Stated Income Loans

Loans For Self-Employed
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Most often, in order to receive Stated Income Loans, the borrower will need to have a high level of income, good credit, provide a bank statement, and so on.

What Is A Stated Income Loan?

The previously Stated Income Mortgage was a home loan that did not require proof of income (or other documentation) to receive financing. Most often, lenders only asked for the borrower’s stated income. That is why this type of financing is called a Stated Income Loan. However, it is important to note that this loan was quite risky and was one of the reasons for the collapse of the housing market in 2008. That is why banks stopped issuing stated-income mortgages.

However, despite all this, this loan did not cease to exist, as thanks to the 2010 Dodd-Frank Act, this loan product was improved. Thus, at the moment, borrowers cannot get a home loan unless they provide proof that they can actually repay the loan on time. In other words, while lenders must document proof of income, borrowers must provide all required documents. However, you should note that stated income loans do not require borrowers to provide income documents or tax returns for self-employed borrowers. Thus, since the adoption of this law in 2010, it is illegal to get this loan for an owner-occupant property.

If you want to know what documentation is required, the first thing to note is that most often you need to provide tax returns, W-2 forms, as well as recent pay stubs (as for a typical conventional mortgage).

Important! Those borrowers who are self-employed are often subject to higher requirements (because their income may change). Most often, lenders have a minimum number of requirements and documents required to receive stated-income loans. What’s more, they don’t require proof of income either! However, they still have some eligibility criteria that must be met. For example, most often they want a potential borrower to have a good credit rating, a significant down payment, and so on. In other words, the better your financial situation, the greater the chance of your application being approved. It is also important to note that people with good or excellent credit will get the best interest rates and loan terms.

The better financial picture you can paint for lenders, the more likely you are to be approved and receive favorable interest rates.

How To Qualify For A State Income Loan?

Since this loan is associated with certain risks, lenders want to compensate them. That is why the requirements for obtaining an A State Income Loan may be as follows:

  • High credit score
  • Statement from the bank
  • Large amount in savings
  • High income and more.

How Is A Stated Income Loan Different From A Traditional Mortgage?

At the moment, a huge number of people are interested in the question of what is the main difference between a Stated Income Loan and a Traditional Mortgage. Simply put, a Stated Income Loan gives borrowers the opportunity to state their monthly income on the application instead of submitting pay stubs (or tax returns).

Can Real-Estate Investors Get Stated Income Loans?

Although Stated Income Loans do not exist for owner occupied property as you may have understood, they are still available to those borrowers who wish to purchase investment property. This can be a great option for borrowers such as real estate investors, home owners, potential landlords (as well as self-employed borrowers who want to purchase non-residential property and get a loan without documenting their income or tax returns).

Moreover, experts say that many borrowers use this loan to buy other properties to rent out. Also sometimes they resell the property and need a loan to finance the reconstruction. Moreover, it is important to note that some borrowers use stated-income loans because they do not want to give up investment property. Thus, they use these loans to save some of their capital for later use.

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$500 Your loan + $79 Your fee = $579 Total Cost*

* Total Cost - The sum of money you are to pay off within the term you’ve chosen if you borrow the stated above amount for the average (or required by your lender) APR.

This calculation is just a representative example. Rates and fees can vary depending on the lender. Check all the finance charges in the loan agreement before signing it