Common Sense Underwriting for a Stated Income Loan

If you’re looking for a non-QM loan option that allows you to show your eligibility without the traditional documentation, a stated income loan might be the perfect fit. This is a creative financing solution that will allow you to work toward your goals in real estate even if you won’t qualify for the traditional loan options.

This is largely thanks to something called common sense underwriting. “We have become experts in creating solutions for our clients who are more than able to carry a mortgage, but wouldn’t qualify without the traditional tax documents. This might because you’re a self-employed borrower, a gig worker, or looking to use a non-traditional income source. Whatever the reason, we have solutions for you.” –Jackie Barikhan

What is a stated income loan?

Stated income loans are a type of mortgage that do not require the borrower to declare their income with traditional income verification documents like pay stubs, tax returns, or W-2s. These loans are designed for individuals who may have difficulty documenting their income, such as self-employed individuals, freelancers, or those with irregular income streams.

What is common sense underwriting?

Common sense underwriting is a flexible and holistic approach to evaluating loan applications, particularly for mortgages. Unlike traditional underwriting, which relies heavily on rigid formulas, algorithms, and strict criteria, common sense underwriting involves a more comprehensive review of an applicant’s overall financial situation and unique circumstances.

We use common sense underwriting to help you reach your goals in real estate, even with limitations that might make it impossible to qualify for a traditional mortgage. These are some of the key characteristics of common sense underwriting:

• Holistic Evaluation: Common sense underwriting looks at the full picture of your financial health. This includes considering your employment history, income stability, assets, savings, and even your personal story and future earning potential. We want to understand you as an applicant.
• Flexibility: This approach allows for flexibility in assessing applicants who may not meet traditional lending criteria but are otherwise financially responsible. For instance, if you are a self-employed individual with fluctuating income or someone with a short credit history but substantial savings, we may be able to qualify you based on those factors.
• Human Judgment: Our common sense underwriters use their experience and intuition to make decisions. They may look beyond the numbers to understand the reasons behind certain financial behaviors. For example, they might consider someone’s ability to manage their finances effectively despite having a few late payments due to an exceptional circumstance like medical issues or temporary unemployment.
• Case-by-Case Basis: Each application for a stated income loan is treated uniquely, with our underwriters considering the specific details and nuances of your financial situation. This approach helps us cater to diverse applicants who might be overlooked by a more rigid, algorithmic system.

Benefits of Common Sense Underwriting

There are a variety of benefits associated with choosing a stated income loan, and the common sense underwriting is one of them. These are some of the advantages of common sense underwriting:

• It’s inclusive: Common sense underwriting is particularly beneficial for applicants who fall outside the norm of traditional lending standards, such as gig economy workers, freelancers, or those with unconventional income streams. It opens doors for creditworthy individuals who might otherwise be denied.
• Personalized attention: Borrowers receive more personalized attention and understanding of their financial circumstances through common sense underwriting. We know that something as simple as a tax document doesn’t paint the full picture, but we can give you the attention and understanding you deserve.
• Accurate representation of you as an applicant: By understanding the complete financial picture, our underwriters can better assess the true risk of lending. This thorough evaluation can sometimes reveal strengths in an applicant’s profile that traditional underwriting might miss. Our years of experience with non-QM loans have taught us that many well-qualified applicants wouldn’t be able to qualify for a conventional mortgage.

Ready to learn more about applying for a stated income loan? Contact us any time or schedule a meeting with a loan officer to discuss a stated income loan or other financing options further.