Mortgage Alternatives To Stated Income Loans
There are still mortgage options available for self-employed borrowers, even if the era of the stated income loan is over. In this case, you can consider the alternative of the bank statement loan.
Like the name suggests, bank statement loans allow borrowers to use business or personal bank statements in the place of tax returns to calculate their income. Lenders use this information to estimate the borrowers ability to repay the loan. They also look for other factors in qualifying borrowers, namely strong credit scores, a large down payment, and sufficient cash reserves.
Additionally, nonconforming lenders offer bank statement loans, meaning they cant be sold to Fannie Mae or Freddie Mac.
Investor Cash Flow Loans
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.
Why Stated Income Loans Are Ideal For Real Estate Investors
Many people associate stated income loans with the mortgage meltdown of 2008, and this is not surprising. After all, stated income mortgages played a massive part in the housing market crash and the recession that followed it.
Banks have since stopped issuing these types of loans for owner-occupied properties. The government also passed several laws to make sure that nothing like the 2008 fiasco ever happens again.
Among the most notable legislations was the Dodd-Frank Act that took effect in 2010. To this day, it continues to heavily regulate lenders and banks while preventing people from buying properties they could not afford. The law has largely been successful in eliminating sketchy lending practices.
However, the Dodd-Frank Act keeps qualified buyersparticularly self-employed individuals, small business owners, and real estate investorsfrom getting property loans because they cannot present proof of income, tax returns, pay stubs, or W-2s.
If you belong in this group, you know very well that it can be difficult to produce the documents that traditional banks typically ask. Perhaps you dont seem to pay a lot in taxes because you have a great accountant who has found many ways to lower your tax obligations legally. Maybe you at earn a small salary but make most of your money through commissions.
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You Require Property Tax Records
A lender will not apply to someone who has failedto file tax returns or claim income they do not make. This happens because theloan is secured by keeping a property on the mortgage.
So in case, the property is sold in the mortgagelender will have the first hand over the property. This means one needs to paythe entire first loan amount before the second one.
Stated Income Loans For Investment Property
October 7, 2014 by
Norada Real Estate Investments is pleased to offer our new Stated-Income Mortgage Loans, available on many of our investment properties. These loans are available on 1-4 units properties with just a minimum mid FICO score of 650. You can get up to 70% loan-to-value with absolutely no personal income verification.
We offer this as a more cost effective financing solution versus traditional hard money with terms and rates closer to those of institutional lenders. This is a great opportunity for investors who are self-employed, have below average credit, or have other personal situations that prevent them from qualifying for more traditional loan products.
Stated income loans allow those who are self-employed or do not have documentation of earned wages to state a wage on the mortgage application and qualify for a mortgage based on that stated income.
The advantages of a stated income loan provide those who qualify with a mortgage based on their stated income. The borrower does not need to verify income and approval is generally faster than with a traditional mortgage loan. The disadvantages of this type of loan are that interest rates are usually a little higher and the required down-payments are often higher than with traditional mortgage loans.
The following are the current loan features and terms :
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Are Stated Income Mortgages Still Available
Stated income loans were very popular during the early 2000s. But due to lax loan approval methods, they contributed to the collapse of the housing market in 2008. Borrowers would apply for the loans and write out their income on the documentation.
Now, as a result of the 2010 Dodd-Frank Wall Street Reform and the Consumer Protection Act, borrowers of owner-occupied properties can no longer take out stated income loans. But they havent completely disappeared. They are still available to investors looking to buy property.
Additionally, the previously mentioned Acts paved the way to reform stated income loans. So, even if you need to fund an owner-occupied property, you can find a similar lending opportunity through bank statement loans.
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Stated Income On Primary Residence Properties
MortgageDepot has partnered with a lender that will mortgage owner-occupied primary residence properties with no income verification. It does require 25% down payment but hey where you can find a lender that will mortgage a primary residence property under a no income check mortgage program? As you search the web you are coming across no income check mortgage programs but they only can be financed on investment properties. This new no income check mortgage is now available for owner-occupied properties. If you fit this criterion then you need to contact our office and speak to a loan officer that will be able to see if you qualify for this no income check mortgage. Take a look below for terms of this no income check mortgage.
Stated Income: State employers information on the mortgage application and just stating the borrowers income without having to prove it. Income must be commensurate with the position held. No 4506 or 4506t required. Two years of employment history with the same employer and/or the same line of work. Salaried borrowers are permitted.
