Finding a stated income home equity loan can be challenging but their are 2nd mortgage lenders out there that do offer bank statement and reduced documentation mortgages in 2024. Are you tired of being denied a loan because you are self-employed? Are you tired of explaining how your income fluctuates?
At Home Equity Mart, our number one goal is to help our customers find the right home equity loan,. We will match you with banks and lenders that offer limited and no income documentation loan programs. In this article we will explore stated income loans, no doc mortgages and bank statement loans for people with all types of employment.
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Can I Get a Stated Income Home Loan?
Many homeowners have enjoyed rising home values in recent years after the pandemic. With higher home prices, homeowners may have hundreds of thousands in equity to tap for home improvements, paying down debt, or funding a college education.
Homeowners often prefer taking out a home equity loan in our higher rate environment in 2024 than a cash-out refinance. Current mortgage rates for 30-year fixed mortgages may be higher than homeowners already have, so a home equity loan may be the ideal option to tap the cash they need.
But what if you have sources of alternative income and don’t have a regular W-2 job? Can you still get a home equity loan? It depends. More lenders are offering loans for people with alternative income sources. One of these options is a stated income home equity loan. Find out more about this unique loan product below, and speak to one of our loan officers if you want to learn more.
State Income Home Equity Loan Overview
A stated income home equity loan allows a homeowner to tap their equity without offering the lender regular documentation to prove their income. If you qualify, you may receive equity you need to pay for anything from credit card debt to home improvements.
A stated income home equity loan is an ideal loan vehicle for people who are self-employed, retirees, and those with alternative work schedules. Some of the benefits of a stated income home equity loan are:
• Simplified application process that is faster than regular mortgage applications.
• The money can be used for almost any purpose, such as home repairs, college expenses, or debt consolidation.
• Access to credit based on your home’s value.
• Standard income verification isn’t needed, which can be beneficial for those without paystubs and W-2s.
To quality for a stated income home equity loan, you generally need:
• To own a home with at least 20% equity.
• Have a high credit score.
• Offer proof that you own the home and live there.
Stated Income Loan Income Verification
A key difference between a stated income home equity loan and a traditional loan is the income verification process. A regular mortgage requires you to offer more documentation of your income, including paystubs, employment history, and tax returns. The income verification process for a stated income loan does not require proof of income, which is good for those who are self-employed. This loan is also a good choice for those with irregular incomes, such as real estate agents and other sales professionals.
Some lenders may qualify your income based on your bank statements, while others may use tax returns or a combination.
State Income Loan Interest Rates
You can assume that the interest rate for a stated income home equity loan will be higher than for a regular mortgage. This is because the lender will consider the loan to be a higher risk than a traditional home loan. The interest rate will probably be fixed, but it will be a few points higher than more traditional loan options.
How to Qualify For a Stated Income Home Loan
Because you don’t have traditional proof of income, other aspects of your loan application will be critical to being approved:
Credit Score
Your FICO score will be important to your application. Every lender has different standards, but you will usually need a credit score of at least 680. Having a higher credit score will make it easier to be approved for any stated income loan. If you have a low credit score, it will be difficult to be approved for this loan.
Loan-To-Value And Amount Of Equity
The LTV is another important aspect of a stated income home equity loan application. Most lenders will let you borrow up to 80% or 85% of the home’s value. You should have at least 20% equity to qualify for this loan, but having more equity will increase the chances of being approved. When a borrower doesn’t have strong proof of income, the application is helped by having more equity in the home.
Self-Employed Borrower Qualifications
People who are self-employed and want a home equity loan may need to provide alternative document sources to prove their income. You may need to give tax returns, bank statements, and a profit-and-loss statement for approval. Also, you may need to prove that your business has been operating at a profit for at least two years.
Overcoming Stated Income Lending Challenges
Many homeowners in 2024 want to get a home equity loan to access the growing equity in the home. For many homeowners, doing a cash-out refi on the first mortgage won’t work because they have a lower rate now than they can get in a new loan.
This means that getting a second mortgage, such as a home equity loan, is the best way to access low-interest capital. If you have an irregular or nonstandard income, you will need to find a lender that offers a stated income home equity loan. Getting approved for this loan may be more involved than if you had a regular W-2 job, but more lenders are offering these stated income loans.
If you want to apply for a stated income home equity loan, our lending company can help you today. However, you should be prepared to offer us bank statements, tax returns, and/or a profit-and-loss statement to prove that you have the income to pay for the loan.
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Frequently Asked Questions on Stated Income Loans
Can I get a stated income loan with bad credit?
Stated income loans were designed for self-employed buyers and homeowners who do not qualify for a home loan due to low reported income on their tax returns. Self-employed individuals often use IRS tax codes to write off expenses, which reduces their reported income below the level needed to qualify for a mortgage or home equity loan.
What is stated income business loan?
Stated income business loans are funding options that do not require financial documents. Many lenders refer to these stated income loans as no doc or no documentation loans, these typically bypass the need for income verification, proof of assets, bank statements, and tax returns that lenders usually request.
What is a bank statement loan?
A bank statement loan allows borrowers to qualify for a home loan or 2nd mortgage using bank statements instead of tax returns. This type of limited documentation loan is most commonly used by self-employed borrowers. Not all mortgage lenders offer bank statement loans, so you may need to work with a Non QM lender or private mortgage broker to find one.
What credit score is needed for a stated income home loan?
There are not many options for stated income loans with conventional mortgage products today. To mitigate the risk taken by your mortgage lender, stated income loans typically require high credit score. Most stated income mortgage lenders are seeking a minimum credit score of 680 or 700. There are still a few non QM and private lenders that offer stated income loans to people with lower credit scores.
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