What type of loan is characterized by a borrower providing limited income documentation?

The option focused on is a stated income loan, which is specifically designed for borrowers who may not have the conventional ability to provide extensive documentation regarding their income. This type of loan allows the borrower to state their income without needing to verify it through standard documentation such as tax returns or pay stubs. The intent of these loans is to accommodate self-employed individuals or those with non-traditional sources of income who may find it difficult to provide the standard documentation required for other loan types.

In contrast, conventional loans generally require full documentation of income, employment, and assets. FHA loans are government-backed loans that also require detailed income verification to ensure that borrowers meet necessary eligibility criteria. VA loans, provided for veterans, similarly require income verification to confirm that the borrower can manage the loan payments. Therefore, the stated income loan stands out as the one specifically characterized by limited income documentation, making it a fitting choice for borrowers who may not have conventional income proof.