SISA Loan (Stated Income
A SISA (stated income, stated assets) is a loan program were the borrower(s) state on the application what their income and assets are, but the lender does not ask for documentation for the amount stated.
Stated Income, Stated Asset programs are not the same as No Documentation programs. Employment will more than likely be verified.
Stated loan programs can help a borrower acquire property which is in line with their true purchasing power, irrespective of reported personal income. It's an excellent choice for investors.
Often times self employed borrowers will require a SISA loan because they may write off most of their income for tax purposes.
In order to justify the higher risk associated with Stated-Income/Stated Assets mortgages, banks charge higher interest rates on SISA loans than on Full Documentation loans.
SISA loans usually require a higher credit scores. Genrally the higher LTV(loan to value)the higher the score needed to qualify.
And because of the higher interest rates you would only use this program when you are in a situation in which this is the only way to get qualified.
Choosing a stated income, stated asset loan does not mean that you will not furnish any documentation to your lender only that documentation will be limited. For example Instead of self employed borrowers providing tax returns you will need to provide a copy of your business license for the most recent two years or a letter from your CPA stating that you have been self employed for at least two years. To state your assets you will need to disclose your bank name or who the asset account is with.
Choosing the SISA loan does not guarantee an approval. The income and the assets that are stated still must be reasonable and is subject to an underwriter's approval.
For self employed borrowers the SISA is a more common as cash flow may show a lack of reserves typically needed for traditional loan programs.
Many conforming lenders do not require IRS form 4506 to be signed at closing when doing a SISA or NINA loan. It is best to check with your lender or broker before closing to see if you are required to sign it.
Stated Income Stated Assets programs sometimes are abused because some believe that income and assets can be exaggerated enabling the borrower to qualify. The program is actually for borrowers who have hard to prove income sources and assets but lenders let them state the true amounts. Lenders usually only let borrowers who have excellent credit history use this program.
Another loan to consider is the NINA (No Income No Asset). The income and assets are not disclosed on the application and not verified. Employment is also stated and not verified on a NINA. Lenders will typically lend up to 95% LTV on these loans with very good credit.
Some loan programs only allow self-employed borrowers to state their income and assets while others allow both self-employed and wage earner borrowers to use this feature.
When a wage earner states their income the underwriter will often use salary.com or other similar resources to determine if the income stated is reasonable.
For a wage earner who needs to have more income stated than what their job allows, comparing the figure from salary.com, they borrower needs to consider going for no ratio product. This program will not state any income at all; thus the underwriter doesn't ask whether borrower makes enough money to qualify for the loan. Usually, this program requires higher FICO score as you try to obtain higher LTV.
If you have any questions regarding our products, you can contact us by calling or e-mailing us and we'll get back to you as soon as possible. Thanks!
Information listed above is to be used for educational purposes only and is not guaranteed