Why Would I Want a Stated Income Loan? - My loan officer says we are doing a stated income loan. Why dont they want to see my tax returns or pay stubs?One example of a reason that you might need a stated income loan is if you are self employed, and claim significant tax write offs to minimize your taxable income. While this is good for your tax status, most lenders will not be able to use your "real" income and base your debt to income ratios on your taxable income.
Do you have very high credit scores? If so, many lenders will allow you to use a stated income program with little or no increase to the interest rate. High FICO customers are seen as a low risk to lenders so lenders often reduce the burden of gathering documentation in order to earn your business. If you have very high credit scores you should ask your mortgage broker if a stated income program is right for you.
Stated Income mortgage is ideal for home buyers with incomes that are difficult to document. People who receive a good portion of their income in the form of cash tip, such as waiters, taxicab drivers and street vendors may not have paycheck stubs to prove their true earnings. Stated Income loans are created with these homeowners in mind.
Many of those who would not have qualified on a Full Doc Loan will have the option of going with a Stated Income Loan.
Stated income loans are for document relief and not to be used as a way to qualify for a loan in which you cannot afford by falsifying your income. Qualifying for a loan by way of the stated income program can put you in a very tough financial situation if you are not honest with your true income.
Stated income loans should NOT be used to exaggerate your income. If you use a stated income loan to claim you make more money than you do, you are committing mortgage fraud.
Any and all sources of income that is un-documentable would be taken into consideration for a stated income loan. Side jobs where you are paid all cash, is an example of money that would be considered.
An alternative to stated income loans is by using bank statements to qualify as income. Stated income and bank statement loans are there for non traditional income sources and should not be used just for anybody.
Stated Loans give a little more flexibility when it comes to particuarlly income. With more flexibilty does come more requirements particularly from the credit score necessary to qualify.
Often you simply don't have a choice. Sometimes a stated loan is the only way to make a peticular loan work. If this is the case with you, make sure you understand exactly what is going on with your loan and why your having to go stated.
A growing number of mortgage companies require borrowers who want a stated income mortgage, whether they are buying a house or refinancing, to complete an IRS form allowing the lender to verify whether or not the borrower files taxes.
One reason why you would want a stated income loan is if you are self-employed or have a new job. A stated income loan will reduce the amount of paperwork required to obtain the loan.
Stated income loans are much easier to close than full doc loans.
Stated income unsecured business line of credit - Unsecured commercial business line of credit is a revolving line of credit that allows the business owner to borrow for short-term capital or cash-flow requirements. For example, one can access a business line to help out during times of slow cash flow, then repay when cash flow improves.
Stated income unsecured business line of credit programs are primarily beneficial to business owners who wish to secure revolving financing to handle seasonal cash crunches or otherwise utilize for short term working capital.
Stated Income Pay Option Loans - Despite recent secondary market restrictions, there are still Stated Income Pay Option Loans available to consumers. The pay option programs come with a variety of terms and qualifications. Pay option loans are particularly attractive to self-employed borroweres who receive uneven cash flow and/or have difficult to document income. We will take a look at some of the niche pay option programs still being offered in todays market for stated income borrowers.
Stated Income Pay Option Loans are available in truly fixed rate loan programs for highly qualified borrowers in several states, however you will find that these truly fixed rate stated pay option loans are not available at your neighborhood bank, and even name brand national lenders are not currently offering Stated Income Pay Option loans with fixed rate periods longer than 5 years.
A pay option arm is a loan with an adjustable rate. The rate is fixed for an initial period and then adjusts higher. The borrower has the option to make a payment of either the fully amortized amount, interest only or a negatively amortized amount. I pay option arm mortgage can be a good selection if you need cash flow or do not plan to be in the home for very long.
There are still stated income pay option programs available for investors as well. The loan to values are generally lower, typically 75% LTV for purchases and 70% for cash-out. 3-4 Unit investment properties qualify as well. Nonetheless these stated pay option loan programs for investment properties are still available.
