What is a Stated-Income Mortgage?

A stated-income mortgage is a "low-documentation" loan in which you're not required to provide documented proof of your income. You must have verifiable employment, and you must have assets.

Stated-income mortgages are great for small business owners, and people who work on commission or are self-employed. With this type of loan, your income doesn't have to be proven. The lender takes you at your word as to your stated income, and can only verify whether your reported income is in line with industry standards for your occupation.

Potential borrowers must have a mid- to high-level credit score, and must be able to verify assets. Most lenders require assets equal to six months of the stated income.

It's possible to get a stated-income mortgage with as little as 5% down, but you'll pay a higher interest rate. If you're able to put 20% down, your interest rate will only be an eighth of a point to a quarter of a point higher than that of a conventional mortgage.