Stated Income Home Loans

If you are applying for a loan you may want to choose a stated income home loan. Stated income home loans permit borrowers to simply “state their income” instead of verifying the exact amount by using your tax returns.

Stated income home loans were initially intended to borrowers with difficult tax schedules and were self-employed, however, it has become very prevalent because oftentimes borrowers can use a stated income loan to get a loan they otherwise might not have qualified for.

The stated income mortgage loan is sometimes known as a “liar’s loan” because often times people do fix the numbers in their stated income loan in order to fully qualify for a particular home loan.

There are two types of stated income loans. The first type is a stated income/verified asset (SIVA) loan. This allows you to state your income, but requires you to verify your assets through a bank statement or other documentation.

The other type of stated income loan is a stated income/stated asset (SISA) loan.  This loan allows you to state both your income and your assets when applying for a particular loan. 

Whether or not you get a SIVA or SISA loan, the banks will require you to verify your employment by calling your company if you are employed or by requesting a CPA letter if you work for yourself.   Banks will look at your specific job title when applying for the loan.  Based on the job title, banks will allow categorize your income but what that position is expected to earn. 

This basically means that if you work as a cashier, you won’t be able to declare the income of an equivalent CEO.  You would have to declare the income of an average cashier salary.   If you overstate your loan then you are likely to be declined from the bank.  It can be common for applicants to overstate their earnings for their income.   To learn more about the typical earnings for a job, look online for specific averages regarding an occupation.  Searching Google for “job salary” should give you a quick estimate of what your job should be earning.  

The major downside of stated income equity loans is that the rates tend to be higher than verified income loans.  This is expected because a stated income home equity loans would be more risky than a fully documented loan.  Before you get a stated income home you should do your research online and see the different options available.