There are also stated pay option programs with a fixed rate portion. This reduces the potential interest rate risk when compared to pay option arm programs. You can know what your interest rate is for the whole term of your loan.
There are still stated income pay option arm programs available for those with credit scores below 620. The maximum loan to value for these transactions is around 80%. There generally needs to be a good credit history with compensating factors.
Stated Income Loan - Stated income loan programs are offered on fixed rate mortgages, adjustable rate mortgages, or on negative amortization mortgages. They do not require income verification.
Almost any type of loan today has a stated income feature if needed.
Some lenders now allow for the borrower to actually document their income with a simple verification of employment from the employer, thus doing away with the need to document W2s, tax returns, and paystubs.
Stated income loans are available for self employed as well as W-2 employees, however many lenders will offer a slightly higher rate for W-2 employees because their income is usually easier to document.
There are two common types of Stated Income Programs:
Stated Income Verified Assets Loan: (SIVA) - Loan approval is based on your stated income, credit history, and verified liquid assets (bank accounts, 401k, stocks, bonds, etc.). The Verified Assets should be consistent with the income claimed.
Stated Income Stated Assets Loan (SISA) - This loan has no assets being verified. You only state your income and state your assets on the application. This program may have a slightly higher interest rate because the assets are not verified.
Lenders will look at the "stated" income to verify it is justifiable. You cannot state $80,000 worth of income working part-time as a cashier. This has to be an accurate figure of income actually made.
Some banks offer borrowers with high credit scores stated income loan programs with no adjustments, meaning the borrowers would not get "surcharged" or penalized for not furnishing proofs of income. These stated income programs offer interest rates that are identical to that of full documentation loans.
Stated Income programs are ideal for those clients with non-documentable income sources. Typically for those who may receive portions of income in cash.
A stated income loan normally requires a slightly higher FICO score to qualify for the same loan to value as compared to a full documentation loan or bank statement program.
Some variations of stated income include:
1) Reduced Doc - Income and assets are disclosed on the application but income is not verified. Assets are verified.
2) No Ratio - Income is not disclosed on the application and assets are stated and verified.
3) No Income No Asset - Income and assets are not disclosed on the application and are not verified. Employment not stated or verified.
Most lenders also charge a higher rate on a stated income loan.
Stated income loans are very popular with business owners. Since they write-off a lot of their expenses at the end of the year on their taxes they sometimes have very little net-income to qualify for a full-doc loan.
Generally a no income, no asset (NINA) loan requires no verification of income or assets. However verification of employment is required and 2 years of same line of work is required. A No Doc loan is a NINA without verification of employment.
Stated-income mortgages are for people who make the money they say they make, but that amount doesn't show up on the bottom line of their income taxes.
Stated Income loans still must be approved by an underwriter. The stated income must make sense for the employment that the borrower has.
As you move down the line on the different programs, from SIVA to SISA to NINA the interest rate will move a bit higher each time. Depending on your credit scores and LTV (loan to value) you might be able to qualify for one but not another.
Many self employed borrowers take advantage of stated income loans so they do not have to provide tax returns to qualify.
They say you can beat the tax man or you can beat the bank, but you can't beat them both. If your income is difficult to document because of commission based pay or revenue from self employment, stated income loan programs are available which enable borrowers with sufficiently high credit ratings to borrow money at competitive rates. Programs are often available to borrow money equaling up to 100% of the value of your home, without the need to verify your income or your assets, or in some cases without the need to verify either.
Stated income is a very popular form of loan qualifying. As you're probably aware, most successful business owners write off a lot of their expenses at the end of the year on their taxes, causing very little net income to be used for qualifying for a loan. You also see this with borrowers that make tips, bonuses and commission as their sole form of income.
