No Doc Commercial Loans In Today’s Market

With today’s credit crunch and the current state of the US Market, many investors are finding it very difficult to find those stated income loans that were once available. For those individuals who are not aware of stated income loans, they are usually utilized by businesses or individuals who do not show enough income on their tax returns to qualify for a traditional commercial mortgage. For businesses generating a large amount of cash on a daily basis (i.e. restaurants, gas stations, or grocery stores), these loans have been very beneficial. In most cases, the borrower will not have to provide his or her tax returns, but the seller may have to provide the traditional operating statement and rent roll for the past two years. One of the good things about income producing commercial properties is that the property qualifies for the loan, not the borrower.

In some cases, investors have been very successful in obtaining optimal financing on stated income loans because of the property historically cash flowing. Some aggressive commercial lenders have provided funding simply by providing a credit report. This is one of the reasons why it is so important to seek the right type of commercial property because generally an income producing property is easier to qualify than a non income producing property. Stated Income Loans usually amortize 20-30 years just as your conventional loan products. Borrowers have the option of obtaining a 5, 7, or 10 year fixed loans with a declining prepayment penalty.

Although these Loans provide great benefits, the interest rate is usually higher than your standard conventional loans. In some cases, it can be drastically higher depending upon how the property cash flows. This is one of the primary reasons most companies and individuals avoid stated income loans, simply due to the high interest rate. Most of the lenders who are offering stated or no doc commercial loans are offering them at very low loan to values or they are requesting a FICO in excess of 700. This usually requires the borrower to put a large amount of money down. Yet, even in this tough market, there are a small number of lenders offering stated income loans with high loan to values and very competitive interest rates.