Is a Stated Income Mortgage Loan for Me?

Stated income mortgage programs allow borrowers who are unable to document their true income to literally state their income on their loan application. These individuals are usually self-employed professionals & those who are paid all or in part by cash.

Many times because the lender is allowing the borrower to state their income on their loan application, there may be a higher interest rate to pay. The stated income programs are a higher risk to a lender because they are not actually documenting or verifying that you make the amount of money that you are stating on your loan application. Of course credit reports are still pulled on these loan programs, so there are some lenders with programs that will offer the same rate as a fully documented loan (which of course is a lower rate) to borrowers applying for a stated income loan as long as they have excellent credit history & a superb payment history.

The income stated has to be reasonable & not outlandish. This loan program is not an opportunity for the lender or borrower to falsify income just to ensure the approval of a loan. If it is discovered that anyone is falsifying information on a loan application due to the loan being audited, they could be prosecuted. As a borrower, one should never let a lender (the lender’s loan officer or broker assigned to your loan) talk you into incorrectly, inflating your income on a stated income loan, & lenders should not knowingly accept inflated income from a borrower.

There are three widely used state loan programs:

1. State Income Verified Assets (also known as the SIVA): With this loan you are approved based on the stated income you provided the lender, your credit & you actually have to provide proof of any liquid assets listed on your loan application. There should be consistency with your assets & the income stated on the loan application.

2. Stated Income Stated Assets (also know as the SISA): For this loan assets are stated as well & not verified. The same rules apply for a SISA loan as with a SIVA. The borrower or lender should not inflate the assets stated on the loan application. This product comes with a higher interest rate as the layers of risk for the lender doing this loan are increased.

3. No Income No Assets (also know as the NINA): The lender will not verify income or assets for this loan program; however, an underwriter must stipulate for a verbal verification of employment be completed on the borrower(s) to ensure the borrower(s) has been with their employer for at least 24 months per the loan guidelines.

Stated income loans are not for everyone. This program truly caters to those with higher credit scores & strong payment histories with their creditors. If your credit score is lower & you are given a higher rate, it may not be worth stating your income. If you do not have all needed documentation to support your income, ask the lender if you can sign a 4506-T. The 4506-T enables the lender to retrieve you tax returns for you. This could save you a lot on your rate & give you a much better house payment.