Stated income loans are not as widely available as they were prior to the recession of 2008 when several houses went into foreclosure. These no-document mortgages became harder to find in favor of strict income verification rules to help mitigate the large risks and reduce the amount and likelihood of a borrower defaulting on a loan when banks were seeing several previous and current customers in desperate mortgage situations.
Not every single person works in a traditional form and receives tax forms that are required for conventional mortgage income verification. Some home buyers need an alternative way to show that they can afford to make payments on a mortgage loan. Today there are new updated versions of stated income loans that can help buyers in less conventional paycheck situations to qualify for a mortgage loan. These options include bank statement loans, asset depletion loans, investor loans, and more.
New options for stated income/the new way of doing stated income mortgages
Before 2008 you could search stated income mortgage, and find several results for products that would qualify for a stated income model. Today the stated income mortgage is also sometimes referred to as a liar loan because it required no income verification from a borrower. It is said that this type of loan was a huge contributor to the housing downturn of 2008. As a result of all of this many banks will not offer what is actually labeled as a stated income loan, rather a similar product with a different name.
Stated income mortgage alternatives
The most popular alternative to an actual true stated income loan, which some may still refer to as a stated income loan, is the bank statement loan. Other alternatives also include asset depletion loans and investor cash flow loans.
Bank statement loans
A bank statement mortgage is growing in popularity among those that do not receive a traditional tax return to verify income. This type of loan is ideal for anybody who is self-employed, a freelance worker, or a gig worker, who makes a significant and steady income but a tax return does not show proof of it. With a bank statement loan, a borrower provides 12 to 24 months of personal or business bank statements to prove income in lou of pay stubs. Some bank statement loans can offer down payment options as low as 10%.
Asset depletion loans
This type of loan has several names including asset depletion loan, asset utilization loan, and asset-based mortgage. This type of loan is a good alternative to stated income and is not only for those who are self-employed. An asset loan does not require employment verification and a borrower does not even need to have proof of steady employment. This mortgage program allows a borrower to qualify for a loan using proof of their current verified liquid assets. This is a great and popular option amongst retired individuals.
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Investor cash flow loans
This type of loan is designed for anyone who plans to generate some form of income from the property they plan to purchase. With this type of loan, a borrower can use proposed steady rent income numbers to purchase a property. Or they can use proof of current rental income numbers to refinance an investment property. No employment or personal income information is required to qualify for this type of loan.
If you are needing a less than a traditional loan because you have less than a traditional means of income, and are interested in alternative stated income loan options abd mortgage options in Mission Viejo and California please contact me anytime.