Requirements at a Glance
Lenders evaluate qualification across three independent boxes: the property fundamentals, the borrower and sponsorship profile, and the business plan or use of proceeds. A single failure in any box can derail a deal even when the other two are strong.
| Category | Requirement | Detail |
|---|---|---|
| Property | LTV at or below program maximum | 60% to 70% LTV required; appraisal must support value at loan amount |
| Property | Property type eligibility | Multifamily, mixed-use, retail, industrial, office, and self-storage are standard; hospitality and land are case-by-case |
| Property | DSCR on property income path | 1.20x to 1.25x minimum using in-place rent roll and actual operating expenses |
| Property | Appraisal recency | Lender-ordered appraisal within 6 months required at underwriting |
| Borrower | Credit score | 660+ FICO from primary guarantor; 700+ for best rate tier |
| Borrower | Net worth | Typically equal to or greater than the loan amount |
| Borrower | Liquidity post-close | 6 to 12 months of debt service in liquid reserves after closing |
| Borrower | No recent major derogatory credit events | No bankruptcy within 7 years, no active foreclosures, no unsatisfied judgments |
| Income Path | Bank statement qualification | 12 to 24 months of business bank statements; lenders apply a 40% to 50% expense factor to gross deposits to derive qualifying income |
| Income Path | Asset depletion qualification | Eligible liquid assets divided by remaining loan term in months to imply a monthly income figure; typically requires assets equal to 2x to 3x the loan amount |
| Income Path | Property income only qualification | Loan sized entirely to in-place net operating income at 1.20x to 1.25x DSCR with no personal income considered; similar mechanics to a DSCR loan |
| Documentation | Entity formation and ownership | Operating agreement, articles of organization, and certificate of good standing for borrowing entity |
| Documentation | Personal financial statement | Signed and dated within 60 days showing net worth and liquidity for each guarantor |
Documentation You Will Need
Sponsors who arrive at term sheet stage with these documents in hand close 1 to 2 weeks faster than those who scramble during due diligence.
- 12 to 24 months of business bank statements for all operating accounts (bank statement path)
- Asset account statements for brokerage, savings, and retirement accounts within 60 days (asset depletion path)
- Current rent roll with unit mix, lease expirations, and monthly rent for each tenant (property income path)
- Trailing 12 months property operating statement showing gross income, vacancy, and expenses
- Signed personal financial statement for each guarantor, dated within 60 days
- Schedule of real estate owned listing all properties, debt balances, and equity positions
- Entity documents: operating agreement, articles of organization, certificate of good standing
- Government-issued ID and background authorization for each principal with 20%+ ownership
- Purchase contract or existing mortgage statement for refinance transactions
- Property appraisal within 6 months (lender typically orders at application)
- Phase I environmental site assessment, current within 12 months
- Proof of property and liability insurance with lender named as additional insured
- CPA or accountant letter on letterhead confirming self-employment and business ownership (some lenders require in lieu of returns)
What Qualifies You
These are the factors that materially improve qualification odds and pricing.
Strong bank statement deposit volume
On the bank statement path, consistent monthly deposits over 12 to 24 months matter more than individual high months. Lenders look for stable or growing deposit patterns and discount one-time large transfers. Mixing personal and business accounts or running expenses through the same account that receives deposits weakens the analysis.
Significant liquid asset base for depletion path
Asset depletion qualification requires documented liquid assets, typically equal to 2x to 3x the loan amount, held in accounts that can be independently verified. Retirement accounts are discounted 30% to 40% for accessibility penalties. Concentrated illiquid positions like real estate equity or closely held business interests do not count.
Property with strong in-place cash flow
On the property income only path, deals with occupancy above 90% and seasoned leases underwrite the cleanest. Lenders use actual collected rent, not pro forma, and apply market vacancy and management expense assumptions regardless of what the sponsor claims to self-manage.
Conservative LTV relative to program maximum
Stated income lenders compensate for reduced income transparency by requiring lower leverage than full-doc programs. Sponsors who come in at 55% to 60% LTV rather than pushing 70% get materially better pricing and faster underwriting decisions.
Clean and deep credit profile
A 660 FICO gets a borrower in the door, but lenders look at depth of trade lines, length of credit history, and absence of derogatory events beyond just the score. Sponsors with 720+ FICO, multiple long-standing trade lines, and no late payments in the prior 24 months qualify for the tightest rate tiers.
Organized entity structure
Complex entity stacks with multiple layers of LLCs, trusts, or foreign holding companies slow underwriting and sometimes trigger additional legal review. Sponsors who hold the borrowing entity in a straightforward single-purpose entity with clear beneficial ownership documentation close faster with fewer conditions.
Experienced real estate sponsor profile
Lenders on stated income programs pay close attention to the schedule of real estate owned. A sponsor with a track record of successfully managing income-producing properties across market cycles reduces perceived default risk even when personal tax returns are absent from the file.
What Disqualifies You
Common decline reasons that surface during underwriting. Most can be addressed with structuring or by routing the deal to a different program.
LTV above program maximum
Stated income programs do not flex on LTV the way full-doc programs sometimes do for strong borrowers. If the appraisal comes in below expectations and LTV exceeds 70%, most lenders require a paydown to close rather than offering an exception. Sponsors should verify value independently before application.
