Stated Loans 101
Which type of stated-hybrid loan you need will
depend on whether you're employed, self
employed or.not employed. Whether you can or
can't show asset statements. AND what your
credit scores are. The higher your score, more
than likely, the less you'll need to provide.
There are many "hybrids", but I have outlined
several basic types of stated loans below:
#1 - Stated Income / Verified Asset Loan (SIVA or NIV) - With this basic
alternative documentation loan, this usually means that you will be asked for proof
of assets. What the underwriter is looking for is that the deal "makes sense". If you
are stating that you make $100,000 per year, yet you only have $800 in the bank,
that doesn't make sense. Also, if you state that you make $100,000, but your
position title doesn't really warrant that type of pay, that doesn't make sense either.
Additionally, it is necessary for this stated loan program to require some type of
documentation showing that you are self employed. If you are employed, a
verification of employment (VOE) will be required, with no reference to income.
Commonly accepted self-employment documentation includes: a business license,
incorporation papers, or DBA listing you as sole proprietor. Common needs for the
stated income loan are hard to prove or alternative sources of other income.
#2 - No Ratio - This is in all aspects, but one, the same as the SIVA loan. The
exception is that instead of the income being stated, or named, on the application,
the income figure is left completely blank. This loan does require asset verification
for reserves. Although, like the SIVA, it requires a reasonability test for the
applicant's position to make sense for the income necessary to qualify, the
reasonability test is much more generous. Many times, for example, this is a great
accommodation for the person with better scores who does not make as much as
his/her spouse, where the main income producing spouse has lesser credit scores.
#3 - High Net Worth Loan - In this type of program, the applicant will be required
to produce asset statements for consecutive months with ample money to cover a
fixed period of the proposed fully amortized mortgage payments. With this program
it is not necessary for the individual to have or to provide proof of self-employment
or employment. However, you will still have to show that you have significant money
in the bank. Often, instead of a "make sense" test that is left up to the underwriter's
human discretion, under this type of program, the dollar amount that needs to be
verified is fixed as part of the program - such as a year's worth of your new
mortgage payments. This is an excellent program for the retired or self-made
person of high net worth.
#4 - Stated income / Stated assets (SISA) - With this program there is no
verification of either income or your assets. This loan is, again, similar to the SIVA
loan with the exception that assets are not verified. Again, this can be an
exceptional program, for example, for the individual whose spouse has asset
accounts in his/her name and whose "actual" employment, or self employment,
income is difficult to prove because of potential alternative payment methods.
#5 - No income / no asset (NINA) - Very much similar to the No Ratio program
above, instead of having you state an income that will qualify you instead leave all
dollar figures for income and for assets completely blank. A reasonableness test is
given and it is up to the underwriter's discretion but, like No Ratio, that test is much
more generous. A verification of employment or self-employment, with no reference
to income, will still be required. There will be no verification of assets required. This
program typically requires a higher qualifying credit score, but is useful, for
example, for those who are concerned about asset protection and/or are being very
careful not to disclose to anyone what assets they own or how much they make.
#6 - No documentation - (true no doc loan) - This program is similar to the NINA
but, instead of a verification of employment or self employment, the employment
section is left blank. Therefore, no income, asset or employment is stated or
documented. Again, this program typically requires higher scores but is an excellent
option for the non-disclosure of income and assets to the lender. This loan is has a
great use for the individual who has no documented sources of employment/self employment,
has no documented sources of income or prefers to disclose no
income and asset information for reasons of personal privacy.