Can I Get a Mortgage Without Tax Returns?

Tax Returns for a Mortgage

Last Updated on 07/31/2017 by GS Staff

Q:

Can I get a mortgage loan without tax returns?

A:

Yes, it is possible to get a mortgage without tax returns. However, it depends on the documentation a particular lender requires. Generally, there are types of income where tax returns will commonly be required and other types of income where tax returns are not necessarily needed for qualification. First, let’s look at some scenarios where tax returns may not be required.

Tax Returns Not Filed

Not everyone needs to file tax returns. The IRS does not require tax returns to be filed for individuals who do not meet a minimum income threshold. You can read this TurboTax article to get an idea of who does not need to file.

If you do not legally file tax returns, there is no way that your lender can be provided tax returns. The individual(s) will be evaluated for the loan without tax returns provided to the lender.

W-2 Employee

If you are a typical W-2 (salary, hourly) employee with no other income, your lender may not require your tax returns because your income can be verified with your pay stubs and W-2s.

Retirement Income

Retirement income like social security, VA benefits, or pension may not require tax returns to verify this type of income. In lieu of tax returns, lenders may potentially accept documentation such as retirement award letters or 1099s.

When Tax Returns Are Required

If you are self-employed, your lender will likely request your tax returns to verify your income. Other types of income where your tax returns may be required are:

  • Rental income
  • Dividend income
  • Capital gains
  • Interest commission income (when 25% or more of income)
  • Employed by family
  • Royalties
  • Foreign income
  • Tip income
  • Employed by an interested party to the subject property transaction
  • Miscellaneous Non-Employment Income
  • Temporary or Periodic Employment

The 4506-T

A lender has the ability to request and receive your tax return transcripts if you signed a 4506-T. This form can also allow the lender to retrieve transcripts for your past W-2s and 1099s. The transcripts can typically be received by the lender within 24 to 48 hours.

There are instances where a lender may order your tax return transcripts even if you did not provide them with your tax returns. If this happens, any discrepancy will be looked into by the lender and you may need to clarify these discrepancies.

The Underwriting Process

A mortgage underwriter will typically be the person that reviews your loan documentation and decides if the loan will be approved or denied. They often use an automated underwriting system (AUS) that determines what documentation is required based on the lender’s guidelines.

The underwriter will condition for (request from you) additional income documentation if it is missing from the underwriting file. If you are unsure if you need to provide tax returns, you can always wait for the lender to specifically requested them from you.

Remember that not all lenders are the same. Some may require tax returns while others may be more lenient and require minimal documentation. You may want to consider working with a qualified loan officer who has a good understand of different lender guidelines. He or she should be able to give you guidance on the documentation you should provide a lender.

Image Credit: 401kCalculator.org