Stated Income Loans Available in 2021

Posted by VP Capital Lending on February 22nd, 2021

Stated Income Loans are making a comeback faster than the speed of light. They are much more different and enterprising than they used to be before the housing bubble. These loans are mortgages that consider the amount of income the borrower has access to, for repaying the loan. Stated income loans in the USA can be used to purchase commercial and residential properties and apply to cash-out refinances, cash-out second mortgages, and refinances.

What Stated Income Loans Are Available Now?

There is no denying that in 2021 and the coming years, self-employed borrowers can get stated income loans using their bank statements as proof of income instead of supplying tax returns.

Stated Income loans for self-employed borrowers

The ever-varying income and more stringent documentation requirements from lenders tend to make it a tad challenging to qualify for traditional mortgages. With alternative documentation loans or bank statement loans, lenders are expected to use different methods to determine qualification while meeting the new ability-to-pay standards.

When it comes to bank statement loans, stated Income lenders use bank statements to confirm a borrower’s income instead of relying on tax returns and recent pay stubs. Each lender has its underwriting requirements for determining the net income of the borrower. This makes it convenient for the borrowers to qualify with another lender if you don't certify with one.

Qualifying for a bank-statement loan

Apart from your net income, lenders look at the following things when determining loan qualification.

  1. Credit-score

Bank statement loans generally require a higher credit score as compared to traditional mortgages.  Even if you qualify with a lower score, you'll be charged a higher interest rate.

  1. Two-Year time frame

Self-employed borrowers are expected to have at least two years of experience with consistent income while applying for bank statement loans.

  1. Debt-to-income ratio

This ratio determines the maximum loan amount. Even though the actual ratio is lender-specific, some lenders may go as high as 55%.

Stated Income Loans for Real Estate Investors

Even though the stated income loans don’t exist for owner-occupied properties, they are still available for the borrowers looking to purchase an investment property. These loans can be a big help for borrowers like house flippers, real estate investors, self-employed borrowers, and to-be landlords looking to purchase a non-occupant property.  They can qualify for the stated-income commercial loans without comprehensively documenting their income or providing tax returns.

Qualifying for a stated income loan for real estate

Generally, the lenders who offer stated income mortgages do not qualify borrowers nonchalantly. The money would be lent to the borrowers only when they have plenty of cash reserves, good credit scores, and a large down payment. Most of the stated income loans are based on the equity position of the property. This means that the more the borrower puts down, the easier it'll be to get the loan done.

Bank statement loans provide easier qualifications as compared to stated income loans for real-estate. A run-of-the-mill stated income mortgage has a considerable number of financial hurdles, including high credit score requirements to high income.

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VP Capital Lending

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VP Capital Lending
Joined: February 22nd, 2021
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