Stated Income Mortgage Loans

Stated income mortgage loans- A stated income mortgage loan was designed for borrowers who can't verify their income with traditional income documentation, typically these borrowers are self-employed or work for tips have seasonal employment or work on commission. A stated income mortgage loan is a good option if you would have difficulty proving your income. The income that you state on the mortgage application must be average in your occupation and assets are generally verified. This means that if you are a waitress and you say you make $10,000 a month it may raise some eyebrows in underwriting. Stated Income Loans are available with credit scores as low as 580 so perfect credit is not always required.

Stated income mortgage loans can be used to purchase a home, to borrow equity or to refinance an existing mortgage. Stated income mortgage loans are offered on standard fixed rate mortgages, adjustable rate mortgages and interest only and pay option type mortgages. A stated income loan does requires a slightly higher credit score to qualify for the same loan to value percentage as a comparable fully documented loan program. Stated income mortgage loans can be applied for by for self employed as well as W-2 employees, but in most cases wholesale lenders will increase the interest rate of the mortgage for W-2 employees because they are allowed to state income that could easily be verified. Lenders normally require 2 years employment in the same line of work for W-2 stated income loan borrowers.

Stated loans are great mortgage loans for self employed commissioned borrowers to buy and refinance homes but the mortgage industry is tightening the guidelines on them because of the rampant fraud associated with stated loans and high also the high foreclosure rate of stated loans. Lenders are gambling on home owners to pay there mortgage, knowing that most of the risk is transferred to the secondary market who purchase the loans in large groups. Although currently, with the increasing number of foreclosures in America, it is now almost impossible for first time home buyers to get approved for their first time home purchase using a stated loan and no money down.

If you have income that is hard to prove because of commission based pay, seasonal work or from self employment, stated income loan programs can help you borrow money to refinance or purchase a home money at competitive rates. But remember that just because you are stating your income does not mean you can inflate your income to buy a bigger home.

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