Stated income loans for the self employed



The stated income program has been suspended. Call John Veenstra at 201-833-0123 Ext 278 for more information.

(Guidelines as of October 25, 2013)

Animated cartoon of a man reading a bookStated income mortgages for self employed still exist in a limited number of areas in the United States. We are fortunate here in the northeast to have access to some of the few that still exist.

They are available in all of New Jersey, all of Connecticut, thirteen counties in New York and nine counties in Pennsylvania.

Stated income mortgages for self employed as well as for other type employment situations were widely available prior to about August of 2007. That is when the subprime mortgage mess hit and that caused the elimination of many “risky” type mortgage products. This caused the elimination of all the stated income programs that were offered nationally.

Stated income mortgages for self employed are offered in this area by “portfolio” lenders. They use their own money and operate by their own guidelines. These lenders have not been victimized by so called “liar loans” because they always did these type mortgages the right way and continue to do so. What is the right way?

  • Stated income in line with type of business and asset positions
  • Verify assets in line with the income stated
  • Owner occupied 1 to 4 family, condominiums (no cooperatives)
  • Second/vacation homes single family or condo
    (established condominium only—call or email for guidelines_
  • Require down payments of 35% or more
  • Fixed Rate & ARM Mortgages 35% down to $750,000
  • Fixed rate & ARM Mortgages 40% down to $1MM
  • ARM Mortgages 50% down to $3MM
  • Lend on owner occupied and vacation homes, not investor properties
  • Require decent credit scores and lengthy credit history
  • Overall common sense underwriting

Stated income for self employed is available in the following states:

New Jersey: The entire state (taxes always escrowed; home insurance never escrowed)
Connecticut: The entire state (no escrows for taxes nor insurance)
New York: Available in thirteen counties (no escrows for taxes nor insurance)
Pennsylvania: Available in nine counties (no escrows for taxes nor insurance)

Stated income mortgages for self employed GENERAL GUIDELINES:

Income and Employment and Citizenship:

  • Self employed, minimum 25% ownership of a business, established 2+ years and ongoing
  • U.S. citizen or Permanent resident Alien (Green Card)
  • IRS Form 4506 is not signed by you and is not part of the process
  • Front House Debt ratio must be 36% or less
  • Back Debt Ratio (House + Other Monthly Debts) must be 44% or less
  • Most recent two months BUSINESS BANK STATEMENTS showing
    monthly deposits equal to or greater than monthly stated income
  • Accountant letter stating: % ownership, business name/address, nature of business,
    Business formation: Sole Proprietor, Limited or General Partnership, S-Corp, Corp
    (If you have no accountant, you will have to get one for the letter)
  • Any FIXED income must be verified as normally would be
  • If Borrower or Co-Borrower has W2 income, it can be used and verified
  • Rental income provide leases and recent two years Schedule E from tax returns

Assets:

  • Personal, Liquid, Seasoned assets verified to cover DOWNPAYMENT + COSTS + RESERVES
    (Seasoned means in account over two months, so, no large deposits in these two months to get the money in the personal accounts. If moving money from gift or business or from overseas or ??,
    Get it in the account three months before mortgage application)
  • Reserves = 12 months house payments (more for second homes and/or interest only)
    (Can be 70% of vested Retirement Accounts, Life Insurance cash value, Business account
    if own 100% of business w/accountant letter stating this will not affect business)
  • Provide ALL pages most recent two months PERSONAL STATEMENTS
    Normal deposit activity is OK and actually required (want to see active accounts)
    NO large deposits from gifts, the business, from overseas, etc.
  • Seller concessions to pay for closing costs are NOT permitted
  • Funds from sale of present home are seasoned and are OK
  • Provide ALL pages most recent two months BUSINESS STATEMENTS
    (Sole Proprietorship may have only PERSONAL STATEMENTS; this could be OK
    if shows enough deposits monthly to support stated income)

Credit:

  • The older/longer the credit history the better—never less than two years
  • The more line items in the credit report, the better—never less than four
  • Prior mortgage or rental history is required
    Verify rent with most recent, consecutive 12 months canceled rent checks or
    Letter from professional management; letters from private landlords no good.
    (One client had none personally, but, verified business paid rent)
  • Open judgments and tax liens must be paid before closing
  • Last 7 years no bankruptcy, no foreclosure, no short sales, no deed-in-lieu
  • Derogatory credit will require written explanations
  • No minimum credit score (should be in 600s or higher to look good)

Picture of John VeenstraIs the stated income mortgage right for you? The only way to know is to give me a call:
John Veenstra
Senior Mortgage Loan Officer
Approved Funding Corp
41 Grand Avenue
River Edge, NJ 07661
NMLS #: 178140
Office: 201-833-0123 Ext 278
Cell: 973-809-8786
www.approvedfinding.com/veenstra
jveenstra@approvedfunding.com

Who's John Veenstra?

Born and raised in NJ; grad Eastern Christian High School 1966; grad West Point 1970; Infantry Officer, Airborne and Ranger Schools Ft Benning, Georgia; 5 years West Berlin, Germany; residential mortgage business since 1983; 4 daughters. Resident of lake community Green wood Lake, NJ

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