Can I Get a Stated Income Loan?

If you’re self-employed or have a hard time proving your income for some other reason, a stated income loan or a stated income home equity loan probably sounds ideal. After all, you don’t have to bother with digging up lots of paperwork to get the money you need. Finding and providing paperwork is a time-consuming process for the average person, so it’s easy to imagine how the task could be nightmarish for someone who doesn’t have a traditional day job. If you need money urgently, you might not also not have time to bother with digging up all your documentation.

Can I Get a Stated Income Loan?

Even if a stated income loans sounds like the answer to all your problems, there is no guarantee you can actually get one. People who are granted approval on loans like these generally have decent credit scores. If your credit is bad or even fair, you probably won’t get approval for a stated income loan. This might seem unfair, but you have to look at it from your lender’s point of view. They need to loan money to people whom they are sure will repay them. If you have a history of not paying back your debts, this tells them you might not be trustworthy. Not asking you to provide documentation before handing you money is taking a chance — even if you have good credit. Your lender would probably prefer to take such a chance on someone who clearly pays their bills on time as opposed to doing so with someone who does not.

Will My Lender Find Out If I’m Dishonest?

Your lender will probably find out eventually if you lie about how much money you actually make, and when this happens, you could get into serious trouble. It’s not worth it to take the risk. Be as honest as you can when you report your income, and keep in mind that even though your lender won’t ask for proof of your income up front, they still have the right to request documentation from you at any time and for any reason.

Are There Any Disadvantages to Stated Income Loans?

Getting no doc loans isn’t exactly ideal in spite of the simplicity of the process. Even if you have good credit, you’re probably still going to get a higher interest rate than if you provided all the necessary paperwork. This is because of the risks involved in loans like these. According to the New York Times, many well-known mortgage companies lost millions of dollars in big part thanks to stated income loans and dishonest borrowers recently. The high interest rate charged helps to compensate somewhat for the potential chance the lender is taking by not asking you to provide the proper documentation. For this reason, stated income loans are probably best reserved for people who truly do have a hard time proving what they earn. If you can easily prove your earnings but just don’t want to because digging up the paperwork is a time-consuming process, it might be best to dig up your papers anyway so that you can be sure you’ll get the best possible deal on your loan.