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What is a Stated Income Loan (and who needs one?)

Stated Income Loans are for those who actually make more money than they can prove with traditional mortgage documentation.  They do not require pay stubs, W-2’s and tax returns and they do not require verification of your income.       

The typical borrower in need of a stated income loan will go with this type of financing because they cannot document enough income to qualify due to the fact that they are either self-employed, have a lot of commission or bonus income, a second job, income that fluctuates, etc.  The keys to being able to qualify for a stated income loan are:

    Your stated income has to be believable for your occupation.       

    You need to be able to prove a 2 year history in the same job and line of work
    .  (Usually with a letter from a CPA or business licenses for 2 years). 

    You need to have enough credit
    (usually 4 accounts with a 24 month history) and a good credit score.

    You need to have enough “reserves.” (“Reserves” are usually 2 to 6 months worth of mortgage payments in checking, savings or retirement accounts that you can verify pre and post closing).  In the case of a cash out refinance many of our stated income programs allow us to count the cash-out as the reserves. If your credit score is below 680 you may need to prove mortgage or rental history for the past 12 months.  If your mortgage is not reported on the credit report or if you rent then we would need copies of cancelled checks if you rent from an individual or a verification of rent if you rent from a management company.   (The management company needs to be listed in the local telephone directory).  We may also waive this requirement on some programs if you have a deep enough credit history, a 660 middle credit score and at least 10% down or 10% equity.   

100% Financing with Stated Income and Stated Assets for 700 plus credit scores

Perhaps our most attractive stated income program is our 80/20 stated income and stated assets program.  This program is very competitively priced.  The 80% loan to value first mortgage can be as little as .125% higher in rate than a full documentation loan.  You have to prove employment or self-employment for 2 years and you state BOTH your income AND your assets.  We also do not require you to sign any IRS forms (4506, 4506T, 8821) with our stated income loans.

The loan has to make sense.  In other words, your occupation and experience have to be such that you could be making the kind of income and assets that you are stating and you must have sufficient credit, but if this is your situation then you will be pleasantly surprised at the good terms available to you…and with no down payment.

We can offer 100% stated income and stated asset loans down to a 620 middle credit score, but the rates are obviously higher.  However, we typically will not require a prepayment penalty on these loans so you are free to refinance after your situation improves. 

Recent  closed loan example:

A recent client had excellent credit (725 middle score) and was purchasing a home for $415,000.  He had been self-employed for 5 years and was looking for a 100% stated income loan.  We were able to get him a 30 year fixed rate mortgage for 80% of the sales price at 6.75% (6.91% APR) and an 30 year fixed rate second mortgage at 100% of the sales price at 8.75% (8.79% APR).  He had to state on the application that he had 6 months worth of his new mortgage payments in either a bank, investment or retirement account, but he didn't have to bring any money to closing since he had negotiated with the seller to pay his closing costs and prepaid expense