Do Stated Income Loans Still Exist? What the Ability-to-Repay Rule Actually Requires

Not for a home you will live in

Stated income loans in their pre-2008 form no longer exist for a mortgage on a home you will live in. Since the Ability-to-Repay rule took effect in January 2014, Regulation Z has required lenders to make a reasonable, good-faith determination that a borrower can repay a consumer mortgage, and to verify the income or assets they rely on using third-party records. A lender that takes your word for your income on an owner-occupied loan is not offering a product. It is breaking the rule.

What replaced stated income is alternative documentation: programs that verify income from bank statements, 1099s, a CPA-prepared profit-and-loss or liquid assets. And for a rental you will not occupy, business-purpose DSCR financing qualifies the property on its rent, which is the closest legitimate descendant of the old no-income loan. The rest of this article explains the rule in plain English, decodes the old acronyms, and shows where the line between a real program and a red flag sits.

What Regulation Z §1026.43 actually requires

The Ability-to-Repay rule lives at 12 CFR §1026.43, part of Regulation Z, which implements the Truth in Lending Act. It applies to most closed-end consumer credit secured by a dwelling. The core requirement is one sentence: before making the loan, the creditor must make a reasonable and good-faith determination that the consumer will have a reasonable ability to repay it according to its terms.

The rule then lists eight factors the lender must consider, at a minimum. In plain English, they are:

1. Your current or reasonably expected income or assets, not counting the value of the home securing the loan.
2. Your current employment status, if the lender is relying on employment income.
3. The monthly payment on the loan itself, calculated under the rule's own payment rules rather than on a teaser payment.
4. The monthly payment on any simultaneous loan secured by the same property, such as a second lien closing at the same time.
5. Monthly mortgage-related obligations: property taxes, insurance, association dues and similar costs.
6. Your other current debt obligations, including alimony and child support.
7. Your monthly debt-to-income ratio or residual income, calculated from the items above.
8. Your credit history.

The part that ended stated income is the verification requirement. The rule says the lender must verify income and assets using third-party records that provide reasonably reliable evidence. It lists examples: tax-return transcripts and filed returns, W-2s and similar IRS forms, payroll statements, financial institution records, records from an employer, and records from a government agency for benefit income. A borrower's own statement of income is not on the list, and the official interpretations make clear it cannot substitute for the list.

Read that list again and the modern alternative-documentation market becomes obvious. Bank statements are financial institution records. 1099s are IRS forms. A profit-and-loss statement prepared by an independent CPA is a third-party record. Brokerage and retirement statements are financial institution records. The rule does not require tax returns; it requires reliable verification. Programs built on those other records comply because of the rule, not in spite of it.

The acronym map: SISA, SIVA, NIVA, NINA

The old products were named for what they verified. Knowing the labels helps you decode what a website is really offering.

• SISA, stated income, stated assets. The borrower declared both income and assets and neither was checked. Nothing legal corresponds to this today for an owner-occupied home.
• SIVA, stated income, verified assets. Assets were documented; income was declared. Also gone for consumer mortgages. Its nearest modern relative is asset depletion, which verifies the assets and then derives an income figure from them. That is the opposite of stating income.
• NIVA, no income, verified assets. Income was not asked about at all. Today's asset-based programs verify the assets and treat them as the income evidence the rule requires, which NIVA never did.
• NINA, no income, no assets. Nothing was verified beyond credit and the property. For a home you will live in, this product does not exist. For a rental you will not occupy, a DSCR loan verifies the property's income and your assets for closing and reserves, so it is not NINA either, whatever a marketer calls it.

Why a 'no doc' offer on your own home is a red flag

If a lender or website offers a mortgage on the home you will occupy without verifying your ability to repay, one of three things is true. The product is being described inaccurately and you will be asked for documents later. The lender is not following the rule, which is a problem you do not want attached to your largest debt. Or the offer is a lead-generation hook with no product behind it.

The rule also gives the borrower a remedy. A consumer can raise an Ability-to-Repay violation as a defense in foreclosure, and within the statute of limitations as an affirmative claim. That exposure is why legitimate lenders document carefully. A lender that is casual about verification is telling you how it handles everything else.

A useful test is one question: which third-party records will you use to verify my income or assets? A real alternative-documentation lender answers immediately, because the answer is the program. Bank statements, 1099s, a CPA-prepared P&L, or asset statements. Anything vaguer than that is a reason to keep looking.

The exception: rental property is business-purpose credit

Regulation Z applies to consumer credit. Loans made primarily for a business purpose are exempt under §1026.3(a), and the official interpretations to that section treat credit extended to acquire, improve or maintain non-owner-occupied rental property as business-purpose regardless of the number of units. The Ability-to-Repay rule therefore does not govern a loan on a rental you will not live in.

That is the legal footing for DSCR loans. The lender qualifies the property on its debt service coverage ratio, rent divided by the full monthly payment, and generally does not document your personal income at all. It is not an unregulated free-for-all. Credit, reserves, the appraisal and the lease or market-rent analysis are all reviewed, and fair-lending and other laws still apply. But it is the one place where 'no personal income documentation' is an accurate description rather than a warning sign.

Two cautions. Occupancy is a fact, not a preference, and stating that you will not live in a property you intend to occupy is mortgage fraud. And lenders may add requirements beyond what the rule demands: some DSCR programs still ask for limited personal items, and which ones varies by lender.

The DSCR loan page explains the product, and How DSCR is calculated walks through the ratio with an illustrative example.

What this means if you searched for 'stated income'

Most people who type those words have real income that a tax return understates. The search term is a decade out of date; the need is current. The decision is not whether a stated income loan exists but which verified record best represents your income, and whether the cost of an alternative-documentation loan is worth it against a conventional loan you might still qualify for once the add-backs are applied.

Which record fits is a separate decision. Steady deposits into accounts you control point to a bank statement program, and Alternative income documentation compared walks through the rest method by method. A rental you will not occupy is a different track entirely: DSCR loans qualify on the property's rent.

Every one of these costs more than a conventional loan for a comparable borrower, because the lender carries more risk and more manual work and the loan does not fit the qualified-mortgage box. That trade-off is real, and it is the price of being measured accurately rather than not at all.

What to do next

The stated income / no doc program page describes each documentation path as it exists today. For a side-by-side of the four, read Alternative income documentation compared, and for the category these loans belong to, What is a non-QM loan?.

Run your own numbers with the bank statement income calculator if deposits are your record, or the DSCR calculator if the property is.

Then tell us how you are paid. The first conversation is about which records you have, not about a label from an old search result.