Stated Income Loans are for borrowers with income sources that are not easily verified through normal channels. So, lenders allow borrowers to state their true income without verifying it. These loan programs are usually for borrowers with good credit and come with a higher interest rate.
Stated Income Loans are not available to everyone. Credit score requirements may be higher and there may be restrictions on the terms.
You may be required to sign a 4506-T that will allow the lender to pull your tax returns if needed. Not all lenders will require this form and your lender will know if it will or will not be.
It is crucial that you counsel with a competent Mortgage Broker or Mortgage Planner before entering into a Stated Income program. It is their job to thoroughly investigate all of your options, income sources and figure corresponding ratios in order to recommend the best product. A good mortgage planner has the heart of a teacher, not a salesmen, and plays the role of a trusted advisor.
Please don't make the mistake of withholding information or providing inaccurate information that they may need to properly qualify you for a stated income loan. You may be tempted to fudge the numbers a little in order to qualify for that dream home, but this could spell disaster as you may be able to qualify for more home than you can afford.
You are responsible for providing an accurate figure when the loan officer asks for your income amount. The loan officer should not coach you or fill in the amount for you. If the loan is audited and fraud is discovered you and or the loan officer can be held accountable under the law.
Stated income loans are mainly for self-employed and commissioned borrowers. Stated, no doc, and no ratio loans can also be used for tipped employees too. Waiters, waitresses, hair dressers, for example, are all common professions that stated, no doc and no ratio income loans can benefit. With stated loans you state the income you truly make. With a no ratio loan you fill in your employment information except no income is documented and no debt ratio is calculated. Lastly with a no documentation loan, you do not state your employment information or your income, and no debt ratio is calculated. Some of these programs may require you to have a certain amount of money put away somewhere, known as reserves. A high credit score is generally needed for these types of programs, and the less documentation that is required, will usually result in a bigger rate bump for utilizing one of these programs.
If you adhere to certain loan to value restrictions, you may be able to state your income and get the same rate as full documentation when refinancing your home.
Tailored perfect for business owners and commission based sales people.
Stated Income Loans have been the target of recent scrutiny in the mortgage industry. For example, in the State of Massachusetts more than a half a dozen mortgage broker business have been closed due to fraudulent activity in regards to stated income loans. It is important to state income true and accurately, and not inflate monthly income to reach the desired and necessary Debt to Income (DTI) Ratio for a particular loan.
Whether you are self-employed or a W-2 employee, the Stated Income Loan can help to reduce the documentation you have to provide in order to qualify for your mortgage. With your good credit, the underwriter will essentially take your word about your income level, without requiring verification of that information.
The Stated Income Loan does not require you to provide your pay stubs, W2s, 1099s, tax returns, and other documentation required to verify your income level. This can make your application process easier and, since there are fewer questions to answer, more likely to go smoothly.
A very common question Lenders ask following a stated-doc scenario, is "W-2 or self employed?"
Some Stated/Verified and Stated/Stated loans for A paper lenders do not require a hit in pricing if under 80% Loan to Value. Without a hit on pricing, these loans are extremely helpful for getting the loan done quickly, as it requires less paperwork for the lender to review.
Stated income loans are used when a borrower cannot provide income documentation such as paystubs and tax return information. In a stated income loan, the client "states" the amount of income that they make and the position and for how long they have worked. Lenders usually require the borrower be employed for a minimum of 2 years for stated income loans. Also, when you state the income, it must be typical for that job title. You can't have a Mc'Ds cashier making $8,000 a month. The stated income must be believable.
A Stated Income Loan requires less paperwork than normal for approval. The income is stated on the application. Tax returns, w-2 forms, and pay stubs are not required. The stated income should be reasonable for your occupation
Under "No Income Verification" loan programs, also sometimes called "Stated Income" or "No Income/No Asset" programs the applicant's income is not verified by any of these methods. The applicant is qualified from the income stated on his/her loan application.
These programs were initially created for borrowers who are self-employed and may not be able to verify all income from traditional sources such as tax returns.
