Stated Income Loan Qualifications and Requirements Explained

A stated income loan is a lending instrument that allows potential borrowers to declare their income amount for a loan. The income is never verified. With this type of loan, the lender does not require any documentation of their income in order to process the loan. However, in order to qualify for this type of loan, you will still have to meet some qualifications. Here are some of the qualifications and requirements of stated income loans. 

Credit History

One of the most important criteria that the lender is going to look at is your credit history. Your credit history tells the borrower what to expect from you as a borrower in the future. They will look at whether or not you pay your bills on time. This tells them whether or not they can expect you to make your mortgage payments. They will also look at your credit score. Each lender has guidelines for the minimum credit score that they will work with. Therefore, you have to have a sufficient credit score in order to get the loan that you need. 

Debt-to-Income Ratio

To qualify for a stated income loan, you will also have to meet your lender's debt-to-income ratio guidelines. To come up with this number, they will use your credit history to add up your total debt. They will look at all of the accounts that you have open and calculate your debt load. They will then compare this to the amount of income that you said you had on the loan application. Even though you provided the number without verification, they will still use it to calculate the debt-to-income ratio. They are just taking your word that the total that you gave them is correct. 

Each lender is going to have their own criteria as to what is an acceptable debt-to-income ratio. Therefore, if one lender says that your debt-to-income ratio is too high, that does not necessarily mean that every lender would say the same thing. 

Property Requirements

In addition to meeting several personal requirements, you will also have to have a property that meets their lending requirements. If you meet their lending guidelines, they will send an appraiser out to the property to determine whether or not it meets lending requirements. They will want to make sure that the property appraises for the value of the loan that you are requesting. If the appraisal comes back with a lower value than the amount that you request in the loan, you will not be able to get the loan. 

Underwriting

Once you get through the initial steps of the loan, it will then be passed onto an underwriter for approval. The underwriting process is standard with any mortgage and the stated income loan is no exception. With this process, an underwriter double checks every aspect of the loan and determines whether or not the loan is acceptable. If the loan is alright with them, then they will approve it and move forward. 

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