You might have shuddered when you read the title. Stated income loans are what caused the housing crisis, right? How could they still be around?
The good news is that they are around and better than ever. You just might not hear them called stated income loans anymore. Instead, they use the name bank statement loans or non-QM loans, but they have the same premise.
What caused the big fallout was the lack of follow through on verifying income in the early 2000s. That’s not the case today. Lenders must know beyond a reasonable doubt that a borrower can afford the loan payment, but that doesn’t mean they can’t prove it in other ways besides W-2s and tax returns.
What is a Bank Statement Loan?
A bank statement loan is a loan that accepts bank statements as proof of income instead of W-2s and tax returns. This is the answer to many borrowers’ problems who can’t verify their income the traditional way.
Say for example you own your own business. You file your taxes and show a loss based on all your expenses and deductions. You did make money, but for tax purposes, you show a loss. That’s what lenders must use to qualify you for a traditional loan.
With a bank statement loan, you provide 12 to 24 months of bank statements. If these statements show regular receipt of income, you might qualify for a bank statement loan.
Who Should Use Stated Income or Bank Statement Loans?
Anyone who doesn’t have tax returns that show positive income or enough income to qualify can be a good candidate.
The self-employed are the most common type of borrowers for this type of loan. However, borrowers that don’t work but live off their assets are good candidates too. You might also consider it if you work on commission or have an irregular pay schedule that can’t be proven ‘right’ with tax returns.
Qualifying for Stated Income Loans
We work with a large number of lenders each with different qualifying factors. In general, try to have the following:
- Good credit (660 or higher)
- Carry few debts
- Have 10 – 20% to put down on the home
We work with lenders who offer competitive interest rates and fees, helping borrowers of all types get approved for financing. As long as you can prove beyond a reasonable doubt that you can afford the loan, you’re in good standing to get financed.
If you’d like to explore your options for a stated income or bank statement loan, contact us today. We work with many lenders who offer these non-QM loan options to help you get financed.
We’ll walk you through the process, help you compare your options, and help you understand the big picture. We know how important getting financing for your home or an investment home can be, and we work hard to get you the financing you need.