Clift Mortgage
   

Stated Income Loans

Stated income financing is a mortgage where the lender does not verify the borrower’s income by looking at their pay stubs, W-2 forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at their word.

These financing are nominally intended for self-employed borrowers, or other borrowers who might have difficulty documenting their income. Stated income financing have been extended to customers with a wide range of credit histories, including subprime borrowers.

Stated income financing fill a gap of situations which normal financing standards would not approve. For example, a standard rule is that a customer’s mortgage and other financing payments should take up no more than 45% of the person’s income. This would seem prudent for a person just owning their main home. However, a real estate investor may have multiple properties and for each may receive only a small amount more than their financing payments on each house, but end up with $200,000 in disposable income. Nevertheless, a non-stated income loan would decline this person since their debt to income ratio would not be in line. The same issue can arise with self-employed borrowers, where the bank with a fully documented loan would include the borrower’s business debt in their debt to income calculation. Stated income loans also help borrowers where fully documented loans normally would not consider the source of income as being reliable and stable, such as investors who consistently earn capital gains. Fully documented loans also do not consider potential future income increases.

Qualification requirements for Stated Income Loans are based on stable employment, good reserves, good FICO and no less then 40% equity position in the property.


This material is not from HUD or FHA and has not been approved by HUD or any government agency. Equal Housing Opportunity Lender

Clift Enterprises Inc.
CL-68323

360-683-4848 office
224 W Washington #103, Sequim, WA 98382

360-457-7654 office
330 E. 1st St., Ste 3, Port Angeles, WA. 98362

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