Stated income loans are those for which virtually no proof of income is provided by an applicant, although the applicant does state their level of income when applying. These kinds of loans virtually disappeared after the housing crash of 2008, because they were a major contributor to that economic downturn. Nowadays, stated income loans can once again be obtained, although it is necessary to have an outstanding credit score, to make a large down payment, and to demonstrate access to a significant cash reserve.
Qualifications for Stated Income Loans
In order to offset the risk undertaken by a lender, it would be necessary for any applicant for a stated income loan to have a large savings reserve, a credit score at 700 or above, solid bank statements and business documentation, and a demonstrated high level of income. It happens quite often that stated income loans are used to secure real estate by people who are in the fix and flip business. In other cases, investors apply for stated income loans so they can retain some of their own cash assets as a hedge against future investments.
Similar to Stated Income Loans
There are financial products which are very similar in nature to stated income loans, specifically alternative income verification loans. These type of loans are especially useful for applicants who have several sources of income, such as individuals who are self-employed. With this type of loans, applicants can purchase homes and sometimes refinance them without the necessity of providing a great deal of documentation.
They are generally easier to obtain than stated income loans, because credit score requirements are lower, and it’s only necessary to have been in business for at least two years. Also known as bank statement loan programs, these types of loans can be very helpful for individuals with diverse income sources and less business documentation.
Need a Stated Income Loan?
If you’re looking to apply for a stated income loan, contact us at 5 Star Funding Group. We’ll be glad to discuss your application, and to explore ways that we can help you achieve your business objectives.