Alex Carlucci The Mortgage Expert,
Publish On: July 22, 2023
Homebuyers who still need to do their income tax returns or have substantial unreimbursed business expenses can qualify for W2-only income mortgages. Gustan Cho Associates does not require income tax returns from borrowers if the Automated Underwriting System does not require two years of tax returns do not condition for it. Gustan Cho Associates offers W2-Only Income Mortgages on the following loan programs:
- FHA loans
- VA loans
- Conventional loans (Fannie Mae Only)
Borrowers do not have to turn in their income tax returns. Loan officers cannot submit income tax returns for W2-only income mortgages. We only need two years of W2s. We will only do a W2 income verification with the internal revenue service. In the following paragraphs, we will discuss W2-only income mortgages.
Loan Programs Offering W2-Only Income Mortgages
Borrowers can now qualify for W2-Only Income Mortgages with Gustan Cho Associates. W2-only income mortgages do not have to provide federal income tax returns on W2-only income mortgages. Homebuyers who are W2-income only and have unreimbursed business expenses do not have to worry about the expenses they include on income tax returns. W2-income only will be used. However, if you have rental properties or another side business or part-time, 1099 income will not qualify for W2-only income mortgages. Borrowers do not need income tax transcripts (the 1040s) if they apply for FHA, VA, and Conventional loans if they are a W2 Income Employees.
Can I Qualify For W2-Only Income Mortgages?
As long as you are a W2 wage earner and do not have any other businesses or 1099 income, you can qualify for W2-only income mortgages. Here are the W2-only income mortgage lending requirements and guidelines. Do not need tax transcripts (1040s) for FHA, VA loans, and Conventional loans if W2 employees and AUS do not require it. FHA, VA, and Conventional loans no longer require full income tax transcripts (4506-T) to be done if they are a W2 employee. This rule is ineffective and doesn’t apply if borrowers are self-employed or more than 25% of the borrower’s income is commissioned or self-employment income. Borrowers with rental income from multiple properties do not qualify for W2-only income mortgages.
How Long Do You Need W2-Income To Be Eligible For W2-Only Income Mortgages?
Qualifying W2-only income mortgages are advantageous for borrowers purchasing a home or refinancing their current home where their income tax returns show losses due to un-reimbursed employee expenses, shown on IRS TAX FORM 2106. The advantages of qualifying for these mortgages are also for borrowers with self-employment losses on Schedule C of their income tax returns and for which this loss is not their primary source of income.
Mortgage Lenders That Do Not Require Tax Returns For W2 Income Wage Earners
Gustan Cho Associates does not require federal income tax returns for W2 income earners. It does not matter whether or not you filed taxes or declared substantial unreimbursed business expenses. Borrowers who have un-reimbursed employee expenses on their income tax returns are workers who need to purchase their work uniforms. Examples of such employees are the following:
- Police Officers
- Fire Fighters
- Mechanics
- Tradesman
- Nurses
- Doctors
- Dentists
- Pharmacists
- Bus drivers
- Truck drivers
- Other workers who need to purchase their uniforms for work
No Tax Returns Required For W2 Income Wage Earners on FHA, VA, Conventional Loans
With W2 Income Mortgages, income tax returns are not required. If borrowers did not file their income taxes, that is alright with this loan program. Only the W2 income transcripts will be verified by the Internal Revenue Service. Borrowers who also need to purchase tools and equipment for their work normally have un-reimbursed employee expenses.
Typical Jobs For W2-Only Income Mortgages On FHA, VA, Conforming Loans
For example, police officers must purchase guns, ammunition, and work gear. Plumbers and electricians need to purchase tools and equipment for work. Mechanics need to purchase tools and equipment for work. This will also help borrowers who have part-time self-employment income show losses. In this new tax mortgage rule, the lender must only verify and confirm your W2 verification with the IRS.
W2-Only Income Mortgages Loan Options
Here is how you can qualify for W2-only income mortgages: HUD allows W2-only income mortgages.VA allows W2-only income mortgages. Fannie Mae allows W2-only income mortgages. Freddie Mac does not allow W2-only income mortgages. W2-only Income Mortgages allow borrowers with many unreimbursed expenses to qualify for a mortgage loan. However, there are rules and restrictions on how borrowers qualify for W2-only income mortgages. Borrowers cannot have a full-time self-employed business. Borrowers cannot own 25% or more of a business that you own even though you are a W2 wage earner from their own business. Borrowers cannot have rental income. Gustan Cho Associates are experts in W2-only mortgages on FHA, VA, and Conventional mortgages.
Qualifying For W2-Only Income Mortgages With a Lender With No Overlays
Borrowers wanting to know more about our W2-only income mortgages and see if they qualify, please get in touch with Gustan Cho Associates at 800-900-8569 or text for a faster response. Borrowers can also email us at gcho@gustancho.com. We are available evenings, weekends, and holidays seven days a week. Gustan Cho Associates is a 5-star national mortgage lender with no mortgage overlays on government and conventional loans. We offer non-QM loans with no waiting period after foreclosure, short sale, or deed-in-lieu of foreclosure. Gustan Cho Associates also offers bank statement mortgage loans for self-employed borrowers.
