If you are a small business owner or a contractor that is looking for a loan, you should consider a stated income loan. The problem that most people who are self-employed have when applying for loans is proving income. Because you work for yourself it is difficult to get the traditional W-2s or pay stubs that are usually required for loans. Stated loans allow the borrower to simply state their income and show the past few years worth of tax returns in the loan application.
Due to recent abuse of stated loans, many lenders have increased the lending criteria regarding these loans. You used to be able to apply for a stated income home mortgage with a bad credit rating a no down payment and get approval. Those days have come and gone. Many borrowers with poor credit have ended up defaulting on a lot of their stated loans. Because of this, many lenders have made it necessary for you to have a good credit rating in order to get a stated loan approved.
When it comes to apply for stated loans, the most important part of the application process is your credit rating. Because lenders are bearing a significant amount of risk with these loans, they want to ensure that borrowers have a good history of making payments on time and not defaulting on previous loan. Your debt to income ratio will be very important when it comes to lenders assessing your ability to repay your stated income loan back. Lenders want to see a debt to income ratio that is under 45% when they are assessing these loans.
If you are interested in applying for a Stated Income Mortgage then you should ensure that you have a good credit rating.