Stated Income Loans Explained: How They Work & Who Qualifies

Time Business News

16 hours ago

When it comes to applying for a mortgage, most of us are familiar with the routine—gather your tax returns, W-2s, bank statements, and every piece of paperwork you've filed in the last two years. But what if your income isn't easy to document in the traditional way? What if you're self-employed or have non-traditional income streams? This is where stated income loans come into play, and for many New Yorkers, they can be a game changer.
In this post, we'll break down what stated-income loans are, how they work, who can qualify, and what you should know before reaching out to stated-income mortgage lenders in New York. Whether you're a business owner, freelancer, or investor, this type of loan might offer the flexibility you need to get into your next home or investment property.
A stated income loan, sometimes known as a 'no income verification loan,' is a type of mortgage that allows borrowers to state their income on the loan application without having to provide traditional income documentation such as pay stubs or tax returns.
Instead of verifying income through documents, lenders look at other factors—like credit history, bank statements, property value, and down payment size—to assess your ability to repay the loan.
Originally created for self-employed individuals or those with variable income, stated-income loans are a unique solution for borrowers who may not fit the standard mold but are financially responsible and capable of managing a mortgage.
The process for applying for a stated income loan is somewhat similar to a traditional mortgage, with a few key differences.
Here's a breakdown of how it works: You Declare Your Income: On your application, you state your income based on what you actually earn—not what's reported on tax documents. This is especially useful for people who write off large amounts on their taxes. Lender Evaluates Other Criteria: Since you're not submitting income proof in the usual way, stated income mortgage lenders focus more on your credit score, debt-to-income ratio, bank statements, and down payment. They may also request asset documentation to see that you have enough financial reserves. Loan Terms Might Be Stricter: Because stated income loans carry more risk for lenders, you might face slightly higher interest rates or be required to put down a larger down payment—typically 20% or more. But that's the trade-off for flexibility. Property Type Matters: These loans are commonly used for investment properties, second homes, or self-employed primary residences. Some lenders may restrict their use to non-owner-occupied properties.
The biggest myth about stated income loans is that anyone can walk in and say, 'I make $200,000 a year' and walk out with a mortgage. That's not how it works. While the documentation might be different, lenders still need to feel confident that you can repay the loan.
Here are the types of borrowers who often qualify:
If you're running your own business or working as a freelancer, it's common to have a healthy cash flow that doesn't show up clearly on your tax return. A stated income loan lets you bypass this red tape.
Investors often have complex portfolios and multiple income sources. If you're buying a property in New York to rent out or flip, a stated income loan can streamline the financing process.
If you live off savings, investments, or retirement accounts, you may not have steady paycheck documentation, but that doesn't mean you can't afford a mortgage. Stated income loans can work for you too.
Even if you have significant assets, qualifying for a conventional loan can be tricky without a traditional income stream. Some stated income mortgage lenders offer 'asset depletion' programs that use your liquid assets to calculate income. Faster approval process due to less paperwork
Flexible for self-employed or those with complex finances
Allows for multiple income sources
Good for investment or rental properties
Can make homeownership possible when traditional loans say 'no' Typically requires a higher down payment
Interest rates may be higher than traditional loans
Not available through all lenders
Can be harder to qualify for if the credit score is low or debt is high
Not all lenders offer stated income loans, especially in states like New York where the mortgage market is competitive and regulations are tight.
Here are a few tips to find the right stated-income mortgage lenders: Experience matters: Choose lenders who specialize in non-QM (non-qualified mortgage) or alternative documentation loans.
Choose lenders who specialize in non-QM (non-qualified mortgage) or alternative documentation loans. Ask about requirements: Every lender has different criteria. Some might accept 12 months of bank statements while others require 24.
Every lender has different criteria. Some might accept 12 months of bank statements while others require 24. Review the terms: Compare interest rates, closing costs, and down payment expectations.
Compare interest rates, closing costs, and down payment expectations. Work with mortgage brokers: They can connect you with niche lenders that offer customized programs for self-employed borrowers.
Yes, stated income loans are still available in 2025, especially in high-demand areas like New York where many borrowers are business owners, freelancers, or investors. However, these loans have evolved since the 2008 financial crisis. Today, they fall under what the industry calls Non-QM loans, which means they're not backed by Fannie Mae or Freddie Mac but still follow certain standards for responsible lending.
If you're considering a stated income mortgage, it's important to work with a lender who understands the local market and your financial situation.
Stated income loans can be a great option if you're financially stable but don't meet the traditional definition of a 'qualified borrower.' Whether you're self-employed, investing in property, or navigating complex income streams, these loans offer flexibility that a standard mortgage can't.
That said, they're not for everyone. It's essential to evaluate the interest rates, terms, and down payment requirements before making a decision. Most importantly, work with a knowledgeable lender who specializes in this area and can help you navigate the process with clarity and transparency.
If you're in New York and are looking to explore your mortgage options, including stated income loans, reach out to a trusted team that understands your needs. For expert advice and access to flexible mortgage solutions, visit Starr Mortgage Company—your partner in making smart, customized home financing a reality.
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