Stated Income Mortgage Rates Glossary Stated Asset SISA 2023
A stated income loan 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 loans are sometimes called liar loans or liar’s loans.
No-income verification mortgages, also called stated-income mortgages, allow applicants to qualify using non-standard income documentation. While most mortgage lenders ask for your tax returns, no-income verification mortgages instead consider other factors such as available assets, home equity, and overall cash flow. This makes it easier to get a home loan if you’re self-employed or rely on seasonal commissions.
- What is a No-Income Verification Mortgage?
- History of No-Income Verification Mortgages
- Are No-Income or Limited Verification Mortgages Still Available?
- Is a No-Income Verification or Limited Verification Mortgage Right for Me?
- Where Can I Get a No-Income Verification Mortgage Loan?
Stated Income, Stated Assets
A SISA loan can be useful if you have significant income and assets that are difficult to document. When you apply for a SISA loan, the lender agrees to accept the income and asset figures you provide, with no documentation needed. This can be helpful for small business owners who keep all their assets in a business account and don’t document their personal compensation with pay stubs, W-2 forms or 1099 forms. In such cases, bank statements for 12 to 24 months can be used to calculate the business’s monthly cash flow in place of other documentation.
Stated Income, Verified Assets
This type of loan is most useful if a big part of your income is hard to document, but you have verifiable assets on hand. The lender agrees to accept your income figure and verify your available assets. One example where SIVA would be appropriate is for someone whose income is based on tips or gratuities but who has a personal bank account in their own name.
No Income, Verified Assets
A no-income, verified assets loan is meant for applicants who have verifiable assets but income that cannot be documented. In this case, the lender verifies your assets and does not take your income into consideration. A retiree who draws income from their retirement accounts may not have enough verifiable income, but their assets can be documented, so they would benefit from using a NIVA loan.
No Income, No Assets
With the fewest requirements of all, NINA loans are best for applicants who cannot provide documents for either income or assets. NINA lenders base approval solely on the collateral and other non-income factors. Someone who is employed by a foreign company and holds their assets in a foreign bank may not be able to provide any documentation acceptable to U.S. lenders. Using a NINA loan, in this case, might allow the borrower to skip document translation and international asset transfers.
If you see a “stated income loan” today, that’s likely not the full story
Stated income loans don’t exist like they used to.
No-doc mortgages went away post-2008 in favor of strict income verification rules.
But not everyone has the tax forms required for a “conventional” mortgage. Some people need an alternative way to show they can afford a home loan.
Luckily, there are modern versions of the stated income loan to help.
Options like bank statement loans, asset depletion loans, and investor loans can help you get a mortgage even without tax returns.
Many lenders offer these semi-stated income loans. Find a few of them and compare rates to get the best deal on your mortgage
Table of contents (Skip to section…) Stated Income Mortgage
- If you see a “stated income loan” today, that’s likely not the full story
- Truly stated income loans are gone. But you still have options
- Stated income mortgage alternatives
- Bank statement loans
- Asset qualifier or “asset depletion” loans
- Investor Cash Flow Loans
- Background: What are stated income loans?
True stated income loans are gone. But you still have options
Prior to 2008, an online search for “stated income mortgage” would have come back much differently than a search done today.
Dubbed “liar loans”, these high-risk mortgages — which required no income verification for borrowers — were a big contributor to the housing downturn.
As a result, most banks and lenders discontinued stated income loans.
The good news for homeowners that can’t prove their income through tax returns? There are other options, including:
All these loans will offer different rates and benefits depending on your income, assets, and the type of property you’re buying.
Stated income mortgage alternatives
The most popular alternatives to stated income loans usually come in three forms. All of these are considered to be “Non-QM” (non-qualified mortgages) since they don’t conform to conventional mortgage lending.
Bank statement loans
The bank statement mortgage is an increasingly popular loan. It’s ideal for self-employed borrowers, freelancers, or gig workers, who make plenty of money but their tax returns don’t show it.
Bank statement loans consider 12 or 24 months of personal and/or business bank statements. In lieu of pay stubs, some or all of these monthly deposits are used to prove your monthly income.
