Updated as of January, 2017
Stated Income Loans in 2017
Just a few years ago, stated income loans were very popular and there were plenty of stated income lenders who had flexible guidelines and low stated income rates.
Then the housing crisis hit and lenders began pulling their stated income mortgage programs. As lenders ceased offering stated income loans, many small business owners and other individuals found it difficult to get the financing they need because of their unique income situations that cannot be met by conventional loans.
Among others, stated income loans benefit the following individuals:
- Self employed people who own a small business
- Highly commissioned people who may have a low base salary but make most of their income on commission
- People who can’t document at least 2 years of income at their current income levels
- People who make plenty of money but don’t want to disclose their income for one reason or another
In 2017: Guidelines Vary By Lender
There’s no single rule for stated income loans. Guidelines may vary from one lender to the next. They come in various names (e.g. “no doc”, “low doc”, “SISA”, etc.) Depending on the state, current regulations, and even to the extent of the uniqueness of a population’s needs, stated income loans can be quite flexible, thus offering a viable choice for those with equally unique financing needs.
Stated Income Lenders
Not all lenders offer stated income loans. After the 2008 mortgage crisis, many lenders tried to offer loans that fit the qualified mortgage guidelines. In the same way, borrowers shied away from financial risks. It was bad business. But years after the meltdown, lenders are slowly getting back on their feet and targeting the large chunk of the market that cannot be catered by conventional lenders – thus the comeback of stated income loans. In 2017, you can find stated income loans from small time lenders. There is a need, so they supply the solution.
If you are considering financing under the stated income loan program, make sure to take advantage of the variety and be patient in shopping. Guidelines may vary greatly. Ask around and compare before you settle on a decision.
Stated Income Interest Rates
Stated income interest rates will also vary by lender. Expect the interest rate for a state income loan to be higher than an FHA loan interest rate, but nothing that is out of the market. Stated income loans carry a premium, but they have to be competitive. Expect a couple of percentage points higher than an FHA loan and you should be close.
Frequently Asked Questions
What is a SIVA loan?
SIVA stands for Stated Income Verified Asset loan. This type of loan allows you to state your gross monthly income and requires the lender to verify assets – usually done by you providing bank statements or brokerage statements or some type of document that verifies your having the assets you claim to possess on the loan application.
What is a SISA loan?
SISA stands for Stated Income Stated Assets. This loan type requires you to state both your gross monthly income and your assets. You are not required to verify these but simply have to state it and the lender will take your word for it.
What is a No Doc loan?
Although guidelines will vary by lender, a true “no doc” loan program is where you don’t have to verify anything other than your citizenship.
Can I be declined if my stated income is too high?
Yes. It is possible to have your loan declined for the reason that your stated income does not match your job description and title. If you are a waitress and you declare making $10,000 per month, the underwriter will have a reason to doubt the accuracy of your application. Underwriters have resources to see the range of pay based on title and job description – and while not always accurate, they are typically in the ballpark.
It is also possible that the underwriter or lender will require that you fill out a form (IRS Form 4506), which allows the lender to request IRS verification of your tax returns for the previous two years.
Is there a minimum credit score?
Usually, yes. Minimum credit score requirements will vary by lender and program. The minimums will vary by lender.
Is there a minimum down payment required?
Most likely. Because the lenders cannot properly verify your income, they make up for the risk by asking you for a down payment (aside from having excellent credit). Minimum down payment requirements will vary by lender and program. They typically require a higher down payment than conventional loans.
Getting The Best Deal
Because not every lender offer stated income loans and the lenders that actually “do” typically only offer a handful of products. Getting a loan will require you to shop around a little bit. It may require a bit of patience but it’s not impossible.