Unlike most other forms of loans, stated income mortgage loans work on the basis of what you write on the application. You don’t need to prove your earnings or expenses, just write down what you earn and the lender works from those figures. So this can often lead to people not being completely honest when applying.

The lender is legally bound not to try to verify the amount the applicant writes down, so you can literally put whatever you want.

So Let’s Be Serious For a Minute

If you are thinking of applying for a stated income mortgage loan please be honest with yourself. You need to be truthful with the figures; otherwise you will pay for it in the long run. If you borrow too much and spend it all, you probably won’t be able to afford the repayments and will end up looking for another loan or even worse, going bankrupt.

The reason these loans were created in the first place was to help self employed people. Often people who are self employed cannot prove their income for various reasons, so these loans allowed them to get the mortgage loan without having to prove their income. This is called providing “Full Documentation”.

The IRS May Get Involved

In some circumstances, the lender may request the IRS to provide them with your last 2 years of tax receipts. This is quite rare and only usually done if fraud is suspected.

Another stipulation is that to qualify for these loans, you need to be employed by the same employer for the last 2 years. This just helps the lender to see that your income is stable and dependable. If you meet these requirements then you shouldn’t have any problems getting a stated income mortgage loan.

If you do apply for one, please be honest with yourself (and the lender)!