Bank statement loans offer down payment options as low as just 10 percent.
Asset qualifier or “asset depletion” loans Stated Income Mortgage
Also known as “asset depletion loans”, “asset utilization loans” and “asset based mortgages”, this loan program is another great alternative to stated income. Even better, it’s not just for the self-employed.
Asset qualifier loans do not require employment verification. Borrowers do not even need to be employed.
Instead, this program allows borrowers to qualify for loans using their verified liquid assets.
This makes asset depletion loans an especially popular option for retired homebuyers.
Here’s how they work.
How asset-based mortgages work Stated Income Mortgage
Borrowers’ assets are summed up based on a combination of cash, retirement, and investment monies. Then the lender calculates a “monthly income” based on the total. Generally, the calculation is a borrower’s total liquid assets divided by 360 (the number of months in a 30-year mortgage).
Assets are generally qualified with 100% of cash accounts and 70% of retirement and investment accounts.
For instance, a borrower might have $1,000,000 in liquid assets, and another $500,000 in retirement and/or investment funds. This gives them an asset-based “income” of $3,750 per month.
- $1,000,000 + $350,000 = $1,350,000 total assets
- $1,350,000 / 360 months = $3,750 monthly income
In addition, all assets counted for an asset depletion loan need to be sourced and seasoned. That means the source of the money can be verified, and it’s been in “seasoned” in the borrower’s account for a certain amount of time.
Sourcing and seasoning requirements vary by lender. Some require a minimum of 2 months to be sourced and seasoned, while many require as many as 12 months.
Finally, asset qualifier loans typically come with slightly higher down payment requirements. Most lenders require at least 25 percent down.
Investor Cash Flow Loans Stated Income Mortgage
Investor cash flow loans are designed for people who generate their income from investment properties. They can use steady rent income from those units to buy or refinance new investment properties.
With this program, borrowers can provide a rental analysis to determine their monthly cash flow. No employment information or personal income is required. This means you can forgo complicated income statements and tax returns.
The typical down payment requirement for investor cash flow loans is 20 percent.
Find an investor cash flow mortgage lender.
Background: What are stated income loans?
A stated income mortgage is a home loan that requires no income verification or documentation. Hence the terms “no doc mortgage” or “no income verification mortgage”.
Back when stated income loans were commonplace, a borrower with a decent credit score could simply state their income on the loan application. And the lender would take their word for it.
In 2010, the Dodd-Frank Act transformed stated income loans for the better. Borrowers can no longer take out a mortgage loan without providing proof of their ability to repay the loan.
This protects lenders from making loans that borrowers can’t pay back. But it also protects borrowers from mortgage defaults and foreclosure.
The ability-to-repay rule is the reasonable and good faith determination most mortgage lenders are required to make that you are able to pay back the loan.
Since stated income loans require no income documentation, these loans are no longer available.
Some lenders still advertise “stated income loans”
After being gone for many years, stated income loans are slowly making a comeback. However, today’s “no doc mortgage” differs from the risky loan products that existed pre-subprime mortgage crisis.
A true stated income loan is only available for non-occupying investors looking for short-term financing on investment properties. These loans are akin to hard money loans.
For all other stated income programs, you will need to prove your income.
But you don’t have to do so through tax returns. As described above, “income” can also be calculated via bank statements or liquid assets.
This makes it possible to qualify for a home loan with all sorts of “non-traditional” income. Self-employed people, contractors, gig workers, retirees, and full-time investors all have mortgage options today.
These new stated income mortgage loans are often referred to as “Non-QM” loans, “alt doc” loans, or “alternative income verification” loans.
With these mortgages, you are not just merely stating your income. Rather, you are using an alternative means to verify your income.
Think you need a stated income loan?
How do you decide between a standard mortgage and an alternative-income mortgage?
First, remember that these loans are designed for folks who can’t prove employment and/or income via traditional methods. As such, these programs are considered higher risk.
To offset the additional risk, these mortgage loans typically come with interest rates and down payment requirements than traditional mortgages.
But for homeowners that wouldn’t be able to qualify for a standard home loan, these programs can be an ideal solution.