These types of loan programs allow a credit worthy borrower to access financing through no traditional documentation. There are a variety of programs available. Some programs even allow a borrower to finance 100% of the property value for a refinance or a purchase.
Under stated income programs your income will not be verified but your employment will. No employment verification programs are typically called No Documentation or NINA (No Income, No Asset).
A stated income loan is one where you state, or declare, your income without actually providing any verification that you make that amount.
Many brokers will ask you to sign a statement of understanding regarding a Stated Income Loan. The purpose of this document is to make clear that this loan is not to be used to inflate the income of the borrower.
Will Stated Income Work for You? - A stated-income loan qualifies a borrower using the income the borrower states on the application form - as opposed to the income the borrower can document. With a stated income loan, the lender agrees not to attempt to verify the income the borrower has stated on the application.
Some times this loan program has been referred to as "The Liars Loan". It is important to understand, the existance of this loan, is for the purpose of helping borrowers, who otherwise cannot document their Actual Income. It is not designed to ficticiously inflate your income.
Stated income mortgages are ideal for the self-employed and for home buyers in professions with salaries comprised mostly of cash tips, such as waiters and hotel porters. This type of loan applicants can often afford a mortgage, but don't have the necessary pay stubs to document their true earnings. Self-employed business owners whose personal assets are comingled with the business assets often utilize "Stated-Income Stated-Assets" mortgage programs.
Stated income may be used in lieu of full documentation if you have higher credit scores. Lenders view you as less risky and therefore are willing to dismiss income documentation to speed up the loan process. The rate you receive is contingent on specific loan to value and/or down payment restrictions.
You are responsible for providing an accurate figure when the loan officer ask's for your income amount. The loan officer should not coach you or fill in the amount for you. If the loan is audited and fraud is discovered you and or the loan officer can be held accountable uner the law.
Lenders will often check with widely-availalbe salary survey sources like salary.com to determine whether or not the income stated is consistent with the borrower's profession and title.
On some stated income programs, the lender may require the borrowers to complete and sign Internal Revenue Service form 4506. This form gives the lender permission to access past and future tax returns of the borrowers. Having a signed and completed 4506 form in the file greatly enhances the marketability of the loan to the secondary market.
One of the reasons for a stated income loan is to minimize paperwork during the loan application process. A number of requirements that would normally be requested are W2 Statements, 1099 Forms, Bank Statements, and Pay Check Stubs. A stated income loan would not require the borrower(s) to find and organize this information to be approved for a loan. In many cases the interest rate difference is very minimal but normally slightly higher than a loan which requires proof of income.
A stated income loan is a great loan for people who are W-2ed or self-employed. There are also programs that allow stated income and stated assets on the same loan. These programs help to preserve borrower’s credit by getting them the funds that need when they need them.
For some people a no ratio loan or a no doc loan may be the best route to go (instead of stated income). On a no ratio loan an income figure is not filled in on the loan application and no debt ratio is calculated. On a no doc loan, there is no employement filled in, no income listed and no debt ratio is calculated. These types of loans are higher risk loans and higher rates are usually associated with them. However, some people may have income that an underwriter will not accept for one reason or another and these options may be the better route to go. Temporary disablitly is usually an income that can not be used. Also a person who jumps around from job to job, has large gaps in between jobs, switches their line of work constantly and has no job stability may consider one of these types of loans.
Employment will most likely be verified, the income stated will have to be make sense with the type of job submitted on the application.
Though the stated income loan is an attractive loan for many self employed borrowers, always remember that many of the deductions that you take on your business taxes can actually be factored right back into your income for mortgage underwriting purposes.
With the use of automated underwriting borrowers with exceptional credit that meet other loan criteria can get a stated income loan or no income verification loan with the same interest rates and fees as borrowers who do provide income verification.
Stated income loans can be a viable option. Generally lenders require two years employment history. If you are self-employed then going stated can smooth the loan process.
