Stated Income Mortgages

Stated Income Mortgages: Simplified Documentation for Self-Employed Borrowers

Stated income mortgages provide mortgage financing for self-employed borrowers using stated income instead of traditional documentation.

This alternative documentation method recognizes that legitimate business deductions often reduce reported income while your actual earning capacity remains strong.

For self-employed professionals, business owners, and independent contractors, stated income mortgages can offer a path to homeownership when traditional lenders cannot accommodate them.

What is a Stated Income Mortgage?

Definition

A stated income mortgage is a specialized loan program that allows self-employed borrowers and business owners to qualify for a home loan by stating their income without providing traditional income documentation like tax returns or pay stubs.

How it works

Instead of requiring traditional income documentation, these loans allow you to state your income based on your actual earning capacity. Lenders verify your income through alternative methods like bank statements, business documentation, or asset verification.

Key advantage

Stated income mortgages bridge the gap between your reported income on tax returns and your true financial capacity, making homeownership accessible to self-employed professionals who have strong earning potential but face challenges with traditional income documentation.

Another Lender for Novus Home Mortgage

Coby MatushNMLS Verified

Loan Officer

Novus Home Mortgage

NMLS #1531494

20225 Water Tower Blvd, Suite 400, Brookfield, WI 53045

Email: cmatush@novushomemortgage.com

Phone: 724-787-7778

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How Stated Income Mortgages Work

A stated income mortgage uses your stated income instead of traditional documentation to verify income. You typically need proof of business ownership, 680 credit score, and 15% down payment. This program may be suitable for self-employed borrowers who were denied conventional mortgages due to low reported income from business deductions.

Basic Stated Income Mortgage Eligibility

You may be eligible for a stated income mortgage if you have:

• Proof of business ownership
• 680 credit score
• 15% down payment
• 2 years in business

Common Stated Income Mortgage Eligibility Requirements

Credit score:

680 FICO score

Down payment:

15%

Business history:

2 years in business

Documentation:

Proof of business ownership and supporting documentation

Loan amounts:

Up to $2,500,000

Reserves:

6 months of reserves

Mortgage history:

Typically no mortgage lates in the past 12 months

Bankruptcy/foreclosure:

Typically no bankruptcy, foreclosure, or deed-in-lieu in the last 4 years

Income verification:

Stated income with supporting documentation

Gift funds:

Allowed for primary residences

Why You Need Another Lender

If you've been denied a mortgage despite having strong income, you're not alone. Many traditional banks simply don't offer programs designed for self-employed borrowers. They rely on standard documentation like tax returns, which don't tell the full story of your financial health.

Your first bank just doesn't offer the right program for you.

Think of it like when a customer asks for something your business doesn't offer. Maybe they want delivery but you only do pickup, or they need a service you don't provide. You're not saying no because there's anything wrong with them—you just don't offer that particular service. Same with mortgages. Traditional banks work great for most people, but they don't offer the programs that self-employed borrowers need.

Traditional banks use conventional underwriting that works well for W-2 employees but struggles with self-employed income. Your business deductions are smart financial planning, but they reduce your reported income on paper. Conventional programs see this lower number and can't approve you, even though your actual earning capacity is strong.

Stated income mortgages are perfect for self-employed professionals who have strong earning capacity but low reported income due to legitimate business deductions, run successful businesses but face traditional lender roadblocks, or want to buy a home but keep getting told "no" despite solid finances.

This isn't about finding loopholes or gaming the system. It's about working with lenders who understand how self-employed income actually works. Stated income mortgages are offered by lenders who work with self-employed borrowers every day. They look at your actual earning capacity—the income you can actually generate—rather than what shows up on your tax returns.

For a no obligation conversation about your mortgage, contact Coby Matush (#1531494) of Novus Home Mortgage at 724-787-7778.

Example Use Cases and Scenarios

How Do Stated Income Mortgages Work?

Stated income mortgages follow the same basic mortgage process as conventional loans, with one key difference: income verification. This alternative documentation method allows self-employed borrowers to qualify using their stated income instead of traditional documentation.

The Stated Income Mortgage Process

1. Income Statement & Documentation Process

Instead of tax returns and W-2s, you provide a stated income figure based on your actual earning capacity. The income verification process begins with income statement where you state your actual income, followed by supporting documentation review where lenders examine bank statements, business records, and other financial documents. Lenders then complete the income verification through alternative methods such as asset verification and business documentation analysis. This process typically results in much higher qualifying income than traditional tax return analysis.

2. Standard Mortgage Process

Everything else follows the same process as conventional loans: credit check with minimum 680 FICO score, property appraisal using standard residential appraisal, title search to ensure clear property ownership, and standard mortgage documentation including loan application, disclosures, and insurance requirements. The only difference is how your income is verified - everything else uses identical underwriting standards and consumer protections.

3. Underwriting

Experienced underwriters review your complete profile using the stated income verification instead of traditional income documentation. They assess your creditworthiness including payment history and debt-to-income ratio, property value through appraisal and market analysis, and ability to repay based on your stated income and supporting documentation. The underwriting process includes the same risk assessment, just with alternative income verification.

4. Approval & Closing

Once approved, the closing process is identical to conventional mortgages. You'll sign the same documents including promissory note, deed of trust, and closing disclosure, pay the same types of fees such as origination, appraisal, and title insurance, and receive the same level of consumer protection including RESPA disclosures and right of rescission for refinances. The loan terms, interest rates, and repayment structure follow standard mortgage industry practices.

Real-World Example: Stated Income Mortgages

Benefits & Considerations

Stated income mortgages offer significant advantages for self-employed borrowers, but they also come with important considerations to weigh.

Frequently Asked Questions About Stated Income Mortgages

Get answers to the most common questions about stated income mortgages. Whether you're wondering about qualification requirements, documentation needs, or how the process works, we've covered the essential information below.

Next Steps: Continue With Your Mortgage

Stated income mortgages may provide a path to homeownership for self-employed borrowers turned down by traditional lenders. Our listed loan officers understand self-employed challenges and can help determine if this program might fit your situation. They'll review your stated income, assess eligibility, and guide you through the process.

For a no obligation conversation about your mortgage, contact Coby Matush (#1531494) of Novus Home Mortgage at 724-787-7778.