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Are You Eligible For A Government
No-income-verification mortgage programs are available to qualified borrowers to refinance government-backed mortgages. Homeowners who have paid on time over the past year and have a loan backed by the FHA, U.S. Department of Veterans Affairs or the U.S. Department of Agriculture , may be eligible for one of these reduced-document refinance loans. An added bonus of these programs: You wont need a home appraisal.
- FHA streamline. Homeowners with an FHA loan can reduce their interest rate or get better terms without any income documents through the FHA streamline refinance program. One drawback, however, is that closing costs cant be rolled into the loan amount unless you agree to a higher interest rate.
- VA IRRRL. Military borrowers can get a lower mortgage rate with the VAs interest rate reduction refinance loan without providing earnings paperwork. The loan amount can be increased to cover closing costs.
- USDA streamlined assist-refinance loan. If you bought your rural home with a no-down payment USDA loan, you can reduce your rate with the USDA streamlined-assist refinance option. No income docs are needed, and you can add the closing costs to your loan amount.
Stated Income Claims Can Be Checked
While there is no guarantee that the stated incomeloan is checked, theres still a possibility. Do not think it is an opportunityfor you to claim an income of $500k a year when you dont.
Being honest in the application process can helpyou greatly in the long run. If the documents are verified and the lender findsyou have lied, he can deny the loan at the last moment.
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Your 3 Best Options For Financing A Vrbo Investment
VRBO, or Vacation Rental byOwner, has been a pioneer in vacation rentals since 1995. Similar to its newer rival, Airbnb, VRBO is a network that brings renters in touch with homeowners with vacation properties. While buyingVRBO investment propertiescan be lucrative, finding the financing for it is a key hurdle to overcome.
If youre interested in capitalizing on in VRBO investments, lets take a look at the financing options available to you.
Understanding Stated Income Home Loans
A stated income mortgage is a type of home loan unique for its lax regulation. It did not require lenders to verify or ask for income documentation. Instead, banks and other lending institutions only needed to ask for a borrowers stated income.
As a result, you may hear stated income loans referred to as liar loans. This is a more general name describing mortgages that require little to no documentation. The loan provider merely underwrites the loan according to the information the borrower themselves supplies.
They, understandably, sound risky now. But originally, these loans helped self-employed borrowers with variable income who struggled to deliver the documents needed for a conventional loan. However, to compensate, liar loans heavily rely on credit scores.
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Stated Income Loans Available In 2021
Stated income loans are making a comeback sort of.
Extremely popular in the early 2000s, stated income loans were one of the factors of the housing market collapse. Why? Lenders were approving borrowers based on the income stated on their loan application but didnt require income documentation to verify if it was accurate. The result: many borrowers defaulted on loans.
With the passing of the Frank-Dodd Act of 2010, stated income loans for owner-occupied properties are now illegal. Lenders must fully document a borrowers ability to repay the loan either with income or assets.
That leaves some borrowers at a disadvantage, especially self-employed borrowers. But, the good news is that there is a type of loan called a bank statement loan that meet these borrowers needs.
Qualifying For A Bank Statement Loan
In addition to determining your net income, lenders also look at the following things when determining loan qualification:
- Two-year timeframe. Most lenders require self-employed borrowers have at least two years of experience with consistent income.
- Debt-to-income-ratio. This ratio determines the maximum loan amount. Some lenders may go as high as 55% , though the actual ratio is lender specific.
- Down payment. These loans tend to require larger down payments than traditional mortgages. A borrower with great credit may still be required to put 10% down , but some lenders may require more.
- Expect a higher credit score requirement with bank statement loans . While you may qualify with a lower score, youll definitely be charged a higher interest rate.
Also, a note about interest rates. Because these loans are considered riskier, expect interest rates to be 1% or more higher than for traditional mortgages. Though, as more lenders start offering non-QM loans, rates may become more competitive.
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Stated Income Loans = Easy Qualifying
A true Commercial Stated Income loan. The perfect type of loan if you cant provide tax returns for some reason or dont want to provide tax returns because of excessive write-offs that keep you from qualifying at your local commercial bank. Thats fine. We dont care what your tax returns show No debt to income ratio review ever. Even with a bankruptcy just discharged, you can still qualify for a stated income mortgage. This program lets you refinance up to 75% of your appraised commercial property or investment non-owner residential value.
