Stated income · California
Stated income loans in California did not disappear. They became illegal on the home you live in.
On the property you rent out, nothing changed. That one distinction is the whole answer, and almost nobody states it plainly.
Reviewed 13 September 2026 · Wexmoor Circle LLC, Los Angeles
1 · The definition
A California stated income loan is one where you tell the lender your income and nobody verifies it.
That is the literal meaning, and it is why the product has a bad name. What exists today is narrower, and it is not the same thing.
Before 2008 a borrower could write a number on a form and buy a house with it. No tax return, no pay slip, no call to an employer. So the industry called them stated income loans in California and everywhere else, and the press later called them liars’ loans, because that is what a fair number of them were.
Yet when someone searches for a California stated income loan today, they usually mean one of two different things. Either “can I still buy a home without proving my income” — and the answer to that is no. Or “I own a business, my tax return understates what I actually earn, and I want to buy a rental” — and the answer to that one is yes, through a product that does not use your income at all.
So stated income loans in California now mean two different things, and those two questions have opposite answers, and most pages on this subject answer neither clearly.
No
2 · The rule that changed
Dodd-Frank did not ban the words. It required every consumer mortgage to be verified.
The Ability-to-Repay rule took effect in January 2014. It applies to closed-end credit secured by a dwelling for personal use — and it does not reach business-purpose credit at all.
So the rule did its work by making verification compulsory rather than by outlawing a name. On a loan for the home you live in, a lender must make a reasonable, good-faith determination that you can repay, and must document the income it relied on. A file with an unverified figure in it does not meet the standard.
Meanwhile business-purpose credit sits outside Regulation Z entirely, under a separate exemption. A loan on a non-owner-occupied rental, made to an investor for business reasons, was never inside the rule that ended stated income — which is why that side of the market kept going while the consumer side stopped.
Both rules are public and short enough to read yourself. You will find both at the foot of this page, and we would rather you checked than took our word for it.
3 · What replaced it
Three products do the job stated income used to do, and only one of them looks at you at all.
Every one is a real underwrite. None takes a number on trust.
| Product | What it reads | Best when |
|---|---|---|
| DSCR | The property’s rent against its payment. Your income is not calculated | The building pays for itself and your tax return does not reflect what you earn |
| Bank statement | 12 or 24 months of deposits, with an expense factor applied | You are self-employed, deposits are steady, and the property alone does not clear the ratio |
| Asset depletion | Liquid assets converted to a notional monthly income | Reserves are large and regular income is small or lumpy |
This page describes how these products are generally built, so you can see where your file sits before anyone spends anything.
4 · The file
California stated income loans are read on the property, the entity and the reserves.
The word stated survives in how the market talks. It does not survive in what underwriting actually does.
The property carries it
Namely, rent against the full payment — principal, interest, taxes, insurance and any association dues. That ratio is the underwrite, and it is arithmetic rather than opinion.
The entity is read
An LLC or corporation holding the asset is normal and expected. The operating agreement gets read, and a personal guarantee is usual.
Reserves are counted
Namely, months of payment held after closing, because nothing about your salary supports this loan if a tenant leaves.
Credit is a gate
Still, it does not replace the ratio and it cannot rescue a weak one. It decides whether a lender opens the file at all, and what they charge once they do.
Purpose is documented
Notably, business purpose is a fact the file has to show, not a box anyone ticks. A property you intend to occupy is a different loan under different rules.
Nothing is taken on trust
Importantly, every figure above rests on a document. That is the honest difference between this and what the phrase used to mean.
5 · The trade
On California stated income loans you pay for the paperwork you did not file.
Every one of these products costs more than a loan underwritten on verified personal income. That is the trade, and it is worth naming rather than hiding.
It is priced above a documented loan
If you can show the income and the property count allows it, a conventional investment loan will almost always be cheaper. Anyone who tells you otherwise is selling something.
Most carry a prepayment penalty
Commonly stepping down across three to five years. If you intend to sell or refinance inside that window, put the penalty in the model on day one.
You cannot live in it
These are business-purpose loans on non-owner-occupied property. Moving in is not a grey area. It breaks the terms you signed and it changes which rules apply.
The tax return still matters elsewhere
Writing income down lowers what a conventional lender will lend you, for years. The saving is real and so is the cost, and most people only ever count one of them.
Primary sources worth reading yourself: CFPB 12 CFR 1026.43, Ability to Repay · 12 CFR 1026.3(a), the business-purpose exemption · California DFPI
6 · The questions
What we are asked most, answered short.
Each answer stands on its own. Take the one you came for.
Are stated income loans in California still available?
Not for a home you will live in. The Ability-to-Repay rule makes a lender verify the income it relies on, so a file without that proof falls short of the standard. On investment property held for business purpose, lending that does not use your personal income is alive and normal.
So can I state my income or not?
Certainly you can state it. Nobody will lend on the statement alone. What replaced stated income is a set of products that read something else instead — the rent, your deposits, or your assets.
Is this the same as a no-doc loan?
No. Namely, every product here is fully documented. The difference is which documents, not how many.
Do I need a company to borrow?
Generally not, but an LLC is the normal structure on investment property, and expect to sign a personal guarantee either way. It is also how most foreign national files close.
What if the rental does not cover the payment?
Then the property alone will not carry the file, and a bank statement or asset-based route is the usual next question. More down payment is the other lever.
Does a low tax return hurt me here?
Not on a DSCR file, because stated income loans in California are read on the property and your income is never calculated. It still hurts you on every conventional loan you apply for, which is the cost most people forget to count.
Is commercial different from residential here?
Overall the principle is the same and the paperwork is heavier. More units, a commercial appraisal, and a lender set that is narrower than the one-to-four-unit market.
Can you tell me if my file works before I spend anything?
That is the whole point of reading it first. Send what you have and you get the arithmetic back, including when the answer is no.
7 · Next
Stated income loans in California usually become a DSCR loan.
If the property pays for itself, your income stops being the question. Both pages below take it from there.
Wexmoor Circle LLC · 930 Colorado Blvd, Suite 1, Los Angeles, CA 90041 · Reviewed 13 September 2026
