Can You Still Get a Stated Income Mortgage?

By
Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

Can You Still Get a Stated Income Mortgage?

 

Believe it or not, the calls come in.  "Do you guys still do stated income loans?"  Still?  Seriously, a lot has changed in ten years, but in the home lending building perhaps there has not been a more pronounced departure than the Elvis of all mortgages, the stated income loan. 

 

Basically, these creatures roamed the earth and skies during the pre-real-estate-downturn era and allowed a borrower to state what he made in income per month.  To state the amount of money he had available for a down payment.  And even to state what he did for a living.  All of this changed with the Dodd-Frank Wall Street Financial Reform Act (Dodd-Frank), and without getting technical, the core provision in this law is "ability to repay," or ATR.  Today, if lenders don't prove that a borrower can repay the loan they are making, then a lot of bad things can happen to the lender.  And if bad things can happen to a lender, then you know that's gonna flow downhill to the person looking to purchase or refinance --- namely, you, the borrower.

 

So, no.  Stated income loans don't still exist.  At least not in the traditional sense.  But in the new world, lenders do have some very viable and attractive ways to determine ATR by alternative measures and I've outlined the three most common below.  These programs address the reality of the borrowing public, especially the self-employed, who often file their tax returns in a manner that reduces income and maximizes expenses --- for good reason and within the letter of the IRS law.  To prevent these otherwise creditworthy borrowers from being shut out, today's substitutes for stated income loans might involve some or all of the following characteristics:

 

Asset Depletion

An asset depletion loan allows a buyer or borrower to leverage his/her cash equivalents, investments and sometimes even retirement accounts to derive a hypothetical income stream that can be used for qualifying.  These assets do not need to be moved or liquidated, just documented.  For those who have sufficient net worth but insufficient traditional qualifying income, an asset depletion loan (also known as asset-backed, asset utilization, asset amortization, etc.) can prove an ideal solution.

 

Bank Statement Qualification

Business owners who show strong income into their business may want to consider a bank statement loan as an alternative to a stated income loan.  For a bank statement qualification, we will typically examine 12 months of business bank statements.  We'll total all of the legitimate business deposits and we'll apply an expense ratio to that sum.  The resulting figure is the qualifying income.  For those who "write off" a lot of business income on tax returns, a bank statement loan may circumvent that age-old challenge, because for these programs, no tax returns are required.

 

Debt Service Coverage Ratio (DSCR)

For the real estate investor who will struggle with a conventional mortgage qualification, we now have the debt service coverage ratio, or DSCR, home loan option.  This program looks at the property's income and nets out the housing payment on it.  As long as the ratio is positive (and all other qualifying criteria are met), we have a deal.  

 

While the sun may have set on the Wild West days of stated income, the home lending industry has come a long way back to offering attractive alternatives to the alternative borrower.  Not all loan professionals have access to these options and fewer of those are fluent in the approval parameters.  If you need help with a bank statement loan, an asset qualifying mortgage or a DSCR program, get in touch at any time.  We are experts in these and look forward to being of service.

 

In a new loan state of mind, 

 

 

Robert J. Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

 

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate's Human Resources Department.

 

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood ChicagoIL 60613 - (866) 934-7283

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Barbara Todaro 08/29/2019 02:54 AM
  2. AC 808-321-1628 08/29/2019 11:26 AM
Topic:
Lending / Financial
Location:
California Riverside County
Groups:
Active Rain Newbies
Realtors®
Diary of a Realtor
CALIFORNIA DREAMING
Bananatude
Tags:
home loan
assets
qualify
stated income
dscr
ninja
mortgage
sisa
bank statement
liar loan
asset depletion

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Ambassador
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Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

The stated income loans are what caused the housing crash in 2008 in my opinion.

Aug 28, 2019 11:28 AM #1
Rainmaker
3,209,288
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

There are a lot of business owners who need those products. They are hard working and do pay their bills. Working n foreclosure the majority of REO's I worked where from the 80/20 loans. People had no skin in the game and walked away. Those self employeed with 20 to 30% down, fought to keep their homes.

Aug 28, 2019 12:22 PM #2
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Anna Banana Kruchten CRS, CRS, Broker, Instructor
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Hi Rob I for one hope we never see those stated income days again.  You've got am interesting array options for buyers that aren't the typical buyer. Thanks for sharing the ideas - very helpful.

Aug 28, 2019 03:38 PM #3
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Rob- you have a wonderful way of explaining things that people like me can understand. 

Aug 28, 2019 04:19 PM #4
Rainmaker
803,069
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Liar loans and stated income loans are not the same thing. Liar loans will work out badly as we saw dramatically demonstrated during the not-too-long-ago recession.