Stated Income loans are ideally suited for borrowers who have difficulty proving heir income using conventional means. If you are able to substantiate your income utilizing tax returns, you will generally receive a better rate by providing your full income documentation.
You may have to sign a statement of understanding so that you are not misleading the lender into believing that you are making more money than is true.
Can wage earners get stated income loans? - Stated income loans used to be for the self employed or hard to prove income. That is not the case anymore.
Some lenders permit Salary employees to get stated income loans
If the majority of your income is received in bonus or other performance based pay, however you are employed and receive a W 2 from your employer, a stated income loan for wage earners may be for you.
The amount of income you state has to make sense for your profession. For example you cannot say that you work as a cashier at Wal-Mart and make $300,000 a year. Underwriters normally use a website such as Salary.com to check the average salary for a given profession in a specific geographic area.
You can use a stated income loan for any income that you can't or do not want to provide income documentation for, including wage earners.
Wage earners can get stated income loans but there may be more restrictions, higher rates, and lower loan to values. Wage earners that use stated income loans usually have other income that is hard to document.
The point of a stated income loan is for borrowers that have difficulty PROVING the income. Make sure with a stated income loan, that the mortgage payment you will receive will be something you can live with in the future.
A Simple Guide To Stated Income Financing - If you are self-employed, you probably already know that applying for a home mortgage can be a nightmare. The problem? Proving your income.
A stated income loan is for people, generally self-employed, who actually have enough income to qualify them for the loan but may have a hard time documenting it or the income may not conform to traditional lending guidelines. Just because you are stating your income does not mean you should lie of fabricate the amount of money that you make or that comes into your household. If an underwriter feels that the amount of income you have listed on your loan application is not in line with your job, then he/she has the right to request proof of income. Therefore make sure you are being truthful on your loan application and talk with your mortgage professional about which type of loan is best for you.
With stated income loans, you do need to be employed (or self-employed) and state enough income to qualify for the loan. If you don't have enough income, there are no ratio loans where you don't need state your income. Then there are no docs loans where you don't even need to be employed.
For borrowers with excellent credit and 25% or more equity in their properties, there may be almost no difference in pricing incurred by selecting stated income documentation for their home loan refinance.
Applying for a stated loan is a simple way around the problem. A stated loan can allow you to close on your property with minimal paperwork and headaches.
There are some drawbacks however. Be prepared to pay a slightly higher rate and your credit needs to be fair to great depending on how much you plan on borrowing against your property's value.
There are low-documentation programs available for self-employed borrowers with excellent credit that have minimal pricing adjustments. Be sure to consult with your mortgage professional.
No Ratio vs Stated Income - No Ratio Loans are available for who wish to qualify for a mortgage without any true income requirements. On the application you would not state your income at all, but may be required to verify your assets.
With a stated income loan you are required to list the amount of income that you truly make on your loan application. The advantage of a stated income loan is reduced income documentation is required for these types of loans. The reduction of income documentation will usually result in a slight rate bump. Now if you are a teacher at a public school and try stating that you make $300,000/year on a stated income loan, that is not reasonable for your line of work and an underwriter would question this. Now on a no ratio loan, you simply do not list an income amount at all on your loan application and no debt to income ratio is ever calculated. Obviously this is a bit of a higher risk loan and there is usually a bigger rate bump than on stated income loans due to the higher risk. Therefore, before you state an inflated income on a mortgage loan application and lie on your loan application ask if you might qualify for a no ratio income loan instead. Your job and job history will still be verified with a no ratio loan, however your income will not be requested nor verified.
Sometime problems arise when the stated income may not make sense for the person particular field of employment. By using a No Ratio Loan that problem can be solved.
Stated Income documentation programs are available to borrowers who have trouble documenting their adjusted gross income, but unlike No Ratio programs, the stated income still must be used to "qualify" for the loan.
