Stated Income Loans for Commercial Owner User and Investment Properties
Yes, it’s true, “stated income loans” with lower than hard money rates and much lower fees are available for the following property types:
- 1 to 4 family properties up to $1 million
- Multifamily (5 or more units) up to $5 million
- Mixed Use to $5 million
- Warehouse to $5 million
- Retail to $5 million
- Office to $5 million
- Self Storage to $2 million
- Auto Repair/Auto Service (no gas stations) to $5 million
- Condos to $1 million (including high rise)
- Commercial Condos and Office Condos to $1 million
Stated Income – A little history
“Stated income” loans were a big part of the implosion of the residential mortgage market that brought the economy to it’s knees.
Stated, no income and no doc loans were just too easy to qualify for and there was too much money to be made by all involved for it not to end badly…and it did.
To a lesser extent, commercial stated income loans also caused some carnage and added to the hangover.
It is now 2013 and the pendulum of legislation and regulation has swung very far in the other direction and it has left some real estate investors with fewer options to finance property.
Many have turned to hard money loans and those have proven to be a good solution, and a more affordable one than in years past, but we are starting to see a new (old) breed of financing come around – No Income Verification Loans.
Lower Rates and Much Lower Fees
Lenders are calling these loans “stated income,” but they are more of a hybrid of stated and hard money because:
- hard money-type equity (25% to 30%) is required
- no income is disclosed – (the income section of application is left blank)
- assets are verified, but the requirements are minimal given the amount of required equity
- the rates are low (typically single digits)
- the fees are much lower than traditional hard money
Lenders are mostly concerned with the following:
- Market Rents
These loans are NOT for borrowers who operate on the fringes of legality. They are for real estate investors and property owners who may not qualify for a conventional commercial property loan but who have good tenants, good equity and/or good businesses who deserve better than hard money rates.
Self employed real estate investors should find these programs very useful.
- You must have at least 25% or 30% down payment depending on the property type.
- The loans are fully amortizing for 30 years with NO balloon.
- Minimum loan amount is $150,000.
- Maximum loan amount is $2,000,000.
- 3 year and 5 year fixed rates are available. (The loan is adjustable after initial fixed period).
- You must have at least a 650 middle score and decent credit.
- The loans have a prepayment penalty typically equal to the fixed period, however they are also ASSUMABLE so if you are thinking about selling the property quickly then this could be a way to avoid the prepayment penalty.
- 1.2 or better debt coverage ratio is required.
- Escrows (Impounds) required.
- A Good Faith Deposit is required for all 3rd party reports.
- The loans have reasonable rates and fees
- You cannot live in 1 unit of a 4 unit property as that would be consider “owner occupied.”
- Cash out is allowed, but you cannot buy a property and immediately tap the equity in it. You must wait 12 months to go off current appraised value.
- The lender will order the appraisal.
- There is NO IRS 4506 required.
- Closings are quick – usually a month or less.
- There are a few states where this program is not available.
Please contact me if you would like to apply or need more info at about how to qualify: jking (at) green commercial capital (dot) com or 1-800-414-5285.