Insufficient or inconsistent bank statement deposits
Erratic deposit patterns, large unidentified transfers between accounts, or declining deposit trends over the statement period will result in a reduced implied income figure or outright decline. Lenders require 12 to 24 months of statements and apply the same deposit analysis to every month in the lookback period.
Credit score below 660 or major derogatory events
Stated income programs are not hard money and do not ignore credit quality. A FICO below 660, a bankruptcy within 7 years, an active foreclosure, or an unsatisfied judgment against the sponsor or guarantor will disqualify the file at most institutional stated income lenders. Some asset-based lenders may proceed with significant compensating factors, but at substantially higher rates.
Property with material deferred maintenance or environmental issues
Stated income lenders still require standard third-party reports. A property condition assessment showing deferred maintenance above 10% of the loan amount, or a Phase I environmental with recognized conditions requiring a Phase II, will pause or kill approval regardless of how strong the income path looks.
Asset depletion pool insufficient to support the loan amount
Sponsors who attempt asset depletion with assets only slightly above the loan amount will fall short of implied monthly income requirements. The math requires a meaningful asset cushion, typically 2x to 3x the loan balance, to generate an implied income stream that covers debt service with the required coverage ratio.
Typical Qualified Borrower
If your situation matches one of these profiles, the program is likely a strong fit.
- Self-employed real estate investor whose significant depreciation and cost segregation deductions suppress taxable income far below actual cash flow
- High-net-worth principal with large liquid investment portfolios and minimal W-2 or business income on paper
- Foreign national investor without U.S. tax return history seeking commercial property acquisition or refinance
- Small business owner whose entity income is reinvested into the business rather than distributed as reportable personal income
- Sponsor with a complex multi-entity structure where income flows across multiple returns in a way that makes standard qualification impractical
- Experienced real estate operator transitioning into a new asset class or market where income documentation from the new venture is limited
Timeline
Stated income commercial loans typically close in 30 to 45 days from term sheet acceptance, slightly faster than full-doc bank loans because underwriting does not wait on tax return analysis or IRS transcript verification. The primary bottleneck is third-party reports, specifically the appraisal and Phase I environmental assessment, which run 3 to 4 weeks. Sponsors who submit clean bank statements, a current rent roll, and a complete personal financial statement at application routinely shave one week off the cycle.
Frequently Asked Questions
What are the three qualification paths for a stated income commercial loan?
The three paths are bank statement income, asset depletion, and property income only. Bank statement programs derive qualifying income by applying a 40% to 50% expense factor to 12 to 24 months of business deposits. Asset depletion divides verified liquid assets by the loan term to imply monthly income. Property income only sizes the loan to in-place net operating income at 1.20x to 1.25x DSCR with no personal income considered.
Do stated income commercial loans require any tax returns?
No tax returns are required under any of the three qualification tracks. This is the defining feature of the program. Some lenders request a CPA letter confirming self-employment and business ownership as a light substitute, but no Schedule E, 1040, K-1, or business return analysis is performed. That said, lenders do verify income through bank statements or asset account documentation.
What credit score do I need for a stated income commercial loan?
Most stated income commercial lenders require a 660+ FICO from the primary guarantor, with 700+ unlocking the best pricing tiers. Credit score is not the only variable but it is a hard floor at most institutional programs. Lenders also review the full credit report for derogatory events, not just the score, so depth and cleanliness of the credit profile matter beyond the number itself.
What LTV is available on a stated income commercial loan?
Standard stated income programs cap at 60% to 70% LTV depending on property type, income path, and borrower credit profile. Multifamily on the property income path with a 700+ FICO borrower can reach 70%. Higher-risk asset types or weaker credit profiles get capped at 60% to 65%. Lenders use the lower of appraised value and purchase price on acquisition transactions.
Can a foreign national qualify for a stated income commercial loan?
Yes. Stated income commercial programs are one of the most practical options for foreign national borrowers because they eliminate the U.S. tax return requirement entirely. Foreign nationals typically qualify through the property income only path or asset depletion, provide a foreign credit report or reference letter from a foreign bank, and fund the transaction through a verified U.S. or international account.
How much in assets do I need for asset depletion qualification?
Most lenders require documented liquid assets equal to 2x to 3x the requested loan amount to generate sufficient implied monthly income through the depletion calculation. For example, a $5M loan would require $10M to $15M in eligible liquid assets. Retirement accounts are typically discounted 30% to 40% to account for early withdrawal penalties, and illiquid assets like real estate equity generally do not qualify.
What property types are eligible for stated income commercial loans?
Multifamily, mixed-use, retail strip centers, industrial, office, and self-storage are standard eligible property types. Multifamily and industrial command the tightest pricing because the collateral is most universally valued by lenders. Hospitality is available at selective lenders with wider pricing and lower LTV. Raw land and ground-up construction are generally outside program parameters.
How does a stated income loan differ from a hard money loan?
Stated income commercial loans are institutional programs with 5 to 30 year terms, 660+ credit requirements, and rates that typically run 150 to 300 basis points above comparable full-doc bank programs. Hard money loans are short-term bridge capital, often 12 to 24 months, with minimal credit standards but rates of 9% to 13% or higher. Stated income programs are for long-term holds; hard money is for short-term necessity or distressed collateral.
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