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Because stated income loans are granted on credit score alone, they're often called liar loans as if you may stated any income required to get the loan. However, false statement made to a lender is a federal crime so you must follow the rules of no-doc loans.
So, when you understand the rules, you can represent your income accurately and qualify without proving income.
This brings us to the four strategies for getting your stated income loan approved.
Strategy 1: Be average.
You may state the average income for your industry and area without being asked to prove income.
In half of all cases this will allow you to raise the level of income you can state.
Strategy 2: Be complete
Add in sources of income you're not required to consider (such as alimony, etc). This can be very significant because some sources of income are treated unequal.
For example, rental income is often discounted 25-percnet. So if you collect $12,000 in annual rents, it is treated as only $750 per month or $9,000 in yearly income.
Likewise, you could have a phantom income or the like added in where you don't get the money but you do honestly earn it.
This often results in a 10-25% increase to the stated income.
Strategy 3: Be aggressive
You likely use the tax law for investors and entrepreneurs to show as little income as possible.
Lenders know this and allow you to add non-cash items from an income statement that entrepreneurs use to take advantage of being a business owner to reduce taxes.
For example, you may add to your income the portion of your home if used as primary office, portion or all of vehicle (difference is whether owned or leased), pension plan contributions, family 'vacations' surrounding a conference, etc.
This often results in a 35-55% increase in stated income.
Strategy 4: Be fruitful
If you're a true credit millionaire, you're borrowing money to a make money.
Since lenders want to work with credit millionaires, you may add a reasonable and projected increased in your income which is a direct result of the borrowing.
So, if sales will grow from $400,000 last year to $800,000 this year because you get the loan, you would be able to double your commission based income and claim it to qualify for the loan.
Depending on how aggressively you project the result of getting the loan, you may use some or all of the growth.
With these four strategies you can access funds to grow your business without having a business plan, proving your income, or revealing all your assets. For the private business owner and credit millionaire, this can be the difference between success and stagnation.
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