proof of income for mortgage self employed

There are a lot of people out there seeking a mortgage that don’t qualify based on the documents needed from the big banks.  You may have heard the phrase “stated income loan” or “stated income mortgage” and wondered if that’s still a thing or what it actually means.  “Do they really just let me state my income, and I’m approved?”.  There’s more to it than that, but I can get you up to speed.

Hey there, Phil here from A Nightmare on Loan Street Blog.  I know that some of these terms can be intimidating - like last weekend when I tried to read the menu at a French restaurant to my date (it’s pronounced es-car-GOH by the way) - but don’t worry, I have your back.

I know you may have already tried to get a loan from a big bank, only to hear someone named Carol shoot you down when it came time to get things moving.  Now you’re searching for an alternative.  Cool, let’s review an alternative called a stated income loan.

So what is a stated income loan?  It’s a loan that uses alternative documentation to verify your income.  

I know that Carol likely asked for paystubs, tax returns, and W2s going back a few years, but that’s just not in the cards for everyone.  And you don’t want to give up if a big bank shot you down.  Did Zack Morris give up on Kelly Kapowski when she started dating that guy Jeff from UCLA on Saved by the Bell?  No, he most certainly did not.  If you’re like me and watched that show ’til the bitter end, you’ll know that Zack and Kelly got married.  Persistence is key, whether it be seeking an alternative loan or dating Kelly Kapowski.

Who might benefit from a stated income loan?  More people than you might think.  

Here are some examples:

• Self-employed with low taxable income
• New business owner doing well, but in business for fewer than 2 years
• Those with seasonal income
• Those who may have recently decided to leave a royal family

You’re probably itching to know what paperwork you actually DO need to provide to get a stated income loan if W2s and tax returns don’t tell your financial story.  The answer is that it will depend on the lender and your exact situation, but you can generally expect to provide 12-24 months of bank statements and/or your business’ P&L.  Some lenders also require an original poem in iambic pentameter.  Technically, that part is not true, but it probably wouldn’t hurt.

Well, this crash course on stated income mortgages has come to an end.  No need to give up or be intimidated by that term anymore.  But I wouldn’t suggest ordering the escargot.  You’d be eating snails.