Self-Employed No Tax Return Mortgage Loans

Self-Employed No Tax Return Mortgage Loans

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will discuss and cover self-employed no tax return mortgage loans. Self-employed no tax return mortgage loans have been non-existent between the 2008 Great Recession and early 2017. However, Self-Employed No Tax Return Mortgage Loans made a comeback in the spring of 2017. Gustan Cho Associates now offers bank statement loans for self-employed borrowers.

Bank Statement Deposits Versus Income Tax Returns are Used For Income Qualification

No income tax returns are required. 12 months bank statement deposits are averaged.

No income tax returns are required. 12 months bank statement deposits are averaged. Average bank statement deposits are used as monthly gross income. Withdrawals do not count. So for example, if the borrower makes an average $10,000 deposit in the bank account and withdraws $9,999, the $10,000 deposit will be used as the borrower’s monthly gross income. In this article, we will cover and discuss Self-Employed No Tax Return Mortgage Loans.

Benefits Of Self-Employed No Tax Return Mortgage

Until now, many self-employed folks were unable to qualify for home loans. Self-employed borrowers could not qualify for mortgages due to the massive write-offs they are entitled to. Lenders use adjusted gross income from borrowers’ income tax returns. Many self-employed borrowers often have very little to no income declared as their adjusted gross income. Many business owners make a lot of income and can afford higher-end homes. The issue is they could not qualify for Self-Employed No Tax Return Mortgage until now due to write-offs on their tax returns

Loan Limits On Self-Employed Mortgage

A great benefit of self-employed mortgage financing is there are no loan limits. Many self-employed borrowers with lucrative businesses can afford higher-end homes. Government and conventional loans have maximum loan limits. Traditional Jumbo Mortgages are often difficult to qualify for unless borrowers are W2 employees. Now with the launch of self-employed mortgage, borrowers can qualify for higher-end home loans without tax returns

Mortgage Regulations On Income Qualifications

The above quotation from Dodd-Frank gives lenders the right to verify income beyond the traditional paycheck stubs and W2s

The above quotation from Dodd-Frank gives lenders the right to verify income beyond the traditional paycheck stubs and W2s. This enables self-employed borrowers to qualify for a mortgage with verification of bank statement deposits. This eliminates the requirement of income taxes. Since the launch of the self-employed no tax returns mortgage, Gustan Cho Associates’ business has increased by over 50%. Using also a free income tax calculator here can help too.  

Basic Self-Employed No Tax Return Mortgage

Here are the basic self-employed mortgage guidelines:

  • 10% to 20% Down Payment
  • The amount of down payment depends on the borrower’s credit scores
  • No private mortgage insurance required
  • Mortgage rates depend on down payment (LTV) and credit scores
  • No maximum loan limits on non-QM loans and bank statement loans for self-employed borrowers
  • Credit scores down to 500 FICO
  • No waiting period after housing event and/or bankruptcy
  • Housing event is defined as foreclosure, deed in lieu of foreclosure, short sale

Qualifying For Self-Employed Mortgage With Gustan Cho Associates

Gustan Cho Associates is a national five-star lender with no overlays on government and conventional loans. Gustan Cho Associates is also mortgage expert in bank statement loans for self-employed borrowers and non-QM loans. Contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, on evenings, and weekends.

Self Employed Mortgage Loan Programs 

There are two types of self-employed mortgage loan programs:

  1. The first Self Employed Mortgage Loan Program is the traditional full doc government and/or conventional loan program
  2. The second Self Employed Mortgage Loan Program is the comeback of the bank statement loans for self-employed borrowers

Bank Statement Mortgage Loans For Self Employed borrowers require no tax returns. Self Employed borrowers need to provide either two years of personal bank statements and/or two years of business bank statements. How this Self Employed Mortgage Loan Programs work is that if the borrower provides 12 months’ bank statements, then 50% of the bank deposits are used. The 12 months is averaged and 50% of the deposits are used as income. With personal bank statements, 100% of the bank deposits can be average over the past 24 months. That average will be used as the borrowers’ income. It needs to be from the same bank. No overdrafts are allowed. A 20% down payment is required. Mortgage Rates will be higher than traditional mortgage loans. Lower down payment possible with higher credit scores.

Traditional Self Employed Mortgage Loan ProgramsSelf Employed Mortgage Loan Programs

If a mortgage loan borrower works as a salaried employee or hourly employee, they just need to provide their W-2s for the past two years and their most recent paycheck stub. The mortgage lender will also ask borrowers to provide prior two years tax returns to see what type of expenses the borrower wrote off where it might possibly reduce their monthly gross income. However, mortgage income qualification calculations are more tricky when it comes to self-employed mortgage borrowers. Many self-employed mortgage borrowers make tons of income but if they write off a lot of money as expenses, their net adjusted gross income will affect the minimum income required for them to qualify for a residential mortgage loan.

How Underwriters Qualify Self Employed Mortgage Borrowers

There are certain documents that self-employed mortgage borrowers need to provide their lenders in order to see the income they can use to qualify for their mortgage loan.  The following documents will most likely be provided to your lender in order for them to calculate income for self-employed mortgage borrowers. Two years of tax returns for both your business and your personal returns. Schedule C will be analyzed. Schedule C is the section where you provide your profit and loss from your business. Schedule C is normally for a business where you are the sole owner of your business, also known as a sole proprietorship. Schedule E will be analyzed.

Schedule E of Tax Returns

Schedule E of tax returns is used for real estate holdings, real estate income, royalty income, partnership income, S corporations, estates, real Estate Mortgage Investment Conduit, and real estate investment trusts. The 1120S if the borrower has it on tax returns. Form the 1120S is for S Corp report of the profit and loss of business. K-1 forms need to be provided if it applies to the borrower. K-1 forms reveal the percentage of profit and loss related to sharing of the business. Profit and loss statements need to be provided. A profit and loss statement is an outline and summary of a business’s annual income and expenses as well as profit and losses.

Amending Tax Returns For Self Employed Mortgage BorrowersWhich means Changing tax returns for self-employed mortgage borrowers

Many self-employed mortgage borrowers ask me if they can amend their tax returns so they can change their tax write-offs so they can declare more income in order to qualify for a mortgage loan. It is perfectly legal to amend tax returns. However, they need to wait a minimum of six months after you amend tax returns in order for the lender to be able to use the amended tax returns to qualify for a mortgage loan. On the flip side, if borrowers declare tons of income and little expenses for mortgage qualification purposes and amend tax returns after they close on the mortgage loan, borrowers are stepping into a gray area. Borrowers who amend tax returns right after they have closed on a mortgage loan and had intent in inflating their income just for qualification purposes, then it is illegal and can be classified as mortgage fraud. However, if the borrower did not have intent on defrauding or fudging income but realized that they forgot to deduct unexpected expenses after filing tax returns, then they should be alright. Self Employed Borrowers who need to qualify for a mortgage with a direct lender with no overlays on government and conventional loans can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, on evenings, weekends, and holidays.

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