Many home buyers generate income outside of the traditional W2 salary. That’s where loan programs like a stated income mortgage become a powerful and strategic tool for buyers to qualify with unconventional income streams. Work with an expert in Non-QM mortgages to get the best deal and terms on your home.
Need quick answers in your journey to financing your home purchase? Here’s the core facts you need to know about stated income loans:
Traditional mortgages rely heavily on documented proof of income through pay stubs, tax returns, and W-2s. But what if your income structure doesn’t fit neatly into those categories? Freelancers, business owners, and individuals with commission-based earnings often face challenges when it comes to securing a home loan. This is where stated income loans come in. They offer an alternative path to homeownership for those who have difficulty documenting their income through traditional means.
In a stated income loan scenario, you report your income directly on the mortgage application. The lender will then use alternative verification methods to assess your financial stability. This might involve analyzing your bank statements to verify income flow and deposit history, or reviewing your assets to determine your overall financial picture.
While stated income loans can be a welcome option for those struggling to qualify for conventional mortgages , it’s important to be aware of the potential drawbacks. Because lenders lack the traditional income verification documents, they perceive stated income loans as carrying a higher risk. This translates to potentially steeper interest rates and stricter down payment requirements compared to conventional loans. On top of that, finding lenders offering stated income loans can be more challenging in today’s market. Following the 2008 financial crisis, regulations have tightened, making these loans less common than they once were.
Steve Abo and his team of mortgage strategists will help you find the right program for your ideal home, market, and goals.