Stated income mortgages.

In a stated income loan, your monthly income is just that...
what you state it is. A stated income loan is available to both
self-employed and wage earner borrowers. However, the
income which you claim to earn must be reasonable for the
type of business you own, or the classification or position you
sustain as a wage-earning employee. For example, if you
work as a substitute elementary school teacher, a mortgage
lender, through its underwriting resources, would have some
knowledge as to what a borrower in that position might earn
in a specific state, county or location. Therefore, if you
overstate what's acceptable or reasonable to a lender for
your position, you're likely to be turned down for your loan.

So, since the stated income approach asks that a lender
basically "take your word for it", in terms of the amount of
your income, there's a certain amount of risk to the mortgage
lender in making this type of loan. Consequently, a stated
income borrower will almost always pay a higher interest
rate than a borrower whose income can be fully documented
by pay check stubs, W-2's, and perhaps additionally... bank
statements and income tax returns.

In some cases, it may be necessary for either a self-
employed or wage earner borrower to take the stated income
approach; especially if the only income they can document or
verify would prevent them for qualifying for a mortgage loan,
because their debt-to-income ratio exceeds the mortgage
lender's allowable maximum percentage. If this is the case,
a stated income loan may be your only option. But, for a less
expensive loan, and for one that's easier to qualify for, the full
doc approach to obtaining a mortgage is a better one.