What is a Stated Income Loan?

A stated income loan allows borrowers who are filling out mortgage applications to skip the actual income verification process that requires borrowers to produce tax returns and pay stubs. Instead they just write in the amount of their income. 

How Does a Stated Income Loan Work?

Although the stated-income loan was designed for self-employed borrowers faced with incredibly complicated tax schedules, it has become popular with any borrower who is seeking easy loan qualification. Unfortunately, the lack of verification results in many borrowers stretching the truth when it comes to their monthly incomes.There are two kinds of state income loans. 

The SIVA Loan is also referred to as the stated income loan/verified asset loan. With this type of loan you can fill out the application estimating your monthly gross income and back it up by providing a bank statement.

The SISA Loan is often known as the state income loan/stated asset loan. This loan gives you as the borrower the opportunity to estimate both your assets and monthly gross income. Unlike the SIVA loan, the lender will not ask for any verification. The lender, however, will verify employment. If you are self-employed they will verify through your CPA.

No-income-verification loans are high-risk for lenders but are understandably popular with borrowers. With the fallout from the sub-prime crisis, however, these loans have largely fallen out of use.