A stated income mortgage is a form of house loan distinguished by its low regulation. It did not compel lenders to check or request income documentation. Banks and other lending organizations are just required to know the borrower’s “stated income.” As a result, stated income loans are sometimes referred to as “liar loans.” This is a broader term for mortgages that need little or no documentation. The loan provider underwrites the loan based on the information provided by the borrower. They now appear to be dangerous, which is understandable. However, these loans were initially designed to assist self-employed borrowers with unpredictable incomes who could not provide the papers required for a traditional loan. However, liar loans mainly rely on credit ratings to compensate.