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Stated Income Mortgage Loans

Definition

A stated income mortgage loan is a specialized mortgage loan where the mortgage lender verifies employement and assets, but not income. Instead, an income is simply stated on the formal 1003 application (the stated income on the application has to be realistic for the employment type). Stated income mortgage loans are ideal for those who's employement and assets are verifiable, but whose income is not verifiable for the type of mortgage loan they're interested in.

Stated income mortgage loans are available as both fixed rate mortgage loans and adjustable rate mortgage loans. Because the mortgage lender qualifies the borrower only off employement and assets with a stated income mortgage loan, the qualifying guidelines are more strict and the interest rate is also somewhat higher than it would be for a regular full doc mortgage loan. In addition, stated income mortgage loans typically require at least 5 percent down from the borrower's own funds.

Key Points

• Both employment and assets are verified for a stated income mortgage loan.
• Income is not verified for a stated income mortgage loan--it is simply stated on the formal 1003 application.
• Stated income mortgage loans have more stringent qualifying guidelines and higher interest rates than regular mortgage loans.
• Stated income mortgage loans also have stricter down payment requirements than regular mortgage loans.

Pros

• Stated income mortgage loans give people who might not otherwise be able to qualify for a mortgage the ability to purchase or refinance at a competitive interest rate.
• There are a variety of stated income mortgage loans available in today's market, including both fixed rate stated income mortgages and adjustable rate stated income mortgages.

Cons

• Because mortgage lenders qualify borrowers for stated income mortgage loans off only employement and assets, they typically have higher interest rates and monthly payments than regular mortgage loans.
• Stated income mortgage loans also typically require higher down payments than regular mortgage loans.
• Like all specialized mortgage types, there are fewer stated income mortgage loan programs available than regular loan programs.

Summary

Stated income mortgage loans are specialized mortgage loans where the mortgage lender does not verify income. Instead, the lender only verifies employement and assets, and the income is simply stated on the formal 1003 application. In general, stated income mortgage loans have stricter qualifying criteria than regular loans. They also have higher interest rates and down payment requirements than conventional loans.

There are both fixed rate stated income mortgage loans and adjustable rate stated income mortgage loans available in today's market, and they can be used for both purchases or refinances. Stated income mortgage loans are ideal for borrowers who can verify employement and assets, but not income, and they've given many of these borrowers an opportunity to purchase or refi a home that they would not have had otherwise.

If you're interested in applying for a stated income mortgage loan with Arizona Mortgage Group, simply complete our Quick Application. One of our loan originators will then call you within 1 business day to answer any questions you have and get you started.