowers who may struggle to prove all their income, especially since business owners often write off a lot of expenses, which lowers the total income presented on a tax return.  The alternative means by which you prove your income is by providing 12-24 months of bank statements.   

The interest rates on alternative documentation loans are often lower than actual stated income loans, so it is worth taking the time to find out if you are eligible for one of these programs.

Request to speak with a lender that offers alternative documentation loans.

Bank Statement Loans

Bank statement loans are typically for self employed borrowers who have a difficult time verifying their income or if they do not show enough net income on their tax returns. The basic elements of this program is for the lender to see a steady flow of money coming into your bank accounts. They will typically use the last 24 months bank statements to get an average monthly flow. They may also combine your business accounts and your personal accounts. The loan to value ratios may vary. It is best to speak with one of our lenders to get the specifics on the program and guidelines in your state. Just click the "Request Quote" form, fill it out and someone will get back to you.

The future of stated income mortgage loans and stated income lenders :

Stated income mortgage loans are making a slow comeback and it is a good thing. The lending regulations in our opinion were over-tightened. Now, you have legitimate self employed borrowers who cannot get a loan. That is a problem which needs to be fixed. If you are not going to bring stated income loans back in full force, then the full documentation guidelines need to change for self employed borrowers. They should use the gross income (or somewhere above the net) on the tax returns for qualification purposes. Salaried borrowers are showing gross income before tax deductions and so should self employed borrowers. That in alone would help to prevent thousands of foreclosures. So, we believe that over time, you will see more stated income lenders back in the game again.

The government believes that stated income loans were the primary reason for the mortgage meltdown a few years back. However, their regulations created the environment for this to happen.  Even after all of that, we are seeing some lenders provide stated income loans for borrowers who are self employed. Why self employed? It is because they often have difficulty documenting their income OR they are taking advantage of the busienss friendly tax laws which results in a poor looking mortgage application (low net stated income). 

There were regulations in early 2014 which penalized lenders who failed fo fully document a borrower's ability to pay their loans. In fact, mortgage originators now have to take the SAFE Mortgage Loan Originator's Test and there are questions specifically targeting the area of a borrower's ability to repay the loan.

Let a qualified lender help you to finance your dream home. Complete a confidential free rate quote today.
 You may also be able to find Stated Income Loans for Investment Properties. These are much harder to find and often the LTV requirement will be lower with the down payment higher. You can also expect the interest rate to be higher when you are looking for a stated income loan for an investment property. 
Looking for a Stated Income Jumbo Loan

Related Articles....

The Pros and Cons of Stated Income Loans - Mortgage 101

Stated Income Construction Loans - Construction Loan Center

The Mortgage Professor - Scapegoating Stated Income Loans - Washington Post

Stated Income Ruling Regarding Bankruptcies - Bankrate

Hard Money Loan - A hard money loan is one where a private lender will take a risk in lending money for the purchase of your home without asking for a bank statement, pay stubs, alternative documentation, or any of the typical documents that would normally be required. They will ask that you have a larger down payment, the interest rate would be higher and in some instances the term will be shorter. A hard money loan is different than a stated income loan and is something that you would do as a last resort.

Frequently Asked Questions

Who Are Stated Income Loans For?

Originally, anyone would apply for a stated income loan but now they are mostly available for self employed borrowers.

How Much Would I Have to Put Down?

That will vary by lender. You may find a downpayment requirement of anywhere from 25%-50%

Is the Interest Rate The Same or Higher Than a Conventional Loan?

Stated income loan rates are typically higher since the lender is taking on increased risk.

Do I Need To Be Belf Employed?

For the most part YES for a minimum of two years.

What Others Are saying

Refiguide.org says that 2018 is a great year for no income verification loans. They said the loans are making a come back and there are more programs today for borrowers than in prior years.

My Mortgage Insider says that stated income loans are great for borrowers who have stacks of tax returns.

CNBC reported that the return of stated income loans is like "housing deja vu again". I think the writer at CNBC is forgetting a couple of key points here. First, back when the market crashed even salaried borrowers could get a stated income loan. Next, the loans were being packeged and sold as prime. None of that is happening now.

The Mortgage Reports says that there are 14 million self employed borrowers out there and this is a good time for them to get a loan. From the programs to qualifying it is much easier now for self employed individuals.

We are able to find stated income loans in AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY




Apply Online Now  Free Rate Quote  Advertise with Us



Home | About Us | Advertise With Us | Glossary | Calculators | Request Quote | Loan Options | Privacy Policy Copyright © 2008 | Dream Home Financing LLC

 Dream Home Financing is a marketing company that provides mortgage related information. Dream Home Financing does not arrange for or originate loans. The request quote and quick application pages, when completed will be sent to third party lenders for consideration.