Most potential homeowners have been given the idea by the media that the only kind of loan available for the purchase of housing are the safe home loans known as qualified mortgages. These mortgages are the ones which have strict guidelines about proof of income, debt to income ratios, and proof of income which is supported by tax returns. Some alternative lenders have stepped up to provide another option however, which is known as the stated income loan.
What are stated income loans?
Stated income loans are those which do not require the potential homeowner to demonstrate proof of income via tax returns. Of course, it will still be necessary to show that you can afford to purchase a home, and the most generally accepted kinds of proof are bank statements. This kind of documentation generally shows clearly what all sources of income are for the household, as well as how much of a cash reserve is available to the borrower, should income suddenly be interrupted.
Qualifications for a stated income loan
In order to qualify for this type of loan, the borrower should typically have a score of 700 or better, although some alternative lenders will accept a score of at least 620. Most lenders prefer to see a cash reserve on hand which could handle making 12 months of payments, in the event that income is stopped for some reason. It will also be necessary to provide a down payment of at least 20% of the total home cost, and it is more typical in such cases that a 30% down payment would be required. You can expect when working with stated income loans, that the interest percentage rate will run approximately .5% to .75% higher than rates for standard qualified mortgages.
Loans from Vankeith Commercial Capital
If your business lacks the funding necessary to take that next step on the ladder of business growth, we may be able to help you. Contact us at Vankeith Commercial Capital, and together we can explore ways for you to secure the funding you need.