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A stated-income program lets a self-employed borrower qualify using a reasonably declared income figure rather than fully documented tax-return income, and is offered mainly by B lenders and other alternative lenders rather than mainstream banks.
A lender still reviews the declared figure for reasonableness — checking it against the borrower’s industry, business registration, and bank account activity — even though full income-tax documentation isn’t required the way it would be for an A-lender file. This makes stated-income lending a common path for a business-for-self borrower whose declared taxable income understates their actual cash flow.
In exchange for less documentation, borrowers using a stated-income program typically face a higher rate, added fees, or a lower maximum loan-to-value than an income-verified file — the specific terms vary by lender and program. Some self-employed borrowers use add-backs to increase a fully documented income figure instead of using a stated-income program — which route makes sense depends on the file.
Mostly a B-lender/alternative product: mainstream A lenders generally require fully documented income; stated-income programs are concentrated among B lenders and other alternative lenders.
A reasonableness test, not blind acceptance: lenders typically still check the stated figure against the borrower’s industry, business registration, and bank activity.
Different terms than an income-verified file: rate, fee, and down payment requirements are usually less favourable than a fully documented file, though specifics vary by lender and program.
An alternative to add-backs: some self-employed borrowers boost a documented income figure with add-backs instead of using a stated-income program.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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