Why should I take a stated income loan? - Stated income loans have both pros and cons. Its important you speak with a mortgage professional to decide which way you should qualify. There are plenty of advantages to taking a stated income loan.
Stated Income mortgage is ideal for people who receive a large portion of their income in the form of cash. Waitors and street vendors, for instance, can usually benefit from Stated-Income loans because they mostly have income that are difficult to document.
Stated income loans pose a slightly higher risk to the lender, so you can expect to pay a slightly higher interest rate.
An alternative to a stated income loan is to use 12 to 24 months of bank statements to document your income.
A disadvantage of the stated income loan is that some home buyers tend to buy too much "house" than they can afford because they are able to qualify based on their credit score and not by the amount of monthly payments they can afford.
It is very wise that you seek the professional opinion of a qualified mortgage agent who can help you better understand the immediate and long term impacts of a stated income loan.
One of the primary advantages of doing a stated income loan is for people who are self employed. Often times a self employed person will have many deductions that offset their income. While this is an advantage when paying taxes, it is a disadvantage when applying for a loan because your tax returns will not properly reflect your true income. With a stated income loan you can state what you really earn.
Sometimes a No Income No Asset loan is a good alternative to stated income loans.
Stated Income Loan Crackdowns - Stated Income Loans have become the target of recent scrutiny. In the State of Massachusetts more than half a dozen mortgage brokers have been shut down recently due to "fraudulent" stated income loans. Before jumping head first into this brand of loan it is important to familiarize oneself with the different rules, regulations, and laws surrounding them.
A stated income loan is a loan where you must prove your employment information but you do not need to document or show proof of your income. You will simply state how much money you make on the loan application. Obviously there has to be a catch or everybody would do this if you don't have to waste time finding your tax information, W2's and pay-stubs. The catch is that there is usually a small rate bump added to your interest rate due to the loan being higher risk to the lender. The part of the loan that people do not understand is that a stated loan does not mean you are permitted to lie on your loan application when you are stating your income. You must disclose your "true" income or the actual amount of money you are making each month. When you sign your loan application you are agreeing that all of the information on the application is true and correct to the best of your knowledge. Therefore, even though you are stating your income on the application make sure you are being accurate. If you have any questions about a stated income loan, please ask your mortgage professional if this type of loan may be right for you or if another loan type might be better. There are many other types of loans for people with hard to document income.
Stated Income Mortgage Loans - A stated income mortgage loan is a great mortgage tool for people who cannot verify all of the income that they earn.
A stated loan is not an opportunity to inflate or falsify your income in order to purchase a more expensive home then you would normally qualify for.
With stated income mortgages, when you are filling out the mortgage application you will still need to provide all of your employment information, however that information is not verified through standard documentation such as: pay stubs, 1099s, W-2s, etc. If you decide to use a stated income mortgage your interest rate will be higher due to the added risk the lender takes.
Stated Income Mortgages are ideal for small business owners and those receiving cash tips as a significant portion of their incomes, such as waiters and cab drivers. In many cases State Income Loan may be the only logical loan option as home buyers in these income situations often have difficulty documenting their incomes.
At any point during the processing of your stated income mortgage loan, the underwriter can request income documents still at his/her own discretion. They may ask for income documents if they deem the income stated on the loan application is not consistent with your job or if they do not feel totally comfortable with your home loan application. There are other types of low or no income documentation loans out there such as, no doc. loans, no ratio loans, bank statement loans, and limited doc. loans.
For stated income loans for employed borrowers, lenders will usually verify that the income stated is reasonable for your occupation and experience level.
Stated Income Loans do require verification of the existence of your business or employment. Most states have this information available online. If not, then a letter from your accountant/tax preparer verifying your information will satisfy this requirement.
The lender will verify the rationality of the income stated for the wage earner is through the Salary.com. If you are at a smaller company, re-wording your job title can give you a little extra room to state more income if the borrower needs it.
