Stated Income

Every borrower has different circumstances. This we know. It is also true that many people may have difficulty adequately verifying their income, perhaps because they are self-employed or run a business that brings in a fluctuating profit from month to month. For whatever reason, it can often be difficult for some borrowers to place a dollar figure on their income and provide the documentation to back up their claim.

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Fortunately, there is an option to help these people. Stated Income, Verified Asset (SIVA) loans are a type of low doc loan that allow borrowers to qualify without the need to produce as much documentation of their income as would be required with a full doc loan.

In order to qualify for a Stated Income loan, a borrower is required only to disclose their 2-year employment history, state their monthly income on the Uniform Residential Lending Application (Form 1003) and provide copies of bank statements to the lender. The lender will not verify the borrower’s statement of income, though they may compare the claim to the industry average level of income for the borrower’s job. If the income claim greatly exceeds the industry average the application could be denied on the strength that the income claim may be fraudulently overstated.

In most cases, the interest rate on a Stated Income loan will be higher than that of a full doc loan, and slightly lower than that of a no doc loan. This is due to the additional level of risk the lender must assume in lending to a borrower with an unverified income. Unfortunately, it’s just one of those things a self-employed borrower must accept in order to qualify for a loan.