Stated Income Loan Facts - Updated August 2008
- Stated income loans are still available, but not in all states and counties
- Stated income loans are available with at least 20% down for the purchase or refinance of a primary residence or second home.*
- Jumbo Stated Income loans are still available up to $750,000.**
- Stated Income loans are NOT available for Investment Properties.
Stated income loans were designed for the self-employed (and newly self-employed) individual with stable income and employment, excellent credit and assets and a proven ability to handle their financial obligations.
We currently offer 3 types of stated income loans
- Loans for the newly self-employed
- Loans for those self-employed for 1 year or more
- Loans for those who have 1 year or more of self-employment who qualify using their taxable income from that year. (This option is not so much a stated income loan as it is a way for someone to qualify without 2 full years of self-employment).
The first and last programs listed above have excellent rates, have a maximum loan amount of $417,000 (higher if the home is in a high cost area) and they require approval from a proprietary automated underwriting system.
The second program is underwritten traditionally and allows jumbo stated loans up to $750,000, but has numerous geographic restrictions.**
It can be difficult to get approval through the underwriting system and each loan is different, but we have had a lot of success getting approvals for clients who are newly self-employed and meet the following criteria:
- a down payment of 20% or more (or significant equity in the case of a refinance)
- a 740 or better middle credit score, a lengthly credit history and very little debt
- significant liquid assets (retirement accounts, investment accounts, checking, savings, etc.)
- very little (or no) increase in mortgage payment vs. current housing obligation
Slightly lower credit scores (720 and up) may work if you have significant assets and/or if your new mortgage payment is going to be lower than your current payment.
The stated loans that require automated underwriting require you to sign a 4506, but the 4506 is usually irrelevant for the newly self-employed.
For instance, if you are newly self-employed it is likely that the 4506 (a form that is used to access your previous years tax returns) will reflect income from your previous job and is therefore irrelevant to the current loan. If the automated system grants you an approval then it is a judgement call by an underwriter as to how much they like the loan. (i.e. does your stated income make sense, are you in the same occupation as you were before, etc.)
The (automated approval) loans for the newly self-employed and for those that are self-employed for less than 2 years are available in all but the following states/areas: MD, NY, ME, IL, AK, HI and Dade County, FL.
Stated Income program that does not require a 4506 available for jumbo loans up to $750,000
This loan is available in approx. 27 states - see below for current list.** The rates are approx. 1 to 1.5% higher than prevailing 30 year fixed rates and the 5 year fixed seems to be the most popular. Interest Only is available.
Here are the some of the requirements:
Primary Residence Purchase or Refinance with No Cash Out
- 20% down requires a 720 or better middle credit score
- 25% down requires a 700 middle credit score
- 30% down requires a 680 middle credit score
Primary Residence Cash Out Refinance
- Maximum cash out on a refinance is $100,000
- 75% loan to value requires a 720 score
- 70% loan to value requires a 700 score
Second Home Purchase or Refinance with No Cash Out
- 80% loan to value requires a 720 mid score
- 75% loan to value requires a 700 mid score
Second Home Cash Out Refinance
- 70% loan to value requires a 740 mid score
- 65% loan to value requires a 720 mid score
- Maximum cash out is $50,000.
Minimum requirements: (Please call us for all loan details):
- Stated income has to be reasonable and consistent for your profession, years of experience and credit profile.
- You must have a lengthly credit history in addition to high FICO credit scores.
- You must have assets that are consistent with your occupation and credit profile and enough cash reserves.
- You must have the financial capacity to repay the mortgage.
Stated loans are not for those with inconsistent or poor work and credit histories and they are not for those in an occupation where it is obvious that they could not afford the mortgage payment.
Please contact us at 1-800-414-5285 if you feel one of our stated income loans may be right for you. We only lend direct to the consumer...no brokers please.
Related Article: Stated Income Loans - The New (Old) Rules - a brief overview of stated income loans of the past and current day.
*Down payment or loan to value may be adjusted if property is in a Declining Market.
**Available states for Stated Program referenced above:
Alabama
Arkansas
Colorado
Delaware
Washington DC
Georgia
Indiana
Iowa
Kentucky
Louisiana
Maine - no interest only in Maine for loans of $417K or less
Massachusetts
Mississippi
Missouri
Montana
Nebraska
New Hampshire
North Carolina
Rhode Island
South Carolina
Tennessee
Texas
Vermont
Virginia
West Virginia
Wisconsin
