Short answer: not in their original form. True stated income loans — where you simply stated your income on the application with no proof — ended after the 2008 housing crash. But if you’re self-employed, a 1099 earner, or a real estate investor, you now have more ways to qualify for a mortgage without tax returns than ever before. Here’s what changed, and the five programs that replaced stated income loans.
Stated income mortgages were once a staple of the market. Borrowers stated their earnings, lenders approved based on credit and assets, and the paperwork stayed light. That made homeownership accessible to freelancers, small business owners, and gig workers whose tax returns never told the full story. Here in San Diego — where a large share of the workforce is self-employed — plenty of well-qualified buyers relied on them. At DG Funding, we still hear the same question every week from Carlsbad and North County clients: “Can I still get a stated-income mortgage today?” The honest answer is that the old version is gone, but the need it served is very much alive — and the no-tax-return options that replaced it are both better and safer.
The 2008 Housing Crisis And The End Of Stated Income Loans
To understand why stated income loans disappeared, look back at the 2008 housing crisis. These mortgages earned the nickname “liar loans” because the lack of verification let borrowers inflate their incomes. When property values fell and adjustable rates reset, large numbers of homeowners could no longer afford their payments, and the resulting wave of defaults and foreclosures rippled through the global economy.
In response, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The law imposed strict new rules on the mortgage industry and required lenders to verify a borrower’s ability to repay — effectively ending the era of taking an applicant’s word at face value.
Why A True Stated Income Loan Isn’t Possible Today
The cornerstone of Dodd-Frank is the Ability-to-Repay rule. It legally requires lenders to make a reasonable, good-faith determination that you can repay the loan before approving it, using verifiable third-party records. Because of that rule, a classic stated income loan for an owner-occupied home is no longer legal. We can’t simply ask what you earn and move to closing — every mortgage today needs a reliable paper trail. If a lender claims they can write you a true stated income loan for your primary residence, they are operating outside federal regulations.
The good news: “verify your income” no longer has to mean “show two years of tax returns.”
5 Modern Alternatives To Stated Income Loans
Millions of Americans earn a living outside the standard W-2 structure. To serve them, the industry created non-QM (non-qualified mortgage) loans — programs that give self-employed and non-traditional borrowers real flexibility while staying fully compliant with the Ability-to-Repay rule. Here’s how the main options compare:
Qualified on your word alone, with no proof. Banned for primary residences under the 2010 Dodd-Frank Act. Here’s what replaced it:
Bank statement loan
Qualify with
12–24 months of bank statements
Best for self-employed borrowers & business owners
1099 loan
Qualify with
12–24 months of 1099 income
Best for agents, contractors & commission earners
DSCR loan
Qualify with
The rental property’s own cash flow
Best for real estate investors — no personal income used
P&L loan
Qualify with
A 12–24 month CPA-prepared P&L
Best for business owners who work with a CPA
Asset utilization loan
Qualify with
Your liquid savings & investments as income
Best for borrowers with strong assets but hard-to-document income
Not sure which one fits your situation? See what you qualify for — it only takes a couple of minutes.
1. Bank statement loans (our most popular option)
Instead of tax returns — which often understate income because of business write-offs — we calculate your qualifying income from 12 to 24 months of personal or business bank statements. We look at the actual cash flow moving through your accounts. It’s the closest modern equivalent to a stated income loan for everyday self-employed borrowers, with financing up to 90% and loan amounts up to $3.5 million.
2. 1099 income loans
If you’re a real estate agent, independent contractor, or commission earner, a 1099 loan lets you qualify using 12 to 24 months of your 1099s — no tax returns required. It’s a clean fit for high earners whose write-offs shrink the income shown on a return, and it can be combined with other income sources.
3. DSCR loans for investors
Building a rental portfolio? A DSCR loan qualifies the mortgage on the property’s own rental cash flow rather than your personal income — nothing about your job or tax returns enters the picture. Investors can close in an LLC or corporation, which makes it the go-to program for scaling a portfolio.
4. Profit & loss (P&L) loans
For established business owners, a P&L loan lets you qualify on a 12- or 24-month profit-and-loss statement prepared by your CPA — no bank statements needed. It’s the simplest path for entrepreneurs whose accountant already tracks the numbers.
5. Asset utilization loans
If you hold strong savings or investments but your income is hard to document, an asset utilization loan lets you use those liquid assets as qualifying income — without selling them. Your portfolio keeps working for you while it helps you buy the home.
Frequently Asked Questions
Are stated income loans legal in California?
For an owner-occupied primary residence, no. The federal Ability-to-Repay rule applies nationwide, so a true “no-proof” stated income loan can’t be written for a home you’ll live in. Investors are an exception, because a DSCR loan qualifies on the property’s income rather than yours.
Can I get a stated income loan for an investment property?
Effectively, yes — through a DSCR loan. Instead of looking at your personal income, we qualify the mortgage on the projected rental income of the property itself, which functions much like a stated income loan once did for investors.
Do these loans require higher credit scores?
Because non-QM programs carry slightly more risk than conventional loans, lenders generally prefer a solid credit history. We can work with scores starting in the low-to-mid 600s on several programs, and stronger scores unlock better pricing.
Are interest rates higher for self-employed mortgage alternatives?
Usually a little. The small premium reflects the alternative documentation involved. If your situation changes later, refinancing into a lower rate is always an option.
Finding The Right Loan For Your Income
The lending world in 2026 runs on verified documentation, so the classic stated income mortgage is a relic of the past. But the Ability-to-Repay rule didn’t shut self-employed buyers out of homeownership — it pushed the industry to build smarter programs that prove income in more realistic ways.
If you’re self-employed, a 1099 earner, or an investor in Carlsbad, North County, or anywhere in San Diego, we’ll help you find the program that fits. The fastest way to start is to run the numbers yourself: see what you qualify for with our home purchase qualifier, or check where today’s rates land with the refinance rate checker. Prefer to talk it through first? Call us at (877) 328-2285.