Using Stated Income Loans in COVID-19
Many investors of apartment complexes rely on stated income loans to purchase, rehab, or fund property changes. This is how they can use their portfolios and business income to fund loans versus the traditional methods. Lenders are tightening approval restrictions in response to the economic crisis created by COVID-19. Fortunately, many may still get fast financing approval with this type of loan. Learn about new changes to stated income loans during COVID-19 from Commercial Mortgage Depot (CMD) in New York, New Jersey, Connecticut, and Pennsylvania. Contact our offices in Clifton, NJ today!
Approvals for Stated Income Loans
Stated income loans are quite simple. To get approved, you can provide bank statements on investments and owned businesses. You can use this type of mortgage for purchase or for renovation mortgages. Even before the pandemic crisis, these loans faced more scrutiny since borrowers do not provide a W-2 or taxes to show stable employment. Recently lenders have begun to hike income verification standards for loans using stated income.
One change lenders have made is to require very recent statements of income. They will now ask borrowers to submit a profit-and-loss statement as well as their two most recent months’ worth of business deposit account statements at the time of application. They prefer to see less debt than usual and feel more comfortable with a larger cash down payment. If you are higher risk, than you may pay a higher interest rate. However, you can always negotiate, especially if you have good credit.
New Documentation Requirements
Fannie Mae has issued more guidance for documentation requirements with self-employed loans. Lenders now require that their business will be open and operating within 20 days of the closing of the loan. Many changes Fannie Mae made are temporary, but still, lenders will need to grapple with uncertainty for some time.
Borrowers must prove recent income and provide ways to show it will remain viable into the future. Fannie Mae also required audited profit-and-loss statements for the year to date, including the month before the date on the loan application; the closing date on the statement cannot be more than 60 days before the loan application date
Finding Ways to Continue Business
Despite all of this, stated income loans remain a great way for investors to get approved for financing. Many will get declined from another type of loan program for insufficient documentation of income. Many companies can use manual underwriting and find creative ways to underwrite your loan even in the uncertainty. Stated income loans are also ideal for people looking to use their assets to get into real estate investing. Commercial Mortgage Depot (CMD) has fast approval for stated income loans on properties in New York, New Jersey, Connecticut, and Pennsylvania. Our team in Clifton, NJ is standing by to help!
