When looking for commercial real estate financing, stated income or total documentation loans are the two most common means of acquiring funding. This terminology concerns how the lenders will underwrite your application for financing.
This means the type of documentation they will require from you to give you the final approval for the loan. The good news is that when you look for stated income loans in Florida, you will find many lenders who will require different types of documentation to meet your needs.
Full documentation loan
If described in simple terms, the complete
documentation loan will require you to offer hard evidence, which will help
verify the income and the assets mentioned on your loan application. The most
common include profit and loss statements, tax returns, balance sheets, and
bank statements.
Besides this, a complete documentation lender
will also ask you to execute a form that will enable the lender to request
actual tax return transcripts from the IRS to validate your income.
Keep in mind that full-documentation lenders will provide lower interest rates because they lend to businesses and people with verified income and assets and higher credit scores.
Stated income loan
Stated income loans are commonly known for the
subprime mortgage meltdown during the Great Recession. The indicated income
loans require you to write down the money you made on an application, and the
lender will take your word for it.
Regarding CRE financing, income loans in Florida are quite different. Here, the lenders will not require you to produce tax returns or documentation to showcase your personal and business income. It uses DSCR, which comforts lenders that providing a loan will be a safe option.
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