When it comes to qualifying for a loan, you may feel like you’re dealing with so many different obstacles. After all, you must prove to the lender that you will be able to afford what you borrow. Wouldn’t it be nice if they would just trust you? At one time, lenders were able to do that through what is known as a stated income loan. Borrowers were not required to document their income. Here’s how stated income loans worked, the target borrower, and how they are still around today.

Using a Stated Income Mortgage Loan

A stated income mortgage loan is known for the lax regulations. Instead of providing documentation of their income, borrowers were only required to state their income. This led to these loans being known as “liar loans”.

These types of loans sound risky- but allowed self-employed borrowers who did not have the necessary documentation due to variable income, to get a loan. That being said, these loans primarily rely on credit scores.

Are they still available?

This type of loan was highly popular in the early 2000s. However, since the approval methods are so lax, they were a contributing factor to the housing market crash in 2008. Due to the Consumer Protection Act and the Dodd-Frank Wall Street Reform of 2010, borrowers are no longer able to use this type of loan for an owner-occupied property. However, they are still available for investors who are looking for property.

That being said, the acts mentioned above reformed stated income loans. If you need funding for an owner-occupied property, you can use bank statement loans.

Property Investors can use Stated Income Loans

As mentioned, stated income loans have not completely gone away. Borrowers such as real estate investors and landlords can qualify for loans without having to come up with documentation for their income. Since the property is not owner-occupied, borrowers have the option to use this type of funding.

However, some borrowers are more ideal than others. For example, rental property owners and house flippers may find the most benefit by using this funding. The loan can be used to fund another property and improve cash flow or to do any required remodeling.


Though stated income loans are not available to those who are purchasing owner-occupied properties, there are still options. If you are self-employed and want to explore those options, contact BT84 Commercial Capital & Business Solutions. We can help by giving you all of the information you need to find the best fit for your financial situation.