- Loan amounts from about $100,000 to $5,000,000
- As long as your credit report has a mid-score of FICO 650 for maximum LTV.
- Fico Scores of 650+ up to 75% ltv!
- Fico Scores down to as low as 590 for up to 65% ltvs!
- No more than two Mortgage Lates in the past year
- Not available in low density or rural areas
We provide an uncomplicated loan process from a common sense point of view and fast loan approvals. Most transactions closing within 30 days of loan application. No Red Tape ever.
Start by contacting Allied Commercial Funding today by email or phone 800-247-8212
Submit Your Application For A Stated Income Mortgage Today
Dont wait another day to get the process of qualifying for your new mortgage underway. Contact NonQMHomeLoans.com to get the process of applying for your stated income loan started now.
To find out if a stated income loan through NonQMHomeLoans.com is available to you and is the right choice for you you should contact us to begin the simple and straightforward application process and get started on getting your loan approved.
When Should You Get A No
You should consider a no-income verification loan if you cant easily verify your monthly earnings, have complex tax returns or just dont want the hassle of providing a ton of earnings documentation.
Lenders analyze self-employed income differently from salaried or hourly earnings. Because income isnt guaranteed, lenders take extra care to verify a borrowers earnings history, the stability of their income, how financially sound their business is and even the demand for the type of service or product that their company offers.
You may want to consider a no-income-verification loan in the following scenarios:
Mortgages For Self Employed Borrowers
With tax write-offs and fluctuations in income, we understand that if may be difficult for self-employed and commissioned borrowers to qualify for home and commercial real estate financing. Thats why we offer a variety of asset verification options such as bank statement loans to help people qualify.
With most of these types of loans, no tax returns, W2s, or K-1s are required! Ready to learn more?
Call us today at 441-9685 for a free consultation.
- 10% Down Purchase Owner Occupied
- 20%Down Purchase and Refinance on Second Homes, Non-Owner Occupied and Apartment Buildings
- Multiple ways to calculate income
- Bank Statements
- Solely on Investment Property Income
- Large Bank Accounts/Liquid Asset Holdings
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No Income Verification Loan / Stated Income Loan For Real Estate Investors
A stated income loan or no income verification loan, is one of the leading private money loan programs available to real estate investors, allowing the borrower to secure funding without needing to qualify on their debt-to-income ratio.
Unlike conventional mortgages, a stated income loan is easier to be approved versus a traditional loan, and is a way for self employed borrowers who would not qualify for a traditional financing to achieve their investment dreams. These types of loan programs are for investment properties only and not for primary residences for an owner occupied property.
Though there has been much criticism of stated income loans recently, for certain borrowers, they are the best mortgage loan option.
Only Real Estate Investors with high credit scores are eligible. Whether it’s a commercial real estate soft money loan or a soft money rental loan, this type of loan product benefits borrowers who do not have the ability to go to the bank due to their documented income, closing timeline, and employment history.
Unlike conventional investment property loans that max out at 70% LTV, a NO-DOC Soft Money Loan Program maxes at 85% LTV and with no PMI. This allows the borrower to put less money down on their purchase.
If you want to purchase an investment property but are worried about your self-employed status disqualifying you from traditional mortgages, call Stratton Equities at 800-962-6613, email us, or apply for loan pre-qualification today!
Asset Qualifier Or Asset Depletion Loans
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, its not just for the selfemployed.
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.
Heres how they work.
How assetbased mortgages work
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 borrowers total liquid assets divided by 360 .
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 assetbased income of $3,750 per month.
- $1,000,000 + $350,000 = $1,350,000total 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 its been in seasoned in the borrowers account for a certain amount of time.
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Best Methods Of Financing A Vrbo Investment Property
There are a number of ways you can get money to invest in VRBO properties. Some of them take more finesse than others, but the variety of options ensures that you have a fighting chance of receiving financing.
One thing thats important for you to understand is that as a rental venture, most banks will be averse to lending you money. Banks dont like rental investments because of the risks, which means youll most likely have to seek funding elsewhere.
Companies like Vacation Rental Property Loans are in between banks and hard money lenders which is good news for you.The advantage is that you can get financed for VRBO investments and receive a better deal than you would at a bank.
If youre wondering what option to go with, a Short Term Vacation Rental Financing loan is one of the best options available for raising capital on VRBO property acquisitions.