Stated Income Loan Program For Investors

Stated Income For Business Occupied

The Stated Income Loan Program for investment real estate is geared towards real estate investors who might not qualify for traditional financing based on their tax returns or who have been turned by a bank or other institutional lender. Because underwriting is based on a non-income verification structure, the lender does not review tax returns. Instead, underwriting is based on a combination of the property’s income as shown on its operating statements and the rent roll, as well as bank statements. Rates will also be based on guarantor’s credit score. Rental income seasoning requirements are also limited, making it an ideal program for newly renovated or recently re-tenanted properties. It’s a great loan program for smaller loans (under $1 Million) or for investors that need to close fast. Unlike traditional bank financing, the loan has up to a 30-year term with no balloon. Due to the low documentation and increased risk, lenders may require a minimum credit score of 650, though some lenders will provide exceptions for credit scores below this threshold. Underwriting requirements may also require the guarantor to have certain cash reserves (e.g., 6-months of loan payments). Rates and lender fees and costs are nominal compared to hard money lenders and unlike bank loans which can take several months to close, these loans can typically be underwritten, approved, and closed in a few weeks.

Program Overview

Loan Amount: $250,000 - $5,000,000
Term Length: Up to 30 years
Max LTV: Up to 75% (80% for Multifamily)
Amortization: Up to 30 Years
Interest Rate: Starting at 6.50%
Closing Time: 3 - 6 weeks
Use Type: Investment Real Estate
Recourse: Full Recourse

Pros And Cons Of Fannie Mae
Small Balance Loans

Pros

  • Low Rates & Costs
  • High Leverage (80% LTV)
  • Long Amortizations (30-yrs)
  • Cash Out Available
  • Variety of fixed rate products
  • Non-recourse
  • Limited Personal Financial
  • Flexible Prepayment Options
  • Assumable & Streamlined

Cons

  • Conservative Underwriting
  • Sponsor Liquidity
  • Requirement
  • Longer Closing Process
  • Property Must be Stabilized
Image

Pros and Cons

Pros

  • No tax returns
  • No balloon
  • Unlimited cash out
  • Quick approval
  • Fast closing time
  • Wide variety of property types
  • Limited or no seasoning required

Cons

  • Need fair credit score (650+)
  • Higher interest rates vs. banks
  • Prepayment penalty
  • No construction

What Do I Need To Qualify

  • Minimum Credit Score > 650
  • 1.2x DSCR
  • Income producing property

Disclaimer: These are general qualifications. Other information might be considered during your application

Eligible Properties

office

Office

Retail

Retail

Industrial

Industrial

Hotel / Motel

Hotel / Motel

multifamily

Multifamily

Other eligible properties include: Self storage, light industrial, mobile home park

Common uses include: Purchase, refinance, refinance + cash out

Required Documents

Property Documents

  • Current Rent Roll
  • Last 3-Years of Operating Statements (P&L)
  • Trailing 12-month Operating Statements

Personal Documents

  • Personal Financial Statement
  • Real Estate Owned Schedule
  • Bio / Resume
  • Proof of Liquidity (Bank Statements 3 Months)

Business Documents

  • Operating Statements (2-Years)
  • Current Rent Roll
  • Trailing 12-Months Operating Statements
  • Articles of Formation
  • Bylaws / Operating Agreement

Required Documents For Business Occupied

Personal Documents

  • Loan Application
  • Credit Report

Property Documents

  • Rent Roll
  • Operating Statement
  • Leases

Is Stated Income Right For Me?

Stated income loans (also known as non-income verification loans) can be an ideal solution for real estate investors that have been recently been turned down by a bank or don’t qualify for institutional products like CMBS, Fannie Mae or Freddie Mac because of loan size minimums or seasoning requirements. Underwriting is generally focused purely on the property’s income and not the guarantor’s global debt service, providing a viable solution for today’s real estate investors.

Real estate investors that need to close fast and seek a streamlined underwriting process with lightning fast approvals should explore a stated income loan. With fixed rate terms, and no balloon and long amortizations, real estate investors can maximize cash flow and not worry about refinancing every 5-years like traditional bank loans. Plus, with rates in the mid to upper single digits and minimal fees, the Stated Income Loan Program is a usually always a lower cost option versus hard money loans.

Turned Down By The Bank?

A private lender may be right for you.

Scenarios Meant For Stated Income

  • Need to close fast
  • Limited verified income or credit issues
  • Bank or SBA turn downs
  • Recently renovated properties
  • For real estate investors looking for long term financing on an investment property

Stated Income Case Study

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Donec quam felis, ultricies nec, pellentesque eu, pretium quis, sem.

Read the full case study

Fees and Costs

  • Application Fee: Typically $1,500 - $2,500, depending on the lender
  • Origination Fee: 1% - 2% of the loan amount
  • Appraisal Fee: Usually $1,500 - $3,500, depending on the property

Prepayment Penalties

  • Varies among lenders and programs
  • Typically eliminated after 3-5 years

Borrower Entity

Generally, the borrower entity must be a single asset, single purpose entity. The typical structure is a limited liability company. For purchases, the sponsors will typically form the entity in connection with the closing process.

Recourse

Generally, all individuals with at least a 20% or more ownership interest in the borrower entity must provide a personal guaranty.

Third Party Reports

Property related reports, such as an appraisal and environmental report are required. These reports are ordered by the lender.

Approval Process

1. Create loan request here.
2. Supply preliminary documents.
3. Select a loan program and product.
4. Receive preliminary approval.
5. Review and accept term sheet; remit application fee.
6. Lender completes underwriting and orders appraisal.
7. Loan approved. Final terms reviewed and accepted.
8. Loan closed and funded.