I used to be a bank manager. I, too often, was approached by a good depositor with good credit, strong balance sheet, good assets, a homeowner who drove a new or newer car and who wanted a loan of some kind. The applicant's tax return was professionally prepared to minimize tax liability which meant that the tax preparer took all possible means to reduce the individual's taxable income. As a banker, it was difficult to make a loan to that excellent depositor because the tax return did not reflect a cash flow adequate to service the debt. Unless the depositor had an accountant who could prepare a personal income statement to satisfy the bank's credit department, that loan request was most likely declined.

Stated income real estate loans were created to serve that borrower. They were given to those who had a decent down payment and the property was taken as collateral. When stated income loans were subsequently approved for those with no substantial income, little or no assets, little or no down payment and no or poor credit...well,..we know what happened.

Aug 28, 2019 07:04 PM #5
Rainmaker
5,444,354
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Rob Spinosa what a great explanation, especially for "bank statment loans"..... I'll be sharing this post with others in my SOI...

Aug 29, 2019 02:51 AM #6
Rainmaker
2,230,487
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

In Rob Spinosa I trust. Serious buyers should too. 

Aug 29, 2019 05:00 AM #7
Rainmaker
21,409
Mike Easton
Movement Bank - Charlotte, NC
Creative lending solutions from coast to coast

Hey Rob please call me ASAP I have a possible client for you to cash out refi in CA. Had a discrepency with an appraiser and my go-to non QM lender WONT budge on this... I have 2 $3M appraisals for these guys, 24month bank statement loan 75% LTV. 585-749-8848 this is THE hottest and easiest referral you'll ever get I'm sure haha

Aug 29, 2019 05:57 AM #8
Rainmaker
1,854,525
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

This is great information to share with buyers in the DC area! Do you write loans on the East Coast? 

Aug 29, 2019 06:06 AM #9
Rainmaker
1,427,647
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Rob Spinosa - I can see why this post was featured. You have provided a lot of good information for self-employed folks looking for loans. 

Aug 29, 2019 08:09 AM #10
Rainmaker
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

The mortgage industry has evolved greatly since pre-recession/downturn days, no doubt about it Rob Spinosa ... and you illustrate beautifully why that was necessary.  Out with the old ... in with the new more credible/reliable loans that assist those of non-traditional lending need.  For me, one of the best changes regarding mortgages has been that they are truly more "individualized" and personal to the individual applying for them.  Typically, if the need is true and the facts support it ... a loan can be successfully completed/written.

Great post, Rob!

Gene

Aug 29, 2019 09:24 AM #11
Ambassador
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MichelleCherie Carr Crowe Just Call...408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

Thank you for sharing about these non-traditional mortgage options.

Aug 29, 2019 01:26 PM #13
Rainmaker
3,735,880
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Rob - it seems that there is no end to questions that are asked and when it comes to the world of mortgages - finding the right professional makes a difference.  

Aug 30, 2019 09:17 AM #14
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Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hey Rob:

Great information and education in your post! These loans that were funded in the past were pretty scary!

Jeff

Aug 30, 2019 10:51 PM #15
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Thanks for this Rob. It amazes me that people still inquire about these types of loans. You would think...???

Aug 31, 2019 08:28 AM #16
Rainmaker
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Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

Great info and something many self-employed will be glad to know.

Aug 31, 2019 10:26 PM #17
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

GREAT information, Rob! Just catching up on AR reads and this is one of the best I've read today. Thank you for sharing this.

Sep 08, 2019 11:50 AM #18
Rainmaker
3,694
Moshon Reuveni
Private Lending Company - Burbank, CA

It is possible to get a 100% stated income as of January 2020  several lenders offer to arrange stated income loans however those loans are restricted to 75% Loan to Value and the interest rate is about 1% higher than conventional loans for owner-occupied properties. Also, a minimum Fico of 700 is required.  Non-owner occupied properties get hard money loans with rates between 6.5% to 11%. The Stated income market is extremely fragmented and you can find a wide gap between rates and among the underwriting qualification requirements.     The list below is for Non-Qm lenders they most of their programs require some kind of ATR other than tax returns :  

ACC Mortgage
Angel Oak Mortgage Solutions
Arc Home LLC
Axos Bank
Caliber Home Loans
Carrington Mortgage Services, LLC
Citadel Servicing Corporation
Deephaven Mortgage
First National Bank of America
Greenbox Loans, Inc
HomeXpress Mortgage Corp
Impac Mortgage Corp.

Lendersa Inc.
Paramount Residential Mortgage Group, Inc
REMN

Jan 27, 2020 09:51 AM #19
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Rob Spinosa

SVP of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?
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