Commercial Real Estate, or CRE, Investors get pretty creative when it comes to finding money for their next acquisition. Conventional loans are one of the go-to methods, but stated income loans are yet another way to get the financing for property purchases or refurbishing.

Stated income loans work by allowing the borrower to ‘state’ the amount of their income to the lender. This is usually a combined total of the income of the borrower and their businesses. The lender will then figure up the dollar amount they will finance for the borrower, with interest, of course. Some lenders will require lots of documentation, but others won’t. You might have to supply records of leases, year-to-date financials, rent rolls and personal financial statements.

A stated income loan is an alternative to a traditional commercial loan where the lender is generally more concerned with the real estate in question rather than the credit history of the borrower. The property income value must be enough to service the insurance, taxes and mortgage in order for this type of loan to be approved.

Depending on your credit rating, you might be able to get a loan without written verification of your income. Today, a large portion of mortgages are created with stated income loans. Due to the reduced amount of paperwork required, the lending process doesn’t take as long. While this isn’t a huge advantage, it could mean grabbing that deal before it’s off the table.

Especially helpful for borrowers who are self employed, stated income loans can provide funds when it’s hard to produce a pay stub or a W-2. It’s not quite as easy as it sounds. Stated income loans will often require a solid down payment, equity and a […]