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So how much income do I need to qualify?

Loan officer looking for qualifying incomeWhen it comes to ‘No Doc’ or ‘Stated Income’ loans, it seems that many lenders think this is what you do when you need to lie to qualify. So, in the interest of full disclosure, I admit to using ‘Stated Income’ to qualify for a real estate loan.

Since by now you know I would not cheat or lie, why would I use stated income? After all, no doc or low doc loans often are priced higher.

In my case it happened when my business income was moving up fast enough that if you went by my current income, as evidenced by the most recent financial statement and tax return, you’d have enough qualifying income. But averaging two years you would not.

It also can be the case when a borrower has a new source of income that your guidelines do not allow you to use yet because it is not ‘seasoned’. This can be a note receivable, child support, almost anything.

Caution is a good idea, however. It would be inappropriate (downright fraudulent?) to tell your borrower the amount they need to write down as their stated income. Leave it to them and then see if they qualify.

If your financial institution chooses to offer stated income or low/no doc loans, then there is nothing wrong with offering them to your borrowers, and certainly nothing wrong with your borrowers using them.

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at, she speaks at banking associations on risk management, lending and director finance topics.