Don't Lie on a Stated Income Loan Application

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Lying on a stated income loan application is one of the biggest financial mistakes that you can make. While lying on stated income loans is common, with more than half of applicants doing so, it is not in your best interest. Here are a few things to think about before you embellish your income on a loan application.

You are Ignoring Guidelines

When you lie on a stated income home loan application, you are basically ignoring all of the traditional wisdom in the mortgage industry. Mortgage lenders have developed their own set of standards over the years for lending money. If you fall into the guidelines for debt-to-income ratio and have a good credit score, you are likely to get a loan. With these ratios, they can tell you exactly what you can afford. While they might not know you individually, they have historical facts to back them up. Not relying on their expertise is a mistake on your part.

You Can Get In Too Deep

If you lie on your stated income home loan application, there is nothing stopping you from getting a much bigger house than you can afford. If you get in over your head, you might be looking at a foreclosure situation in the next few years. Once the payment becomes too much to handle, you could lose your home and ruin your credit.


If you lie on your application, you are committing fraud and can be prosecuted. When you sign your name to an application, you attest that you are telling the truth. Most lenders will provide you with a disclaimer to let you know that should you commit any type of fraud, you can be assessed fines and your home may be subject to foreclosure.