This BLOG On No Tax Returns Mortgage W-2 Income Only For Home Buyers For Home Buyers Was UPDATED And PUBLISHED On September 27th, 2019
Income is the most important factor in qualifying for a mortgage.
- Borrowers can have the most perfect in the world but with no qualified income documentation or declare low income, borrowers may not qualify
Mortgage Underwriters require the following:
- 2 years of tax returns
- 2-year W-2s
- 2-year 1099’s if applicable
- 60 days of bank statements to see verified funds for the down payment and/or closing costs
- The above docs are required in order to see whether or not they meet the required debt to income ratios in qualifying for a mortgage
In this article, we will cover and discuss No Tax Returns Mortgage.
Adjusted Gross Income As Qualified Income
Unreimbursed expenses can be deal killers:
- Lenders go by adjusted gross income on the borrower’s tax returns
- Self-employed borrowers need to provide 2-years of tax returns
Self Employed Mortgage Loan Borrowers
Self Employed Borrowers who are business owners or 1099 wage earners need to provide the lender with 2 years tax returns and 2-year 1099 income.
- Tax returns are definitely required
- This is because most self-employed borrowers write off expenses on their tax returns
- The way mortgage underwriters calculate income is the adjusted gross income after all deductions
- They take the 24 month average of the adjusted gross income on self-employed borrowers
- However, the average of the two years is only averaged if the adjusted gross income is the same or is higher in the most recent year
- If the adjusted gross income is lower the most recent year, the income of the lower year will be used
- The two years adjusted gross income average will not be used in cases of declining income
- If the underwriter sees that the adjusted gross income has been declining and the likelihood is likely to decline, then the income cannot be used
- The borrower would need to go FHA and get a non-occupant co-borrower in order to qualify for the mortgage loan
- Or they may be eligible for our bank statement loan program for self-employed borrowers
- Tax Returns are not required with our bank statement mortgage loan program for self-employed borrowers
1099 Wage Earners Versus W2 Income Only No Tax Returns Mortgage
Mortgage borrowers who are 1099 wage earners such as car salesman, realtors, or other sales workers lenders will require two years 1099’s and two years tax returns.
- Tax returns are required to see how much the borrower has written off on their tax returns
- The gross adjusted income will be used to calculate income
- If the two years 1099’s are similar, a 24 months average will be used to calculate monthly gross income
- However, if the borrower shows declining income, then the most recent lower income will be used
- It will be averaged for 12 months to determine monthly gross income in qualifying for a mortgage
W-2 Wage Earners Mortgage Guidelines
Borrowers who are W-2 wage earners, mortgage underwriters will go off the most recent paycheck stubs reflected on the past 30 days paycheck stubs and from the employer’s verification of employment. Two years W-2s are required but there is a lot of leniencies with W-2 wage earners.
Here are some case scenarios:
- If a mortgage loan applicant has been working for a company part-time status for the past two years or even less but got promoted to full-time status, underwriters will use the full-time status income to qualify for the mortgage income debt to income qualifications.
- If a mortgage applicant has been working for the same company and got a promotion with a hefty pay increase, the new payment will be used to calculate income as long as the verification of employment confirms that
- If a mortgage loan applicant moved jobs from one job to another job and the new job offered a high pay increase, the new job’s pay will be used to qualify income even though the W-2s for the past two years was substantially less
Mortgage Guidelines With Employment Gaps In Past 2 Years
If a mortgage applicant has had gaps in employment via W-2s, they can qualify for a mortgage as long as they found a new job within six months and the gap in employment was not greater than 6 months.
- If the gap in employment was longer than six months, then they would have to work in their new job for at least six months to qualify with the pay of the new job
- Offer letter is required 30 days of paycheck stubs are required at the new job prior to underwriter issuing clear to close
Overtime Income To Qualify For Home Loan
Overtime income can be used for additional income as long as borrower can document they have been getting overtime income consistently for the past two years.
- Bonus income can be used in qualifying for a mortgage as long as the borrower can show that they have been receiving bonus income for the past two years
- Alimony and child support income can be used as long as the borrower is likely to receive alimony and child support income for the next three years
Qualifying For W2 Income Only No Tax Returns Mortgage
Home Buyers who are W-2 wage earners can qualify for W2 Income Only No Tax Returns Mortgage on the following loan programs:
- FHA Loans
- VA Home Loans
- Conventional Loans
No Income Tax Returns is required on W2 Only Income Mortgage Loan Programs. Borrowers who write off a lot of expenses on tax returns, the write-offs from tax returns will negate the W-2 income. Many times due to the write-offs the chances are borrowers do not qualify for a mortgage loan. Gustan Cho Associates now offers W2 Income Only No Tax Returns Mortgage For Home Buyers. W2 Income Only No Tax Returns Mortgage is available for FHA Loans, VA Loans, and Conventional Loans.
How Does W2 Only Income Mortgages Work
Borrowers, where they can qualify for W2 Income Only No Tax, Returns Mortgage need to be full-time W2 wage earners.
- This is where as long as borrowers are W-2 wage earners, no income tax returns are required
- Only two year W-2s are required
- However, the borrower needs only to have W-2 wages and not 1099 wages
- If the mortgage loan applicant has both W-2 income, has rental properties and 1099 income, then two years tax returns are required
- As long as borrower has W-2 income only, then the two years tax returns will not be used
- It will not be required to be submitted and the write offs from the two years tax returns will not be used and counted against borrowers
We offer W-2 Income Only Mortgage Loans on FHA, VA, and Conventional Loans.
Update On W-2 Income Only Mortgage Loans
Effective immediately, Gustan Cho Associates Mortgage Group offers bank statement loans for self employed borrowers. Tax Returns are not required with our bank statement mortgage loan program for self employed borrowers.
20% down payment is normally required and a minimum credit score of 620 is required. 680 credit score borrowers can qualify for 15% down payment. Borrowers with 720 credit scores can put 10% down payment. The amount of down payment requirement is dependent on borrowers credit scores. There is no private mortgage insurance required. There is no loan cap with bank statement loans for self employed borrowers.