What’s the Truth about Stated Income Loans?

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 If you are reading this post, then for sure, you are also the one of them who is curious to know about the real truth of stated income commercial loans and their lenders.

To get to the bottom of the matter of stated income loans, we have to understand it from the beginning.

So, without chewing more long fat, let first start with what are stated income loans.

What Are Stated Income Loans?

Stated income loans are mortgages for borrowers who want or need to qualify without any standard paperwork like an income certificate. The following categories might have enjoyed the stated income loans:

•                      People with irregular or seasonal income.

•                      People who work with their family members.

•                      Low taxable income self-employees.

•                      Businesses that have been proven profitable beneath two years.

•                      Salaried employee who got an appraisal.

Any of these people can fully enjoy the stated income loan.

The Truth: Can you still get a Stated Income Loan?

The answer is yes! But stated income mortgage is now available from a few stated income lenders today. The reason is that stated income loan has a bad reputation after the housing market recession in 2008.

 Lenders often asked for the form of a stated income and stated asset loan.

They do not even verify the documents and offer very high loan-to-value ratios up to 125%. As a result, the housing bubble burst.

 But after the Dodd-Frank bill passed in 2010, only business purpose loans were eligible for stated income mortgage. In addition, according to the new stated income loan program, a borrower must have a credit score of 660, and only 80% of LTV (loan-to-value) is allowed. Moreover, borrowers have to showcase their ability to repay the loan.

 How to Qualify for Stated Income Commercial Loan?

The requirements to qualify to depend on what stated income program you are looking for. Following are general requirements:

•           You have to provide at least one recent bank statement and profit and loss statements to the bank for an alt-doc loan.

•          For stated income, verified assets (SIVA) loan, you have to provide 12 to 24 months of bank statements.

•           If you are self-employed, then you have to show that you have been in business for the last two years for either loan type.

Wrap up

A stated income loan can be a good option for those who can’t qualify for a traditional mortgage. It is also difficult for small business owners to qualify for a traditional mortgage they could benefit from a stated income loan.
Location: United States

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