Stated Income Home Loans
Competitive Interest Rates
What Are Stated Income Loans?
This is a type of loan where the borrower is not required to provide W-2 forms or tax return in order to verify their income. The borrower simply states their income. Also known as no income documentation loans, stated income loans are available in California.
Benefits and Considerations
No income documentation loans are ideal for those who invest in real estate or those who are self-employed. These loans are a great option to help potential buyers or those wishing to refinance qualify for a loan where normal loan standards would not be acceptable. Typically, the combination of one’s mortgage and other loan payments are not to be more than 43.00% of one’s income. However, if investing in real estate or given other special circumstances (such as being self-employed) the sum of mortgage and loan payments can look much higher than 43.00% of one’s income, even though in reality, the consumer may have a large amount of disposable income.
How Does It Work?
As a mortgage applicant, you don’t have to provide tax returns or pay stubs to show your income. Stated income loans through City Capital Realty are loans at considerably higher interest rates and fees. Instead, City Capital Realty offers stated income loans from institutions that specialize in these programs.
Cross collateralization offers flexibility in using multiple properties to help secure funding or refinancing and an excellent means to secure financing when proof of income is an issue. These loans also offer the unique advantage of being available to entities such as corporations, LLCs, partnerships, trusts. Stated income loans can be qualified by cash flow (bank statements), FICO score, rental income, cash reserves, and loan-to-value in and of itself (or in combination). These standards greatly enhance qualification, and can be used to purchase, refinance, or cash out of the property.
For stated income loans throughout California, minimum FICO scores will be 700, as will the loan to value. These loans are offered for both owner occupied and investment properties
Stated Income Home Loan Requirements
Salaried Borrowers
- To be employed in the same line of work for minimum of TWO years
- Varification of employment to verify borrower’s current status, position and length of employment
- Borrower’s TWO months bank statements
Self-Employed Borrowers
- Business phone must be verified via 411 or internet
- Min TWO years in same line of business
- CPA letter to verify borrower’s ownership of business for the past two years
- Borrower’s TWO months business bank statements
- Income with verified asset is required
- A full disclosure of income, assets and liabilities is required on the application
- Fico Score 720
- No 4506-T
- 30 Year Fixed Rate
- 30 Year Amortize
- Primary Residence
- Business License
- No Tax Returns
- 1003 Application
- 1-4 units
- Purchase
- Refinance
- SFR/CONDO
From $1,000,000 to $5,000,000
Program Highlights for Purchase Transactions
- Maximum debt to income coverage to be 45%
- Two full appraisals required if value is over $1,500,000
- Automatic Payment Required
- Gift is allowed on purchase transaction of primary residence
- Foreign assets must be transferred to U.S. bank prior to closing
- Foreign nationals must have valid passport and visa to US
- Maximum EIGHT financed properties
- 12 MONTHS months Principle, Interest, Tax, Insurance must be verified for cash reserve requirements
- Subordination financing: Not permitted
- Rental agreements must be provided
Credit & Reserves
Reserves can be from checking, savings, CD’s, money market accounts, cash, stocks, bonds, IRA’s, 401k’s, and Keogh accounts.
Stated income home loan has a higher interest rate and more points than other loan that require documentation.
City Capital Realty understands your needs if you are self-employed or have a complicated income structure. Our Stated Income Mortgage allows you to borrow up to 75% of your property’s value without providing income documentation. Borrower approval is based on your credit history, verifiable liquid assets, the value of your home and your stated income. This loan product is unique.
FAQs
Our Most Frequently Asked Questions
Yes, debt service coverage is one of the key factors contributing to whether a commercial loan is approved
Usually, the magical number is 20% minimum equity in the property. This relates to a loan to value that is no higher than 80%. There are some exceptions that apply (two properties can be cross-collateralized).
Usually, residential mortgages take about 45 days to close while the more involved commercial process takes around 60 days from beginning to end.
All lenders will want to see:
- Three years of individual and business tax returns
- Statements that detail improvements or expenses incurred by the property
- A current rent roll of any apartment building
- Personal financial statements for all partners
Most commercial loans do have a “pre-pay penalty.” This penalty is instilled if a loan is paid in full or prior to the outlined terms. Commercial loans carry a prepayment penalty for four of the first five years.
A residential mortgage only applies to residential property (no greater than four units per building). A commercial mortgage is utilized to secure financing for a larger spectrum of properties. A residential loan process is standardized by established guidelines, but the commercial loan varies depending on individual lenders.
A broker can aid you in understanding the transient nature of the mortgage market. The broker’s fee will be more than made up in the insight they can provide in steering you away from mistakes. Since they work with mortgages on a regular basis, they will be able to offer their expertise and better be able to explain the numbers.
Use the time between accepting a lender’s offer and receiving the commitment to your advantage by tackling as many obstacles as possible:
- Once you have accepted the offer, order the title searches.
- Find out the lender’s requirements for the ALTA survey (this process could take up to 4-6 weeks, so do not sleep on the process.
- Make sure you have a long-term sense of what you will do with the property.
All professionals will say to move as many things into the “completed” list from the “to do” list. Some processes are very time consuming and should be immediately addressed.
Suggestions:
- Do not focus on the absolute bottom when choosing an interest rate. Focus on the monthly/annual payment being in your range.
- Stick with one broker. Do not work with multiple brokers.
- Address any issues (tax escrows, lender’s calculation method, timing, etc.) before you make your initial deposit.
- When it is time to refinance, consider using a different lender or at least find out what they can do for you. The nature of the industry is not static, so it is always good practice to see what others have to offer from time to time.
