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Stated Income Loans vs. Traditional Loans: A Deep Dive

Stated Income Loans vs. Traditional Loans: A Deep Dive

Navigating the landscape of home loans can be a daunting task for any prospective homeowner. Among the multitude of options available, two of the most commonly discussed types are Stated Income Loans and Traditional Loans. To help clear up some of the confusion, we will delve deep into each of these loan types, contrast their features, and aim to provide you with the information needed to make an informed decision.

Traditional Loans

Traditional loans are the most common types of home loans. They usually come in two forms: Fixed-Rate and Adjustable Rate Mortgages. With these loans, lenders require comprehensive documentation, including W-2 forms, tax returns, and bank statements to verify your income and ability to repay the loan.

The primary benefits of traditional loans lie in their relatively low interest rates and fixed payment schedules, making them a predictable option. However, they require a good credit history, a stable income source, and usually a substantial down payment.

Stated Income Loans

On the other hand, Stated Income Loans, also known as “no-doc” or “low-doc” loans, require less documentation. As the name suggests, borrowers simply state their income without needing to provide extensive evidence. These loans were designed for self-employed borrowers, or those with variable incomes, who may have a harder time gathering traditional income documentation.

Stated income loans offer flexibility that can be attractive to some borrowers, but they often come with higher interest rates to offset the perceived risk by the lender. They also require a higher down payment and a good credit score.


When comparing the two, Stated Income Loans offer convenience and less documentation, but they come at a cost. Higher interest rates can significantly increase the amount paid over the life of the loan.

In contrast, traditional loans require more paperwork and have stricter qualification criteria, but they typically offer more favorable terms, including lower interest rates.

Final Thoughts

In summary, the choice between a Stated Income Loan and a Traditional Loan depends largely on your personal circumstances, including your income structure, credit score, and your ability to provide documentation. Before making any decision, it’s always best to consult with a mortgage professional who can guide you based on your unique financial situation.

Remember, the key to successful homeownership is not just getting a loan, but getting the loan that’s right for you. Contact Kenbry today to learn more about our stated income loans for commercial real estate.