Question:

Are there stated income construction loans?

Answer:

Stated income construction loans are a relatively new category of loans. Since the value of newly finished properties is increasing, construction loans are gaining popularity. Similar to other loans, it is possible to obtain a construction mortgage loan providing reduced documentation. Requirements for obtaining a stated income construction loan vary for self-employed and salaried borrowers.

Obtaining a Stated Income Construction Loan

  • If you are employed with a company but have other income sources, as well, you will qualify for the best terms of the stated income program. The lender will list your job as main income but will consider your other cash sources. This will qualify you for the best rates and greater amount, if you need it. Stated income construction loans should not be used to state income that is well over your capacity. Even though stated income loans are great for anyone filing complicated tax returns, they are not to be used to avoid the truth.
  • Simple documentation is required to document the construction loan if you are going stated income. Since income figure is not verified, a letter from employer or your tax professional (in case you are self-employed) is the only income verification.
  • Stated income construction loans will require cash reserve to guarantee payments for several months. If the borrower demonstrates excellent credit and financial circumstances, less or none cash reserves may be required.

Final piece of advice: Monitor your credit report and score regularly, to ensure there are no inaccuracies or unauthorized activity. Your credit report and score are the two major methods that creditors and lenders use to make a credit decision about you. Higher scores usually mean lower interest rates, which will save you money.

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Common misspellings: mortage and morgage