What are stated-income mortgages?
A stated-income mortgage is underwritten with the borrower’s income as the primary factor, but the income is stated and not verified in order to save time and money. These mortgage programs can be used to purchase, refinance or take cash out of an owner-occupied residential home or a commercial investment property.
Many times, a stated-income loan is used by a self-employed borrower who does not document their income with a traditional pay stub or tax forms. These mortgage programs also are useful for real estate investors, particularly experienced ones who may be taking cash out of a non-owner-occupied property.
Due to regulations developed after the housing crisis of the 2000s, many stated-income loans for primary residences have disappeared. But some are still available if the borrower can document their ability to repay via alternative methods.
What are some types of stated-income loans?
- Purchase or refinance loans for primary residences where the income is derived through 12 months of personal or business bank statements
- Purchase or refinance loans for investment properties where the borrower can provide a downpayment of 20%, 30% or more
- Verification of employment (VOE) loans where the lender gets written or verbal verification of the borrower’s employment and no other income documentation is required
- So-called “second-chance” loans where the borrower has recently experienced a bankruptcy, foreclosure, short sale or modification
- Jumbo loans for amounts of $1 million to $5 million
- Debt-service-coverage ratio loans where rental income is used to determine eligibility
Who offers stated-income loans?
Use Scotsman Guide’s Lender Search to find lenders based on the borrower type, property type, location, purchase price, downpayment amount and more.
Commercial mortgage brokers who are working with a real estate investor have a few options for their stated-income loan inquiries. Lender Search can help brokers find private money for borrowers who are willing to pay a higher interest rate and/or make a larger downpayment in exchange for speed and less stringent underwriting. For properties with five or more residences, Lender Search can help you find multifamily lenders.
Additionally, for borrowers who are looking to build a primary residence or an investment property from the ground up, Lender Search can help you find residential or commercial construction lenders.