How Do The W2-Only Income Mortgages With No Tax Returns Work?
Qualified income is one of the most important factors when lenders qualify borrowers. All income used as qualified income needs to be verified. Lenders want to make sure borrowers have the ability to repay their new mortgage payments. The history of qualified income is important and a good indicator of future income. Every lender has its method of the way they are calculating qualified income. Most lenders will require two years of income tax returns, two years of W2s, and the past 30 days’ paycheck stubs.
The Mortgage Process For W2-Only Income Mortgages
At Gustan Cho Associates, we do things differently. We try to streamline documents and make the mortgage process easier. You do not need to provide two years of income tax returns for all W2 wage earners with a base salary and overtime income. The only income document we go by is W2 transcript processing. This holds true only if you are a W2 salaried employee. If you have a commission or bonus income of less than 25% of your base salaried income, it can only be used, and no income tax returns will be required.
How Do Mortgage Underwriters Process W2-Only Income Mortgages
Income is among the most important factors when qualifying for residential mortgage loans. In the past, all government and conventional loan programs require two years of tax returns. However, if mortgage borrowers only have W2 income jobs, income tax returns are usually not required when qualifying for FHA, VA, USDA, and Conventional loans.
There are many instances where Automated Underwriting System Approval (AUS) does not require income tax returns from W2 Wage Earners. Mortgage Lenders with no mortgage overlays only go off Automated Underwriting System Approval (AUS). I
f the automated findings do not require two years of income tax returns, Gustan Cho Associates will not require it. W2 income wage earners can now qualify for W2-only income mortgages with no tax returns required on FHA, VA, USDA, and Conventional loans. Only two years of W2s are required.
How Do I Start The W2-Only Income Mortgages With No Tax Returns Loan Process?
The past days of no income and no documentation loans have been gone. Cash income does not count in the mortgage lending world. All income needs to be sourced and documented. Two years of tax returns are required for self-employed mortgage loan applicants or 1099 wage earners. For those W2 income wage earners, most 30 days of paycheck stubs are required, and most mortgage lenders want to see two years of W2s and tax returns.
Mortgage Loans With No Income Tax Returns
We have just launched a new residential mortgage loan product for W2 wage earners. It is called W2-only income mortgages, where only two years of W2s are required, and the past two years tax returns are no longer required. W2-only income mortgages are available on government-backed and conventional loans:
W2-only income mortgages are available for FHA, VA, and Conventional loans.
All lenders do not offer this. Gustan Cho Associates offers W2-only income mortgages for FHA, VA, and Conventional loans. To qualify for W2-Only Income Mortgages With No Tax Returns with FHA, VA, and Conventional Loans, borrowers must be W2 income wage earners. 1099 or self-employed borrowers do not qualify.
Why Are 2 Years Tax Returns Required?
Even though borrowers are W2 income wage earners and the Automated Underwriting System does not condition for two years income tax returns, many lenders will ask for two-year tax returns. The reason is due to tax deductions from income taxes. Borrowers who have large unreimbursed business expenses often run into debt-to-income issues due to adjusted gross income:
Write-offs on tax returns offset monthly gross income. This gross income reduction will often hurt borrowers regarding debt-to-income ratio calculations.
Due to the income tax deductions, many cannot qualify for FHA, VA, or Conventional loans. Many police officers and firefighters get uniform allowances. Many write off expenses for uniforms, weapons, equipment, and other job-related write-offs on their income tax returns. Unfortunately, these write off will bite them in the rear end when qualifying for home loans because some of these write-offs can add up to several thousands of dollars.
The Impact of Unreimbursed Business Expenses on Qualified Income For a Mortgage
Many business owners, independent contractors, real estate investors, and 1099 wage earners benefit from using substantial unreimbursed business expenses and writing off from their gross income on their tax returns. Unreimbursed business expenses are a great tool for self-employed people to take advantage of minimizing paying taxes. However, it is often a barrier when qualifying for a mortgage.
Mortgage Loan Options With No Income Tax Returns Required
These write-offs are then subtracted from gross monthly income, which often exceeds the maximum debt-to-income ratios allowed: Many borrowers try to amend their tax returns where they want to reverse the write-off. However, amending tax returns requires a six-month waiting period before the amended tax returns can be used to qualify for a mortgage. With the new W2-only income mortgages, no tax returns are required, and W2 wage earners can now qualify for home loans. W2 income wage earners with rental properties will not qualify for W2-only income mortgages.
W2-Only Income Mortgages With No Overlays
Gustan Cho Associates is a national mortgage company with no overlays on government and conventional loans. Gustan Cho Associates offers W2-only income mortgages with no income tax returns required on FHA, VA, USDA, and Conventional loans. Borrowers who need to qualify for FHA, VA, USDA, or Conventional loans with no income tax returns, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.
