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Stated income loans have been popular for years. In commercial lending, the concept of "stated income" can be confusing, because there are different ways to calculate income. The traditional method of calculating income, and the one used by most banks, involves a detailed review of your tax filings, usually the last three years. The banks will use the income and expenses you have reported, historically, on the tax returns. Your other personal income and expenses will be thrown into the mix, as part of a "global cash flow" analysis.

The other method of calculating income for commercial properties is to use income and expenses from the income statement for the last couple of years.

So stated income for commercial is misleading - since there is more than one way to calculate income - in a way there is no such thing as a "stated" income loan for commercial loans, because there are zero lenders who don't utilize either one or the other method of income calculation.

So many lenders "claim" stated income but what they are doing is actually a "no tax return" type loan, however income is still calculated using however just historic income statements and rent roll. Usually lenders charge more for this.

Our favorite apartment lender now has a policy of not asking for tax returns, and they use only the income and expense statements for their analysis. They do not call it a "stated income" loan, and most importantly there is no surcharge, and their rates are as good as any other apartment lender I have found.

This is an enormous advantage for consumers; files typically fail for either having too many write offs on the schedule E, or for too many debts overall - global cash flow analysis failure.
Posted in:no tax filings and tagged: apartment loans
Posted by Chuck Green on January 24th, 2018 10:41 AM