What is Stated Income?

Did you know that Self Employed and Commissioned Sales people can still get approved for up to 95% financing on a mortgage without having to prove income? They use ‘Stated Income’.

What is Stated Income?

Stated income is where a client will state earnings without having to prove these earnings. For example, client makes 100K per year but only declares 35K on his tax return. Client is a self employed electrician. Client needs 65K of income to qualify for the mortgage. The lender will look at the application and decide if it is possible that this client could make 65K a year. If so the deal will be approved based on good credit score and having down payment from own resources. That is a self employed stated income deal.

The deal has to make sense to the lender. A client stating that he makes 90K per year to qualify for a mortgage with declared income of 20K and works in a profession where 90K per year is very unlikely will not be approved.

General Guidelines

· Must have proven minimum 2 years of self employment or commission sales. As proof must provide copy of Master Business license, Articles of incorporation etc. (For real estate agents a letter from employer is sufficient)
· Must have good credit. Minimum beacon score of 680 or better. Lower beacons scores still accepted from some lenders but down payment will increase.
· 90% financing available on refinances.
· Interest rates and terms the same as regular financing.

As with all posts on this blog, please consult a mortgage professional for proper details and explanations, items are posted here merely for general information.