How to Get a Stated Income Mortgage
What it is
A stated income mortgage is a form of mortgage loan that is referred to as a low doc or no doc loan. This means that little or no documentation is required for the loan, compared to traditional loans which require a list of all creditors, last two or three paycheck stubs, W-2s and returns on income tax for the past two years, bank statements going back two months, and legal documents in case of bankruptcy or family misadventure. Borrowers interested in stated income mortgages are those who cannot show income but have the income and good credit history to obtain a stated income mortgage.
The lenders assume more risk with stated income mortgages, so they will require a list of assets and debts in order to understand the debt-to-income ratio. Because the lender assumes more risk, stated income mortgages come with interest rates that are anywhere from one-half to three points higher than conventional mortgages. Other types of low doc or no doc loans are no ratio loans and no income or no asset loans.
Who it's for
A stated income mortgage is designed for people who are self employed or paid in cash and cannot provide all the documentation for a conventional mortgage. All income must be claimed on tax forms in order for mortgage approval. Approved clients with income from a business must have owned the business for a full two years and state an income that is reasonable for the industry. They also must prove that they are self-employed.
What you need to do to apply
In order to obtain a stated income mortgage, interested applicants will need to contact a local lending institution and inquire about the different options and rates available. Borrowers will need to demonstrate income and good credit history.
