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Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
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Monthly Housing Payments

P & I
Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
Mortgage Insurance
Mortgage Insurance: The monthly cost for a policy that protects the lender in case you're unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
Property Tax
Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
Homeowner Insurance
Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
Homeowner Association Fee
Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
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Total Monthly Housing Payments

Lender Fees

Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
Origination Fee
Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
Credit Report Fee
Credit Report Fee: Fee charged to obtain an applicant's credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower's creditworthiness.
Tax Service Fee
Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
Processing Fee
Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
Underwriting Fee
Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property's value, and perform a risk analysis on the overall loan package.
Wire Transfer Fee
Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
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FHA Upfront Premium
FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
(If any)
VA funding Fee (If any)
Flood Fee
Other Fees

Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower's attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

Total Lender Fees
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How a Stated Income Loan Works

How a Stated Income Loan Works

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience
  • What is a Stated Income Loan?
  • A stated income mortgage works just like it sounds. The mortgage does not require borrowers to provide personal financial documents such as W-2s and pay stubs when they apply for the loan. Borrowers are required to state the amount and sources of their income on a loan application but are not required to provide certain financial documentation to verify their income as they would with a regular mortgage. Instead, lenders use your credit report and a property appraisal report to determine if you qualify for the mortgage.

    In short, stated income mortgages offer very relaxed qualification requirements as compared to standard mortgages. Given the high level of risk and negative consequences of this loan program, they are almost impossible to find these days.

  • Stated Income Loans and the Real Estate Crisis
  • In the build-up to the real estate crisis in 2008 and 2009, stated income loans became very popular. Because lenders did not verify an applicant’s income, many borrowers used stated income mortgages to buy homes that they simply could not afford. Property buyers and lenders assumed that home value would always increase so checking a borrower’s income was less important. As long as property values appreciated, lenders would be protected if the borrower could not repay the loan.

    Unfortunately, stated income mortgages led to a significant amount of speculation in the housing market and was one of many factors that created the real estate bubble. In fact, at one point prior to the market collapse, stated income loans accounted for almost 30% of all mortgages. When the bubble burst and property values plummeted, these loans resulted in tremendous losses for both homeowners and lenders.

    Following the painful lessons of the real estate and mortgage crisis, both lenders and regulators agreed that offering loans without verifying and documenting an applicant’s income was not a good idea. Today, almost no lenders offer stated income mortgage but they have been replaced by other types of alternative document mortgage programs that offer more flexible qualification requirements for borrowers.

  • Alternatives to Stated Income Loans
  • Today, most stated income loans have been replaced bank statement mortgage. With a bank statement loan, instead of requesting tax returns, W-2s or pay stubs, the lender requires that borrowers provide 12-to-24 months of bank and investment account statements to verify their income as well as the source of assets used for the down payment.

    As you can see, this type of mortgage program is similar to a stated income mortgage but borrowers are required to provide certain documents to prove that they earn enough money to afford the monthly mortgage payment and that they can eventually repay the loan over time. This is consistent with industry regulations that were adopted after the real estate market collapse. Lenders are required to determine that borrowers can repay the loan and solely not rely on property value appreciation as protection against default or foreclosure.

  • Reasons to Get a Stated Income Loan or Similar Mortgage Program
  • Borrowers who are self-employed, have limited employment history or who do not want to reveal personal financial information typically used stated income mortgages and those reasons hold true for similar programs today. For example, many self-employed borrowers use bank statement mortgages today because they can not provide W-2s or pay stubs to verify their income or because they experience significant fluctuations in their earnings. Additionally, this type of mortgage program is also good for applicants who cannot or who do not want to provide their tax returns.

    Stated income programs were also used by property speculators or investors because you could provide any information you wanted for your income on the loan application. Today, lenders require much more documentation on projected rents and property cash flow as well as a much larger down payment for property investors to qualify for a mortgage.

  • Lenders That Provide Alternative Mortgage Programs
  • Alternative mortgage programs are provided by traditional lenders such as banks, mortgage banks, credit unions and mortgage brokers as well as hard money lenders. Not all lenders offer alternative mortgage programs so you may need to reach out to several lenders to find the program you are looking for.  Contact multiple lenders in the table below to understand the programs they offer and to request loan proposals.  Because loan terms for stated income loans can vary significantly it is especially important to shop lenders to find the mortgage and program that best meet your needs.

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  • Qualification Requirements
  • Because borrowers provide different personal and financial documents than they would for a standard mortgage, qualification requirements for a stated income loan or similar program can be more demanding. These programs typically require a loan-to-value (LTV) ratio of 90% or less, which means that the borrower is required to make a down payment of at least 10%. This is higher than the down payment required for many conventional and government-backed mortgage programs.

    Additionally, these mortgages typically require that borrowers have a higher credit score, in the range of 680 or above. Lenders also typically require that borrowers keep six-to-twelve months of total monthly housing expense as savings in reserve.

  • Stated Income Loan Rates and Fees
  • Lenders typically charge a higher mortgage rate and fees for this type of loan. For example, the interest rate for a bank statement loan is usually .500% to 1.000% higher than for a regular mortgage. Interest rates and fees are determined by each lender and vary based on LTV ratio and your credit score. The closing costs and fees are also typically higher than for a traditional mortgage and vary based on lender requirements and qualification guidelines.

    Many hard money lenders, also known as private money lenders, offer alternative or reduced document mortgage programs to credit challenged borrowers. The interest rate for a hard money loan is typically 4.000% to 7.000% higher than conforming mortgage rates offered by traditional lenders and the fees are also higher. Hard money stated income lenders typically require an LTV ratio of 70% or less, which means that the borrower is required to make a down payment of at least 30%.

    If you do pursue a mortgage from a hard money lender be aware of excessive mortgage rates and fees and be sure the compare proposals from multiple lenders to make sure you find the best terms available. Some mortgage brokers work with both traditional lenders and hard money sources and can help you find the lender that is right for your situation.

    In some cases borrowers obtain a hard money mortgage for a short period of time and then refinance the loan through a traditional lender such as a bank, mortgage broker or credit union when they can qualify for a standard loan program with a lower mortgage rate and fees.

    Use the FREEandCLEAR Lender Directory to search for twenty-five mortgage programs by lender type including private money lenders that offer alternative loan programs.


    Related FREEandCLEAR Resources

    About the author

    Harry Jensen, Mortgage Expert

    Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry


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