Which is better: a traditional home loan, or a stated income loan for a first time buyer on a budget?

Well it depends. Going stated is pretty much in essense a "liars loan" What you are doing is telling the lender you make a certain amount that you cannot prove (IE self employed, waitress, bartender, poker dealer) etc etc. You will have a higher rate of course. Stated can work out for you if you cannot prove your income, and the income you can prove is not large enough to get approved for the traditional loan. Good luck!

PS keep in mind, you cannot obtain a stated loan if you work at Mcdonalds as a fry cook and claim you make 60k. You get the drift.

It is always better to get a traditional loan for the obvious reason, lower rate thus lower payments. You must prove your income with W-2, fed income taxes and pay stubs.

Now failing to be able to prove your income the conventional way there are other methods lenders will allow you to qualify for a loan.

These are not liars loans, also the sub-prime business still allow stated income loans, the credit score has to be higher than before.

You should contact a mortgage broker in your area, sit down with this individual. He/she will complete a mortgage loan application after which he/she will run a credit report and get your credit score.

Once this has been accomplished he/she will sit down and tell you the loan programs you are qualified for to include 100% loans, stated income loans, adjustable rate loans, conventional loans and other loans that you might be qualified for.

You have to be smart enough to understand what is best for you, understand how you will make the payment no matter the loan you decide to take. If you decide to gt an adjustable mortgage remember that they can go up or down. Get as much information about this type loan as you can.

Remember a couple of things, the mortgage broker is there to assist you with understanding the mortgage programs. If you decide to get a program that will cause you problems down the line, just remember that the mortgage broker will never make a mortgage payment for you.

If you don't understand something, sit there with this person until they explain it to your satisfaction. You and you alone will sign for this loan. You and you alone are responsible for the payment of this loan.

Once you have selected a loan of your choice then you may sign your loan docs.

If while signing your loan docs they are not what you and the mortgage broker discussed, please don't sign them. Call the mortgage broker to get a complete understanding.

I hope this has been of some use to you, good luck.

"FIGHT ON"

The best loan from a cost stand point is a traditional home loan.

A stated income loan is usually higher fees and rates and buyers use them when they get get a traditional loan.

If you're on that tight of a budget, perhaps you shouldn't be buying right now anyway.

If you need a stated income loan, because your documentable income is insufficient to qualify, there's a good chance you'll end up losing your home to foreclosure eventually.

Now, if you make a bunch of other money that is real, but the lender can't use for qualifying for some reason (like tips, side-jobs, etc...), maybe then a stated income loan makes sense, but I'd steer clear if this isn't your situation.

right now banks, mortgage companies and financial institutions are not allowing for "Stated Income Loans". with the real estate sub-prime crisis many people 'qualified' using this method...and of course lied about their earnings...they are now in foreclosure.

So a Traditional loan is the best option for you with a min of 20% down.

good luck :)

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