Stated income loans have been extended to customers with a wide range of credit histories, including subprime borrowers.
For example, a standard rule is that a customer's mortgage and other loan payments should take up no more than 45% of the person's income.
However, a real estate investor may have multiple properties and for each may receive only a small amount more than their loan payments on each house, but end up with $200,000 in disposable income.
In August 2006, Steven Krystofiak, president of the Mortgage Brokers Association for Responsible Lending, in a statement at a Federal Reserve hearing on mortgage regulation, reported that his organization had compared a sample of 100 stated income mortgage applications to IRS records, and found almost 60% of the sampled loans had overstated their income by more than 50 percent.
[4] Stated income loans are still offered typically by small local banks.